what are mutual funds?

Question

how to deal in them and how are they diefferent from shares???

Answer 1

Mutual funds are when a company pools resources of many investors and uses those funds to purchase various types of financial securities, depending on the company's goals. Clearly, the buying and selling of certain securities (e.g. bonds and shares) make up mutual funds.

Answer 2

I suggest that you check out

"investopedia.com" , "investorwords.com"

mutual funds are a basket of stocks, so each "share" of a mutual fund represents holdings in -depending on the fund- anywhere from a few dozen to hundreds of companies.
There is normally a minimum amount to open a mutual fund
$3000-$5000 is pretty standard...
some have "loads"...up front sales charges of 3% to 6% [YIKES!!]
in addition, they have operating charges....these vary with the fund and the type of fund shares...see any prospectus

the easiest way to buy them
....brokerage houses and directly from the fund company

selling them, the same way....

although-and this is a fine point-your NAV for some funds is not determined until the close of that day's trading....not necessarily the time that you put the sell order in.


Mutual funds allow you to diversify your holdings....you can buy funds that target a specific type of company , size of company, location of [global] company...etc etc etc

However....ETFs and closed-end funds usually have cheaper operating expenses and do not have a minimum dollar amount to purchase...and there is an ETF and/closed-end fund that will match any mutual fund available...

for these, I suggest you refer to
Amex.com. CEFA.com ishares.com powershares.com


before you put a dime into anything.....read enough to have a really good idea of what you are buying.....

and don't be afraid to use stops/limits/stop limits to limit your losses and protect your gains

good hunting

Answer 3

Check out "Mutual Funds For Dummies" by Eric Tyson. It has everything you need to know about mutual funds, in plain language. You might also want to read "A Random Walk Down Wall Street" by Burton Malkiel. He makes the case that stock picking, and actively managed mutual funds, are a losing strategy compared to index funds.