Mutual funds?

Question

What is a mutual fund? Does it make a lot of money and how do I go about getting one? Thanks.

Answer 1

The other responders have given you a good idea of what a mutual fund is.

Here is how you go about getting one.

There are two different types. Open ended funds and closed end funds.

The closed end funds are traded like stocks. You enter your order through a stock broker. Many index funds fall into that category.

Open ended funds are sold directly by mutual fund companies. You can go to their web sites and down load the forms to invest in them. Many are also sold through stock brokers in addition to directly.

Here are a few open ended fund companies with web sites for you to visit.

Royce Funds
Fidelity Funds
American Funds
Vanguard Funds
T Rowe Price Funds

Here is a site that will tell you all about closed end funds and index funds.

http://www.etfconnect.com/

All open ended funds have a minimum investment amount. American Funds is among the lowest at $250 because it is a front end load fund.

The others have minimums of $2000 and more.

Answer 2

A mutual fund is a portfolio of securities. These securities can be stocks, bonds, other financial instruments, or even cash. the nice thing about mutual funds is the diversification of risk. Instead of buying stock in one company, you buy a mutual fund which invests in 100's of companies. For beginning investors, try an index fund. This is essentially, "buying the market". A few companies, (Vanguard for one) offer these at no upfront sales charge adn low expenses. Check out their site, and see if this is right for you.

Answer 3

A mutual fund collects money from different people so as to make a large pool of money, which it invests in equity shares or in debt (Bonds) or a combination of these.Equity shares are subjected to market risk.Debt (Bonds) are considered as lesser risky as they give a constant return like ur money in a abnk gives fixed rate of interest.So because risk factor is involved a mutual fund may or maynot give u higher return (money) and it may actually erode ur money.So think carefully before investing that u can make more money or lose ur money.So it's like a gamble. But because professionals run it they invest in diversified shares(equity) to reduce risk, but whether they can give u back more depends on the mutual fund. For more info u can send me message at messanger.

Answer 4

Suppose you wanted to start an investment company. There is a management company and a separate corporation that issues shares to whomever wants to invest in what your investment company is going to do. Suppose you have an idea, like the Standard & Poors 500 is nice, but you buy losers along with the good stuff. Suppose you invested only in the top 200 most profitable companies on that list. On the management company payroll, someone then examines the earnings reports of all 500, sorts them by profits, and counts out the top 200 companies. Then you also have marketing and sales or promotional people, on the management company payroll, who try to find people who want to invest in only the top 200 most profitable companies on the famous S&P500 (with Standard & Poors permission, of course, which may cost you extra). Then when money comes in, you hold a piece of it for those who want to cash out their investment, but with the rest you map out a batch of orders, some 200 orders, one for each of the 200 companies in your list. Of course there could be things like you hold back some on companies that are in price decline, yet you have to put some in them because that is what you promised the investors. Similarly, the government has, for some classes of investment companies, a diversification rule that requires a percentage ceiling of something like 2-5 percent, so that no more than that would be held in any one company--initially, things grow of course. Take DIA for instance. They invest in the Dow Jones Industrials, but almost half the value of that index is held in ten (out of 30) stocks. Some things grow, others don't. This was the idea in the first place, buy the winners and ignore the losers, in some fashion or other.

Now, for folks who owned shares in your fund, as the price of the holdings rises or falls, each investor's proportionate share of the fund would reflect that value to some degree. Meanwhile, the management company totals up what it spent to operate, divides it among the fund shares and assesses everyone's account a management fee and operating cost charge (commissions on buying and selling all those stocks your fund is invested in).

As for investors, funds vary. Sometimes they have charges for salespeople, commonly called a "load" as in sales load. It is often a percentage of the amount you invest and can be pretty expensive. Some funds have minimums and limits. If they permit an IRA, then funding could be something like $50 a month, with a promise of so many months. Otherwise, they may say a minimum of $2k, $5k, $10k or more. If you invest, for instance, in some funds they charge one rate if you have under some line like $100k or $1 million, and a drastically smaller set of fees if you hold and keep amounts over that.

Then there are exchange traded funds, or ETFs. Look up stock symbols for things like these: DIA, SPY, DVY, NY, FXN. You buy a minimally-managed fund who invests in the Dow Jones Industrials (DIA), the Standard & Poors 500 (SPY), the Dow Jones list of solid companies that pay decent dividends (DVY), or the biggest, by market capitalization, 100 companies on the New York Stock Exchange (NY), etc. In these, you buy or sell them just like regular stocks.

Answer 5

Basically a fund that is spread out into investing in several different "stocks" so the overall gain or loss isn't based on one company or performance. to invest in one, you probably need about $1000 before you see any real gain or loss, and possibly a minimum purchase depending on the company that manages it. try www.fidelity.com for one of the bigger mutual fund companies for more info and purchasing

Answer 6

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Answer 7

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Answer 8

Go to Vanguard.com they will help you call them they are good

Answer 9

do some research. http://www.vanguard.com is a great place to start.