what are Mutual Funds?Meaning of Mutual funds?Advantages and Disadavntages?

Question

What are Mutual Funds?What does the mutual fund manager exactly do?Do we really get good returns investing in mutual funds?What happens in a mutual fund?inside mutual fund.

Answer 1

I am a broker so I can shed some light on this for you. In the simplest terms, Mutual Funds are basically a bunch of stocks bundled into a package. By buying shares of a mutual fund, you are essentially buying a whole bunch of stocks. The company that manages the mutual fund has many professionals (mutal fund managers) that watch these individual stocks and may get rid of some of the stocks or add different ones depending on what the economic forecast looks like for those stocks or the industries that those comapnies are in. You can choose from hundreds of different types of mutual funds, from aggressive ones that carry more risk, to conservative ones that will just slowly and steadily grow. The nice things about mutual funds is that you can usually get into them for as little as 50 to 200 dollars and you have professionals looking at them that will make decisions to benefit you. Returns on mutual funds do vary, and are usually purchased by people who are looking to invest for a long period of time before pulling their money out. That is why most retirement plans are invested in mutual funds. However there are some that are intended for short term investing and there is no such things as cookie-cutter approach. Each investor has different needs, so each case needs to be looked at seperately. I would recommend meeting with a broker in your area and discussing it with them in more detail to get a full understanding of mutual funds and what ones might be a fit for you. The bottom line with Mutual Funds is that they are much nicer than going out and buying individual stocks and trying to manage them yourself.

Answer 2

Some investors find mutual funds a lucrative investment, since they usually have the following features:

Professional Management:

Professional money managers research, choose, and regulate the performance of the securities bought by the fund.

Diversification:

Diversification is a fruitful investment strategy that can be summarized as not putting all the eggs in a single basket. Dividing your investments across many companies and industry sectors can reduce your risk if a company or sector underperforms. For some investors, diversification can be easily achieved by owning mutual funds instead of buying individual stocks or bonds.

Affordability:

Some mutual funds allow investors with smaller amount of funds to invest by lowering the pound amounts for initial purchases, future purchases, or both.

Liquidity:

Mutual fund investors can easily sell their shares along with any fees and charges payable if any while redeeming.

But some features of mutual funds can also be treated as disadvantages like:

Answer 3

Good question!

Mutual funds are basically funds that are run by companies that pay people to research the best investments to match the stated values, ideals, and purposes of that fund.

It's a way to invest a relatively small amount of money into a BIG pool of investments. They'll take your money and put it in with all of the rest of their money, and use all of their money to invest in the stated goals of the fund.

You will typically make much more money investing in mutual funds than you will in individual stocks.