So you’ve read my post on Investing For Beginners and decided you’ll like to invest in Mutual Funds? Great, so what exactly are you investing in …
What is a Mutual Fund?
A mutual fund is a professionally managed fund that pools money together from you and other investors and uses that money to buy securities. A security is a financial instrument/asset with monetary value. Because of the diversification (mutual funds invest in stocks/equity, bonds), it’s less volatile (which means it doesn’t go up and down as much as i.e. stocks). So if a mutual fund has 100 stocks and one does bad, then you lose 1%, as opposed to a stock where if you bought that particular stock that did bad with all your money, then you’d have lost all your money.