In the simplest terms, a mutual fund is an investment company that pools the money of many individuals and uses the money to purchase stocks, bonds and money market instruments or some combination of the three. When you invest in a mutual fund, you receive shares representing part ownership of the fund's holdings. This entitles you to a part of any profits and subjects you to a part of any losses. Even if you park your money in an insured savings account, you run the risk of inflation outpacing profits over the long run. Mutual funds offer investors a simple, convenient, less time consuming method of investing in a diversified portfolio of securities.
Investment risk is limited because mutual funds invest in a broad range of securities.
Back To Top Major Advantages of Mutual Funds Professional management you can afford . Few of us have the time or knowledge to research and track the performance of a variety of stocks, bonds, and other investment options. With mutual funds, someone else does that for you. Every fund has an investment management team. These professionals work full-time tracking market trends, evaluating the general condition of the economy, researching companies and monitoring the fund's investments.