And no wonder. A mutual fund is an investment company that pools the money of many different individual investors and places that money in stocks, bonds, and other securities under the guidance of a professional manager. Once investors find a fund they like, they can open an account through a broker or directly through the fund company and send in a check to purchase their first shares in hopes of making money.
Profits arrive in a number of ways.
These are passive forms of income for the investor, who can also take action to earn money. You'd earn a capital gain on that sale just as if you were selling a stock. The category name generally defines the fund's strategies and investments. Loads are measured as percentages and generally run from 3 to 8.5 percent. Index funds are popular because they have very low operating costs and essentially are guaranteed to match the overall market's return, minus overhead expenses investors pay funds to manage their money.