Mutual funds are the answer, whether you're interested in stocks, bonds, government securities, international securities, foreign currencies or options. This gives you access to the market and a chance to add to your holdings in small increments. Everybody in the pool Mutual funds are investment companies that raise money from shareholders to pool it for the purpose of investing in many securities. Because they can buy and sell large blocks, their brokerage costs are lower than commissions paid by individuals. Mutual fund companies have professional management, with a portfolio manager to monitor its holdings and decide which to buy, hold or sell.
Most funds pay dividends every quarter and capital gains distributions annually.
Fund families, which offer many different types of funds, permit switching from one fund to another within the family as the market or your goals change. Most offer free switching, although some impose small fees. A potential investor should also examine the annual and semiannual shareholder reports. After that, the plot thickens. Funds' annual expense ratios, an annual percentage of assets, usually range from 1.75 percent down to a fraction of a percent, depending on the fund family.