Mutual Fund InvestmentsMany Investors pool their funds and in effect then hand it over to a Trusted Professional Fund Manager to make good Investments for them in the hope that they will earn exceptional returns on their Investments.
In the United States, there were more than 9 000 ( nine thousand ) Mutual Funds in 2014, managing assets worth approximately 15.85 trillion U.S. dollars. Domestic equity funds constituted 42 percent of the Fund Market in the United States. The second most popular were Bond Funds, with 21 percent of the market share.
" Unit trusts, which are commonly known as Mutual Funds outside South Africa, are a collection of shares from many different companies. Every day the stock exchange is open, people buy and sell these shares. "
Why a Mutual Fund is like a Herd of Cattle -
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“Invest in Mutual Funds,” the standard grandfatherly advice goes. Reduced risk, no over exposure, etc. It’s the responsible, conservative way to build a substantial — if unimpressive — nest egg. And judging by the size of the Mutual Fund Market ($24 trillion worldwide), plenty of people indeed heed that counsel.
Mutual Funds : Conclusion
A Mutual Fund is nothing more than a collection of Stocks and/or Bonds. You can think of a Mutual Fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.
You can make Money from a Mutual Fund in Three ways :
Let's recap what we've learned in this Tutorial :
- A Mutual Fund brings together a group of people and invests their money in Stocks, Bonds, and other securities, which is called - Equity Funds ( Stock ); Fixed Income Funds ( Bonds ) and Money Market Funds ( Cash ).
- The Advantages of mutuals are professional management, diversification, economies of scale, simplicity and liquidity.
- The Disadvantages of mutuals are high costs, over-diversification, possible tax conse-quences, and the inability of Management to guarantee a superior return.
- There are many, many types of Mutual Funds. You can classify funds based on asset class, investing strategy, region, etc.
- Mutual funds have lots of costs.
- Costs can be broken down into ongoing fees (represented by the expense ratio) and transaction fees (loads).
- The biggest problems with Mutual Funds are their costs and fees.
- Mutual Funds are easy to buy and sell. You can either buy them directly from the fund company or through a third party
- Mutual fund ads can be very deceiving.
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