|What is Investing?
Time Value of Money
Rule of 72
Mutual FundsWhen investors decide to invest in a mutual fund, then money is put in a pool of money from other investors to create a large portfolio so everyone benefits from bigger profits. Most funds buy a variety of investments like stocks, bonds, or other securities. Because there is such a variety of different investments in one mutual fund, there is not as much of a risk. Usually if one investment has a bad return, another will make up for that loss.
To invest in a mutual fund, an investor buys shares of the fund and becomes a shareholder. That fund makes money two ways: by earning dividends or interest on its investments and by selling investments that have grown in price. The fund then pays out its profits to the shareholders.
Note: This is better if you are investing for long term profits.