Your Purchasing Power … Multiplied
Whether you are a new investor or an experienced one, investing in mutual funds may be an easy way to diversify your holdings. A growing segment of the investment market, mutual funds are professionally managed portfolios whose shares are sold to the public in much the same way that stocks are.
Think of a mutual fund as a way for a giant group of people to pool their money together to have more purchasing power. If you were to invest $100 a month into the stock market, you wouldn’t be able to buy many shares. But if thousands of people invest $100 each month, as a group they can buy substantial shares.
Because fund managers can afford to purchase more shares, they are able to better diversify fund holdings. This, in turn, generally provides you with an instantly diversified portfolio.
Types of Mutual Funds
Thousands of funds are available to investors today, each with its own characteristics. In order to find one that’s right for you, you’ll need to understand the following terms:
Open-end funds – Unlimited shares are sold to investors. These are bought and sold directly through the fund, not in the market.