Today I want to cover a great way for an individual investor to put their money to work. That way is with Mutual Funds. What is a Mutual Fund? A Mutual Fund is commonly referred to as a diversified portfolio of various stocks, bonds, and cash. Mutual Funds usually are typically offered by a Financial Institution and are managed by a professional fund manager.
The great thing about Mutual Funds is that they offer an individual investor to have access to a diversified portfolio at a fraction of the cost. What this means is that a Mutual Fund is a pool of money from many investors. The fund manager that runs the fund chooses to invest the money to which they see fit. Many Mutual Funds consist of 100 or more stocks, but there are some funds that have less.
The first thing to consider when investing in a Mutual Fund is your age. This will determine what type of time horizon you have to invest and build wealth. This also will reflect what type of Mutual Fund you should be investing in. Not all Mutual Funds are created equal! Some funds have higher risk/reward than others and you as an individual must find that risk tolerance.
This is all I have for now as this topic will be covered over multiple posts. Next time I will explain more into detail of how age plays a factor in investing. Also, we will cover what to look for when choosing a mutual fund.
Thank You,
Clay-
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