A mutual fund is a portfolio of stocks, bonds, or other securities purchased with pooled capital from investors. It's like a basket of investments you buy all at once. Mutual funds offer access to a wide variety of assets, reducing risk compared to individual stock or bond investments. Fund managers handle investment decisions, saving you time and effort.
- Types: Index funds, bond funds, and target date funds are common types.
WHY INVEST IN MUTUAL FUNDS?
1. Diversification: Spread risk across multiple assets.
2. Economies of Scale: Lower costs due to group investing.
3. Monthly Contributions: Grow assets steadily.
4. Liquidity: Mutual funds are less volatile and more liquid.
STRUCTURE OF MUTUAL FUNDS
- Open-End Funds: Most common type. Investors can buy or sell shares at any time. The fund size adjusts based on demand.
- Closed-End Funds: Fixed number of shares. Traded on stock exchanges like stocks.
NET ASSET VALUE (NAV):
- NAV represents the fund's per-share value.
- Calculated daily: (Total Assets - Liabilities) / Total Outstanding Shares.
- NAV fluctuates based on market prices of underlying assets.
In Summary, Mutual funds provide professional management and diversification—ideal for building a robust investment strategy! . We continue next week
- Types: Index funds, bond funds, and target date funds are common types.
WHY INVEST IN MUTUAL FUNDS?
1. Diversification: Spread risk across multiple assets.
2. Economies of Scale: Lower costs due to group investing.
3. Monthly Contributions: Grow assets steadily.
4. Liquidity: Mutual funds are less volatile and more liquid.
STRUCTURE OF MUTUAL FUNDS
- Open-End Funds: Most common type. Investors can buy or sell shares at any time. The fund size adjusts based on demand.
- Closed-End Funds: Fixed number of shares. Traded on stock exchanges like stocks.
NET ASSET VALUE (NAV):
- NAV represents the fund's per-share value.
- Calculated daily: (Total Assets - Liabilities) / Total Outstanding Shares.
- NAV fluctuates based on market prices of underlying assets.
In Summary, Mutual funds provide professional management and diversification—ideal for building a robust investment strategy! . We continue next week