ELI5: mutual-fund
// explanation
What is a mutual fund?
A mutual fund is like a big piggy bank that lots of people put money into together [1][3]. Instead of each person buying their own stocks and bonds, a professional manager buys them for everyone in the group [2].
Why do people use them?
When you pool your money with other investors, you can buy more different types of investments than you could alone [1][2]. It's like going to the store with friends so you can buy bigger things together than each of you could buy separately [3].
What do you own?
When you invest in a mutual fund, you own a tiny piece of everything the fund buys—like owning a slice of a very big pizza [1][2]. If the fund owns 100 different stocks, you own a little bit of all 100 [3].
How do you make money?
You make money when the stocks and bonds in your mutual fund go up in value, or when companies share their profits with the fund [1][2]. The professional manager does the work of picking which investments to buy [3].
// sources
A mutual fund is an SEC-registered open-end investment company that pools money from many investors. It invests the money in stocks, bonds, short-term money- ...
Mutual funds are investment strategies that allow you to pool your money together with other investors to purchase a collection of stocks, bonds, or other ...
A mutual fund is an investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and ...
Money market funds are common investment tools for families, businesses, and a range of companies. The MMLF assisted money market funds in meeting demands for ...
Streamline mutual fund operations with DTCC's automated solutions—accelerate transactions, reduce risk, and improve efficiency across the fund lifecycle.
Video by Charles Schwab
Video by The Ramsey Show Highlights
Video by The Ramsey Show Highlights
