Investing basics: mutual funds

A mutual fund is an open-end professionally managed investment fund that pools money from many investors to purchase securities. The fees associated with the fund, usually make mutual funds a poor investment option. You are better of investing by your own means or through a strong financial firm, which actually has your best interests at heart.

How does a mutual fund work?

Income is earned from dividends on stocks and interest on bonds held in the fund's portfolio.

What do you need to know before investing in a mutual fund?

If the fund sells securities that have increased in price, the fund has a capital gain.

Pros and cons of mutual funds

High Expense Ratios and Sales Charges

Why you should not invest in mutual funds

Mutual funds are considered a bad investment when investors consider certain negative factors to be important, such as high expense ratios charged by the fund, various hidden front-end and back-end load charges, lack of control over investment decisions, and diluted returns.

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