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13 November, 07:20

What is a mutual fund

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  1. 13 November, 10:25
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    A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks. Investors put money into a pool. One professional makes all the decisions of what to invest in. All you have to do is decide when to leave.

    You normally sell when you believe the sector you decided to invest in is at its peak. i. e. Precious metals right now are a great investment.

    Mutual funds are good because you don't have to be watching it everyday unlike the stock market as someone makes all the decisions on behalf of all the investors.

    The problem is, you have to buy your mutual funds from a bank that you can trust. Do a little research on the professional that is running that mutual fund and whether or not he/she has a good track record.

    From most risky to least risky:

    Stocks

    Mutual Funds

    Bonds

    GICs

    More risk = more reward

    You won't be making a lot with $500. Look at the price history and yield on the mutual fund (s) that you are planning to invest in.
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