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Mutual Fund
A type of fund managed by professional investment managers that pools money from many investors and uses that money to buy a diversified portfolio.
More Details
A mutual fund is an investment vehicle that pools together money from a large number of investors and uses that money to buy a diversified portfolio of stocks, bonds, or other securities. Mutual funds are managed by professional fund managers who research and select investments for the fund based on its stated investment objective.
Example
Imagine that you want to invest in the stock market but don't have the time or expertise to choose individual stocks. You might invest in a mutual fund instead. Your money is combined with other investors' money and the fund manager uses it to buy a diversified portfolio of stocks, bonds, or other securities. You can choose a mutual fund based on your investment goals and buy or sell shares as needed. Mutual funds can be a convenient and diversified way to invest in the stock market and can be suitable for investors with different risk tolerances and investment horizons.
Related Terms
Bond
A debt security where an investor loans money to a borrower for interest and the return of the principal. They are low-risk but offer lower returns.
Escrow Funds
Funds that are held by a third party on behalf of two parties in a transaction and are released when the terms of the transaction are met.
Social Security
A government-run program that provides financial assistance to eligible individuals, including retired workers, disabled workers, and their families.