What is a Mutual Fund?
You've undoubtedly heard about these investment vehicles called mutual funds, but what exactly are they? Simply stated, mutual funds are like an insurance policy. They are a conglomeration or collection of many different types of securities. When investors come together and want to buy securities as a group, you have a mutual fund. Each investor has a proportional stake in the securities based upon how much money he/she contributed. Mutual funds are a cheap and an easy way for the average person to own several hundred stocks. They've been around for quite a while, too. The first mutual fund was established in Boston well over seventy years ago. Today, there are over 2000 mutual funds.
Mutual funds can also be the investment companies that buy and sell securities.
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