A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio. Investors buy shares in mutual funds. Each share represents an investor’s part ownership in the fund and the income it generates.
Mutual funds are a popular choice among investors because they generally offer the following features:
Mutual funds offer professional investment management and potential diversification. They also offer three ways to earn money: