2016-12-01 00:00:00 Finance and Accounting English Learn the definition of a mutual fund along with its advantages and disadvantages as an investment option. https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2017/03/08214734/Small-business-owner-near-garden-viewing-smartphone-financial-documents.jpg Small Business Terms: What Is a Mutual Fund?

Small Business Terms: What Is a Mutual Fund?

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A mutual fund is an investment offered through an investment company that invests in various assets and securities based on the fund’s stated objectives. The fund pools the assets of multiple investors, and then provides a market for the shares to be bought and redeemed at net asset value.

The advantages of mutual funds include:

*Liquidity – Fund shares may be redeemed at any time.*Small investment requirements – Initial purchases are as low as $500.*Instant diversification – One fund may invest in as many as 100 different companies.*Investment expertise – Fund managers have extensive experience and background in investing.*Automatic reinvestment – Investment returns from capital gains and dividends can be compounded.

Disadvantages include:

*Many mutual funds charge high management fees.*Many mutual funds also charge a front-end sales load.

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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