The Basics of Mutual Fund Investing

A mutual fund company is an investment company which buys and sells securities based on specific and specified goals for investors. A mutual fund can also be called an open-end investment company, or a closed-end fund. A closed-end fund limits the number of shares available and an open-end fund issues new shares as new investors invest in the fund.

Why should you invest in mutual funds?

- professional management of your investments
- diversification
- potential savings on commissions

One concept to keep in mind is the Net Asset Value. This is the total value of assets the investment company holds, minus the total value of liabilities. This total is then divided by the total number of shares outstanding. This value reflects the ups and downs of the value of the underlying securities held by the fund.

Before investing in any mutual fund be sure to review the prospectus carefully. If you have any questions about the fund, be sure to consult your financial or investment advisor.

See also:
- Mutual Fund Fees
- Mutual Fund Investment Strategies
- Mutual Fund Calculator
- What to look for when investing in a Mutual Fund

Written byFinPlan

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