Mutual Funds

Overview

Mutual funds are shared investments. That means they use money from multiple people to invest in a mixed group of stocks, bonds, or other securities.

Although mutual funds provide an easy way for people to diversify their portfolios, these investors won’t actually own shares of any of the companies the fund invests in. Instead, they’ll own shares of the mutual fund, which invests in the companies for them. The result is a less risky investment overall—but also a somewhat lowered rate of return.

Risk-averse investors who don’t want to manage their own portfolios and like the idea of getting higher returns than a savings account or CD could provide might gravitate toward mutual funds.

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