Mutual Funds: How to Make Them Work for You

A mutual fund is an investment vehicle where a person or group of persons, called mutual fund managers, choose a group of stocks and sell them in one package. Mutual funds are generally lower risk investments for a beginner or intermediate investor because:

• The managers are experts
• Having a large number and variety of stocks is less risky than owning one stock
• If the price per share of some stocks go down, others can go up, possibly keeping the price (Net Asset Value), of the mutual fund stable or going up.

Mutual funds are also recommended for those who do not have the time, energy or desire to research their own stocks. Every mutual fund and fund family comes with a prospectus-READ the prospectus before investing. The prospectus not only helps you to understand what you are investing in, but it helps you to understand mutual funds and stocks in general.