what are mutual funds?

well, the last we left off, we were talking about stocks/shares/equites... so now, lets take a quick look at mutual funds instead...

so what are mutual funds? basically, when u buy a mutual fund, u are actually pooling ur money together (with millions of others in that company offering the mutual fund option) to have the capacity to buy a broader range of stocks/shares/equities, something u might not be able to do with ur capital in itself... the money that is pooled together is then managed by a fund manager who will then decide in which companies he wants to invest in... and because u are buying a broader range of stocks/shares/equities, the risk level of going 'kaput' (die/mati/sei) is lowered, and as such, so are the chances of gain...

there are certain mutual funds which allows u to make an initial payment and follow suit with monthly payments... though this might be a good idea for those with minimal capital, there are its downsides... for example, if ur mutual fund is doing well (which u want of course) that means the stock prices of the companies ur invested in is goin up... and as such, with ur fixed monthly payments, ur actually paying more money for one particular stock than u would have the month before... in other terms, ur paying equal the amount of money in the month of March as of February for less stocks in March than u would have gotten for that same price in February...

and voila, stocks and mutual funds explained...

-aDRiANo-