What is Mutual Fund?
A mutual fund is basically a financial mediator that permits a bunch of investors to pool their cash alongside a foreordained investment objective. The shared fund will have a support manager who is mindful of investing the pooled money into particular securities (usually stocks or bonds). Mutual funds are one of the excellent investments ever made since they are exceptionally cost effective and simple to contribute to (you don’t need to figure out which stocks or bonds to purchase).
How does Mutual Fund Work?
A mutual fund is a collection of stocks, bonds or other securities owned by a group of investors and managed by a professional investment firm. It is difficult for individual investors to have a diversified portfolio. Mutual funds help individual investors invest in both stocks and bonds at the same time. When an investor invests a certain amount in a mutual fund, he/she becomes a shareholder of the corresponding stock. Mutual funds then invest the shareholders' money in stocks, bonds, or other securities that pay interest or dividends. This money will be distributed to shareholders. If the fund sells some shares at a higher price and makes a profit, shareholders are obligated to receive capital gains.
