Learning about Mutual Funds

Mutual funds are a very popular means of investing money. A mutual fund pools money received from individual investors like you — often in modest amounts — to create a large investment fund. A professional fund manager with detailed knowledge of investing then puts this money to work for you. As the money grows over time, so does the value of your investment.
The money in mutual funds is usually invested either in stocks or in bonds. Stocks represent shares in the ownership of companies. When you own stocks, you share in the profits the companies enjoy, and when the value of the companies grows, so does the value of your stocks. Bonds, on the other hand, represent money that has been borrowed by a company or a government agency. When the loan is repaid, the owner of the bond gets the money back with interest. When you invest in a mutual fund, your money goes with the money of many other people to buy stocks or bonds. As the mutual fund that owns the stocks or bonds profits from these investments, so do you.