Welcome to professorsavings.com, we teach finance basics. Today we will teach you about an introduction to mutual funds.
Hi I’m Rayfil Wong. We hope these investment concepts will help you be a better investor.
A mutual fund pulls the capital of many individual investors and invests it in a set portfolio.
Professor Savings decides to he would like to start investing. He wants a balance portfolio broken down in to 50% stocks, 30% bonds, and 20% cash.
However, Professor Savings has only $50 to begin investing. This means he only has $25 for stocks and even less for bonds.
Professor Savings’ lack of cash limits his ability to invest in a balanced way by himself but he can invest in a mutual fund to get around this problem.
A mutual fund allows Professor Savings to pull his money with other investors that want to invest in a balanced portfolio. By purchasing units in the fund, Professor Savings can get the exposure he wants.
Utilizing the strength in numbers, mutual funds allow individual investors to allocate their investment dollars in ways they couldn’t have otherwise.
There are many types of mutual funds including energy funds, emerging market funds, and even funds of funds.
These offer investors many flavors of portfolio exposure.