Back to the Basics: Mutual Funds

Updated 3 months ago

Several times a year I try to do a segment on terms that are used in investing. Even if you’ve invested for years, if no one has explained these terms, you might not know them. So today’s term mutual fund and key points to remember.

A mutual fund is organized by a company to pool money from many investors together. A mutual-fund manager then buys stocks or bonds or holds amounts of cash in a style told to the investors, through the prospectus, before they invest in the fund.

The combination of holdings and investments is then called a portfolio. Many mutual funds are traded on exchanges and you can buy into them or sell them to other interested investors.

Investors can be individuals or institutions, such as pension plans or banks.

The fund managers and their assistants perform research on what stocks might be the best choice for the mutual fund that they manage. For instance, if you are investing in a technology fund the portfolio might include hardware- components like semiconductors, that make up the machine. Or it might also invest in social media companies. The manager is looking to follow the guidelines set in the prospectus while earning a return for investors.

Each ‘share’ represent an investor’s ownership in this pool of investments. You may receive annual reports from the companies held in the mutual fund’s portfolio.

You can learn all kinds of information. Even information that is not of pressing interest if you hear it in a way that connects with you, and if you hear it often. We like to make the basics an important part of the information we provide to you.

Citation:

http://www.sec.gov/investor/pubs/sec-guide-to-mutual-funds.pdf

Marion Syversen, MBA
NorumbegaFinancial
207.862.2952
Marion@NorumbegaFinancial.com
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Voted Bangor Region’s Best Financial Planning Firm since 2008.

Disclosure:
Only securities and advisory services offered through Wall Street Financial Group, Inc. Registered Investment Advisor. Member FINRA/SIPC. Wall Street Financial Group, Inc. and Norumbega Financial are separate entities, independently owned and operated. Investing in mutual funds involves risk. Read the prospectus carefully before investing. (CR9734)


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