A mutual fund is a pool of money which is used to invest in what ever the fund specializes. Most mutual funds buy stocks but some buy gold, bonds, or other investments. Many funds specialize in certain areas of investment like China or US technology stocks.
Example: the Fidelity Contrafund is a large fund with a minimum investment of $2500. Thousands of investors have put money into the fund which, in turn invests the money in US stocks, the fund's specialty. A large staff monitors the investments and makes decisions under the direction of the fund manager.
The main appeal of mutual funds is that smaller investors can receive the same expertise and purchasing power as the large institutions. Investors who buy mutual funds need only be concerned with the quality and long term performance of the fund. They do not need to worry about each individual stock or bond purchase the fund makes. Mutual funds are an excellent way for investors to have their money handled in a professional manner and take advantage world class expertise.
Also See: Atlantic Financial's main Mutual Fund page.
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