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A mutual fund is an open-end investment company that invests money of its shareholders in a usually diversified group of securities of other corporations, as defined in the Merriam-Webster dictionary. Mutual funds help with financing and investing opportunities. They give the small investors a chance to invest their money in other areas besides stocks and bonds. There is multiple mutual funds to choose from and different reasons why shareholders should choose them. As popular as mutual funds have become, there is downfalls to them like most investment opportunities. In 2003, mutual funds were giving a bad name when a scandal was brought public. These opportunities and issues will be discussed.
Becoming major suppliers of funds in the financial market, mutual funds have become a very popular investment in recent years. Because of the diversity of investments, portfolio management’s expertise, and liquidity, mutual funds have grown rapidly over the past few years. One of the most popular group’s investing in mutual funds is people with self-driven retirement plans. This provides professionally handled money and pooled risk. There are more than 8,000 different mutual funds, with more than 88 million households owning shares of one or more.
Mutual funds pool investments by individual investors and use the funds to accommodate financing needs of governments and corporations in the primary markets. Investments in securities in the secondary markets are made as well. Mutual funds are used both by governments and corporations that need funding, which gives small investors a place to invest their money.
Small investors h ...