What you need to know about mutual funds
Investing in mutual funds can help you achieve your financial goals. Here are some of the key elements you need to understand about this investment option to help you determine if it's right for you!
Whether you are a seasoned pro when it comes to personal finance or you're just starting to think about investing your money, you most certainly have heard about mutual funds. They are, in fact, one of the most popular savings vehicles. What are they all about really?
Investing in mutual funds means pooling your money with other investors' money in funds that can be made up of stocks, bonds or other securities. The composition of the mutual funds you invest in will generally depend on your risk tolerance. This is one thing you will need to consider in order to determine the type of product you can invest in: are you more conservative and leaning towards a fund made up of bonds with guaranteed income, or are you more growth oriented, favouring mostly stocks with the goal of growing your money as much as possible? Or maybe you are somewhere in between?
There are specialists in personal finance that can definitely help guide you in your choices and work out an investment strategy that fits your needs, but, at the end of the day, it's still your decision. Because when it comes to your money, you may as well have a really good grasp of what goes on when your savings are invested in a mutual fund.
Here's some vocabulary and basic financial concepts to retain so you'll be ready when you finally sit down with a professional.