Mutual funds are a pooling of investors’ dollars with a common objective, whether it be growth, income or a combination of these. Mutual funds have many advantages. One advantage to mutual funds is diversification. Mutual funds invest in different industries, different companies within those industries and in different types of securities, such as stocks and bonds.
Another advantage to mutual funds is professional money management. Each mutual fund has an industry professional that watches over the fund and makes changes based on the economy, interest rates, and other factors. Of all the investment types, mutual funds are generally recognized for their ease of use. You can start with a very little amount of money and contribute more at any time through a method called dollar cost averaging. Mutual funds are sold by prospectus. Investors should read the prospectus carefully and consider all the investment objectives, risks, charges, and expenses of each fund carefully before investing. The prospectus contains this and other information about the investment company.