6829422155_d895bbb8d3Introduction to Mutual Funds.

Article Number 1 in the Mutual fund series (For the next article click here)

I am going to post a series of articles on mutual funds of which this would be the first. We will be going through the basics of what mutual funds are in this article and subsequently move on to their benefits & disadvantages, types, performance, expenses among other things in the later articles.

Prerequisite – It would be beneficial in our quest to understand mutual funds by first understanding about the concept of NAV which I have described here.

So lets begin,

What is a mutual fund?

SEC provides a very simple and jargon free definition for a mutual fund. It says that “A mutual fund is a type of investment company that pools money from many investors and invests the money in stocks, bonds, money-market instruments, other securities, or even cash.”

Lets understand what mutual funds are with the help of the following analogy. More »