Mutual Funds Trading

Written by Michael Federico
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When a person enters into a mutual fund he is, in essence, joining an investment company. His money is pooled with the money of other investors, and together their money is invested into stocks, bonds, or other securities. Investment decisions are generally left up to a fund manager who makes purchases that he thinks will help the fund achieve its goals.

Mutual funds are generally thought of as long-term investments. In fact, some funds have a time period in which a person cannot withdraw his money. Many funds have been in existence for lengthy periods of time, which allows a person to research the fund's performance before investing in it. There are funds that only take a limited number of investors and there are funds that are open-ended, meaning the fund will keep taking investors until it has run its course.

Load Mutual Fund Trading

Load funds require investors to pay fees either in upon joining or upon removing their money. If a fund requires an initial payment, a person will actually give up a portion of his investment. If the load is three percent, only 97 percent of the investment will actually be put into the fund.

There are a lot of financial experts who believe there is absolutely no reason for a person to enter into a fund that requires payment. Their belief is not unwarranted. Several studies that have been conducted have shown that load funds do not outperform funds that require no payment. It should be made clear that even funds that are "free" usually have some fees attached. A monthly or annual payment might be taken from a person's investment, so whether a person is entering a fund through a firm or online, he should be aware of all the costs involved before investing.


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