I want to enter the stock market. But, I don’t have the $$ it takes to do it right.
(click on the bold-faced vocab words:))
There’s no way little me could buy all the stocks necessary to have a fully diversified investment portfolio. My mutual friends at my mutual fund make it possible.
Once I buy a share of a mutual fund, I get a piece of the pie.
The mutual fund pools the membership’s $$ and invests according to its objectives. I wait and reap the rewards—dividends and capital gains!
Watch out, mutual funds are not created equal.
Some are open and some are closed. Some have a front end load, others back end.
Investment objectives can include index, equity, bonds, international, and sector specific.
My mutual fund’s tiny expense ratio reminds me the manager’s expertise is getting me the most bang for my buck.
(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)