| Mutual funds are a type of investment that pools | | | | Corporation, fund holders are not protected by |
| together funds from different investors for the | | | | the government insurance deposit. |
| sole intention of trading to make money. These | | | | Mutual funds need to maintain a lot of liquidity in |
| investments are managed by professional fund | | | | order to satisfy the demands of their clients. This |
| advisers whose main duty is to monitor cash | | | | is because there are so many investors wishing |
| flows of the investment, making sure that their | | | | to make deposits as they are wishing to |
| strategies generate profits for their clients. | | | | withdraw. The investment advisers usually have a |
| The different types include bonds, stocks, money | | | | problem deciding how much cash would remain in |
| market as well as hybrid funds. These funds are | | | | their bank accounts waiting for withdrawals and |
| registered with the Securities and Exchange | | | | how much would be invested. This in effect |
| Commission. There are a few drawbacks | | | | reduces the amount of profits the fund would |
| associated with mutual funds investment firms. I | | | | have accrued. |
| have listed here some of the disadvantages that | | | | With mutual a fund investment, investors are not |
| you need to be aware of before investing in one. | | | | able to know what the earning per every share |
| Just like any other investment out there, mutual | | | | was in a given period of time. What investors get |
| funds are also prone to fluctuations in the price. In | | | | is the total value of their portfolio less liabilities |
| some instances you risk loosing all or part of your | | | | incurred i a certain financial period. This means |
| investment. There is need for an investor to do a | | | | that, it may be difficult to gauge the performance |
| lot of homework regarding the risk of the | | | | of the managers of your fund. Maybe you could |
| particular investment. Unlike bank customers who | | | | even pick better performing stocks than them. |
| are protected by the Federal Deposit Insurance | | | | |