| Why do we invest money in a particular busines? | | | | investments, such as bonds and stocks. He would |
| It is a question that you should answer first | | | | be the one responsible in managing and investing |
| before you start any kind of business. Succesful | | | | the pooled money in different securities. |
| investors always remember to include every | | | | In mutual funds, all profits and losses will be |
| detail on their planning activities-- and they have | | | | shared among the fund's shareholders. In other |
| answered every vital question that they should | | | | words, all profits as well as losses will be shared |
| address first. | | | | among the group according to the percentage of |
| You invest money for profit. Thus, you need to | | | | individual share in the fund. For instance, if you are |
| consider investments that can give you a high | | | | a group of five investors, investing $20,000 each, |
| return. You might consider gambling your capital in | | | | making your mutual fund to be worth a hundred |
| a stock market, where every cent can be | | | | thousand dollars. All profits as well as losses would |
| doubled or tripled, depending on market conditions. | | | | be distributed on a 20-percent basis, thus reducing |
| Since stocks could be easily acquired and sold, it is | | | | all possible risks. |
| one of the viable options that you may consider | | | | Aside from the low-risk feature of mutual funds, |
| in choosing an investment portfolio. | | | | you need not to be an expert in stocks or other |
| However, a high return may also come with high | | | | forms of securities. The fund manager would be |
| risk. Do you remember the unwritten rule "high | | | | the one to take care of it. In addition, you can |
| risk yet high return" and "low risk yet low return"? | | | | diversify your capital and spread it to other types |
| It is true that investing in the stock market may | | | | of investment. Diversification means spreading all |
| give you a huge profit, but expect your capital to | | | | of your money into several investments. In case |
| be at a high risk. Unstable market conditions might | | | | one investment is down, there are other |
| cause you to lose all of your money. | | | | investments that you can concentrate with. Thus, |
| If you do not like taking high risks, the stock | | | | you will not be losing all of your money in a single |
| market is not an ideal investment for you. You | | | | investment as well as maximizing your potential |
| may look for an alternative that could give you | | | | profit through other types of investments. |
| the same return but with lower risk than investing | | | | The mutual funds will automatically diverse your |
| in stocks. If you are under this category of | | | | investment across bonds or other securities. |
| investors, then you might consider investing in | | | | Again, the fund manager would be the one to |
| mutual funds. | | | | handle all transactions and determine if it is viable |
| Mutual funds are a good alternative for investors | | | | for you to invest on that particular security. |
| who do not want to take the risk when getting a | | | | Form a pool of investors and combine all of your |
| huge profit. It is a "common fund" or amount of | | | | capital into a single mutual fund. Share the huge |
| money pooled by a group of investors with a | | | | profits out of diversified investments as well as |
| definite investment objective. Such pooled money | | | | enjoy the reduced-risk feature that comes along |
| would be managed by a fund manager, an | | | | with it. |
| individual who specializes in different types of | | | | |