| If you do not have the time and the | | | | Mutual funds investors also gain through dividends |
| professionalism to invest your money, and you | | | | on stock. This happens when a company |
| think that handling it by yourself is too risky, then | | | | experiences less liquidity or when they wish to |
| you can invest in mutual funds. Mutual funds are a | | | | reduce the price of their shares. When the |
| portfolio of stocks, bonds, assets and money | | | | number of shares increase in the market, the |
| market instruments contributed by various | | | | prices tends to go down. This prompts more |
| investors and held together in an investment pool | | | | investors to invest in the less valued stock since |
| for the sole purpose of making money. This pool | | | | they are able to buy them. Mutual fund managers |
| is supervised and monitored by a group | | | | could also choose to make money through |
| professional investment adviser. These managers | | | | interest on bonds, where investors agree to give |
| will make sure that the cash flow of the fund is | | | | loans to the government or companies that have |
| one that will make profits for its investors. | | | | a lower risk of default at a predetermined rate of |
| The increase in price of fund holdings is dependent | | | | interest. |
| on the strategies employed by the fund | | | | As a mutual funds investor, you could also expect |
| investment adviser. Once the prices increase, the | | | | to make money through capital gain. This happens |
| investors make money by selling the high valued | | | | when the fund invested increases in value when |
| shares. You will find, in most cases, fund | | | | sold. Profits made from a long term investment |
| managers will not disclose the nature of bonds or | | | | are usually taxed less than those made on a short |
| stocks they have invested in. They will generally | | | | term fund. There are two types of capital gains:- |
| release these results on a quarterly or half yearly | | | | realized and unrealized capital gain. The former |
| basis in order to shield the investors from unfair | | | | referring to a stock that has already been sold at |
| competition and price hikes. This lack of | | | | a profit, while the later refers to a stock that has |
| information gives some managers unfair | | | | yet to be sold, but has a potential to make |
| advantage over their investors. | | | | profits if it would be sold. |