What Are the Main Benefits of Mutual Funds? One of the great things about mutual funds is that you don’t need a lot of money to get started, and-thanks to their diversity of investments-you can invest confidently because all of your retirement eggs aren’t in one basket. And as the value goes up, so do your returns! Some of those company stocks may go up while others go down, but the overall value of the fund should go up over time. See? Not that complicated!Ī typical growth stock mutual fund buys stocks in dozens, sometimes hundreds, of different companies-so when you put money in a mutual fund, you’re basically buying bits and pieces of all those companies. What if it’s used to buy bonds? Then it would be a bond mutual fund. If it’s used to buy stock in international companies, then the fund would be an international stock mutual fund. Now, what the money is used to invest in will tell you what kind of fund it is. These people just mutually funded that bowl. They each take out a $100 bill and place it in the bowl. Here’s a good way to visualize how mutual funds work: Imagine a group of people standing around an empty bowl. What if it’s made up of bonds? Then it’s called a bond mutual fund. When a mutual fund is made up of stocks, it’s called a stock mutual fund. Mutual funds have a team of professionals working behind the scenes, picking and choosing which stocks, bonds or other investment options to include inside the fund. Mutual funds are professionally managed investments that allow investors to pool their money together to invest in something. Simply put, mutual funds are professionally managed investments that allow investors to pool their money together to invest in something. So let’s take a closer look at what mutual funds are, how they work, and why they can become the most valuable tool in your retirement investing strategy. But you should never invest in something you don’t understand. With the help of an investment professional, mutual funds are a great way to invest for your retirement. The good news is, they’re not as complicated as you may think. If the mere mention of the phrase mutual funds has your eyes glazing over with confusion, trust us-you’re not alone.
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