Mutual Funds
A mutual fund is an investment product that takes investment money from a range of individual investors and that then pools the money together to invest it in one lump. There are various ways that a mutual fund can invest on behalf of its investors - for example, the investment manager may invest in bonds, stocks and/or securities, for example.
Most people will invest in mutual funds for the medium to long term as this can have a positive effect on your return on investment. As with many investments a mutual fund does not give a guarantee that your money will grow and you do run the risk - if markets fall - that you will actually lose money.
There are various types of ways to invest here to minimise your risk and/or to maximise your returns. Some investors, for example, will invest in safer options such as money market funds whilst others will take a gamble on higher risk (and potentially higher return) products such as equities. Some mutual finds (such as guaranteed capital funds, for example) will put limits on how much you could potentially lose but these funds may also impose limits or extra charges if you want to cash in your part of the mutual fund early.
Some of the advantages of mutual funds is that they give you access to experienced fund managers and you can easily build up a diverse portfolio of investment products without any specific expertise. You can also choose the sector and/or type of investment that the fund buys into if you like.