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Financial Terms and Glossary

Mutual Funds

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A mutual fund is a fund operated and ran by a professional investment firm or company. The fund may invest in stocks, bonds, commodities, or other securities depending on the type of mutual fund.

The basic idea behind a mutual fund is that the small investor can make a single investment that is diversified across multiple investments and/or investment types.

Most mutual funds come with costs associated beyond just the standard commission fees associated with stocks. The fund manager is paid by the fund. Each mutual fund may have a different cost and way of paying the fund manager.

Many mutual funds can be purchased and sold similar to stocks. Often they are bought or sold after the market closes and the current value is established.

Many mutual fund companies offer mutual fund families in which an investor can move their investment from one type of mutual fund in the family to another type of mutual fund in the family for little or no transaction costs.

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