Mutual fund
Mutual fund is a type of investment that gives you opportunity of starting your investment without large risks as well as it does not demand paying large brokerage commissions or fees. All what you need is information and you can start your first investment even with such sum of money as $50. Thousands of people invest money in mutual fund so actually mutual fund is an investment company itself. Let us explain how it works. When you invest in a mutual fund it is like buying shares of an investment company. Stock, bonds, certificates of deposits, etc. are the company’s assets. The history of mutual funds begun in 1924 in the USA. Nowadays mutual funds are offered by over 600 different companies. The quantity of mutual funds is more than 11,000. Four billion dollars are under management of mutual funds.
One of advantages of investment in mutual funds is diversification allowing minimizing potential risks. It is difficult to have such an opportunity while investing in stock market, which demands a lot of money for investment. For instance you should buy shares of 10 different companies (or 15) to make the risk of loss lower. And with mutual fund investment you will get diversification by default, because mutual fund does it for you. Mutual fund already consists of many different securities such as bonds, stocks, money market funds, real estate, etc. You can buy only one share of a mutual fund, and this means that you already have possibility of diversification. It makes sense - higher return with lower risks, does not it?
Keep in mind that mutual fund is managed by professionals, so investment in mutual fund does not demand you special attention all the time. You can even forget about it while your money is working for you and just get your income. Detailed reports regularly sent from your mutual fund will provide clear picture of how your investment is doing. Return of the mutual fund is about 12% (or even more) and that for sure is higher that returns of a bank saving account. So what you need to do to start investment in mutual fund is reading about different companies, checking their performance and stability and then make your own choice.