What are mutual funds ? What is their significance?
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Mutual funds are a form of organized investment. The fund works by collecting amounts from various investors into a bigger pool of money. That money is invested. So it is a form of collective investment.
The mutual fund is created by a company/person known as the fund manager. The company takes a small cut of the pool as their income and in return, they are supposed to research the market and invest the pool of money.
Because the funds typically spread investment to different projects or company and are professionally managed, mutual funds are considered safer for investors. Funds are important because they give small and new investors a way to invest in small amounts and still achieve some risk protection through diversification.
There are many types of mutual funds and their specializations as well as their benefits and drawbacks. It would be impossible to summarize in a reddit post. You can research more in sites like investopedia.com
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