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investing

Mutual Fund

An investment vehicle pooling money from many investors.

A mutual fund pools money from many investors to buy a diversified portfolio of stocks, bonds, or other securities managed by a professional fund manager. Mutual funds are priced once daily at market close and may charge management fees (expense ratios) ranging from 0.03% to over 1%. They provide diversification and professional management accessible to individual investors with modest amounts.

Example

A business owner invests $25,000 of personal retirement savings in an S&P 500 index mutual fund with a 0.04% expense ratio, gaining exposure to 500 large US companies for just $10/year in fees.

Why It Matters for Your Business

Mutual funds simplify investing by providing instant diversification, making them a cornerstone of retirement planning for business owners.

Related Terms

ETF

More Investing Terms

Dividend

A distribution of profits to shareholders.

Stock

A share of ownership in a company.

Bond

A debt security where the issuer owes the holder payment.

ETF

Exchange-Traded Fund - a tradable investment fund.

Portfolio

A collection of investments held by an investor.

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Accounting 101 GuideFinancial Statements GuideTax Deductions GuideFinancial Reports Feature

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