mutual fund

The definition of a mutual fund is an investment option in which your money is pooled with the money of other investors and then invested by a professional fund manager.

There are three major types of investment funds:

• Equity fund - consists of investments coming from common stock. It can be riskier than other types of investments; but, with higher risk comes opportunities to earn more profit.
• Fixed-income fund - consists of corporate and government securities that provides investors with fixed returns with relatively lower risk.
• Balanced fund - combines bonds and stocks and the investments are pooled together. It may have low risks, but lower risks mean lower returns. It is therefore important for investors to first study how much risk they are willing to accept before making any type of investment.