Tips About Mutual Fund Investing

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A mutual fund is a company that accumulates money from many investors, and allocates that money by purchasing stocks, bonds or other assets. In this way, you can own a small percentage of many different assets that you might not otherwise be able to manage on an individual basis. The value of the fund is in accordance with the value of the assets it holds. As the stocks or bonds within the fund increase in value, the fund increases in value. On the other hand, as the stocks or bonds within the fund decrease in value, the fund also decreases in value. Mutual funds only trade at the end of the day depending on their net asset value (NAV). To figure out the NAV at the end of the trading day, the mutual fund company looks at all of the assets, decides their value and separates that number by the total number of outstanding shares in the fund. Mutual funds are separated into two categories: closed-end funds and open-end funds. Closed-end funds have a set variety of shares issued to the public. If you want to buy a part of the fund, you have to buy an existing share from a shareholder that is selling. Open-end funds have an unlimited number of shares. If you want to buy a part of the fund, the fund creates a new share and sells it to you. There are considerably more open-end funds than there are closed-end funds. closed-end funds. Closed end funds can trade at values that are above or below their NAV, while open end funds only trade at their end of day NAV.