Personal Finance Tip of the Day

It is a professionally managed investment vehicle, which pools the funds from many investors and collectively invests these funds in stocks, bonds, cash instruments, commodities, other mutual funds, real estate, and many other types of investment instruments, which enables the investors to gain or lose from the performance of the fund.

The collective investments of the mutual fund may earn dividends on the shares they own, as well as capital gains on shares that they purchased and then sold, as well as capital losses, if they have sold shares at less than the purchase price. The fund also charges a management fee to all shareholders. After we subtract the expenses from the gains, the earnings of the fund are distributed to each investor in proportion to the amount of shares invested. Investors believe that, although any one stock or group of stocks in the fund's portfolio may go up or down, the total gains of the portfolio will be positive over time.