What is a mutual fund?
A mutual fund is a large pool of money that is invested by experts in stocks, bonds or other securities with the goal of growing value of the overall pool. Mutual funds are very popular because they let individual investors, like you, invest in a wide variety of companies and markets in Canada and around the world at a much lower cost than if you bought and sold the stocks, bonds, etc. by yourself.
While some funds can be used for shorter term investing, usually mutual funds are appropriate for longer term investing. That's because their value fluctuates with the values of the securities they hold and returns are not guaranteed. Short term fluctuations can be quite dramatic, but historically, over the long-term, returns have been higher than from guaranteed investments. See Investing during market volatility.
There are thousands of mutual funds to choose from. Each one has a written investment goal that helps you decide how, or if, the fund should have a place in your overall financial plan.
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