What is a Mutual Fund?
A mutual fund is like a pot where group of people putting their money together to invest in different things, like company shares or bonds. By combining their money, they can afford to invest in a variety of things, which helps them lower their risk and possibly make more money.
Who Manages the Money?
A fund manager is a professional who takes care of all the money in the mutual fund. The fund manager decides where to invest the pooled money by choosing different stocks, bonds, or other investments. Their goal is to help grow the money over time.
How Does a Mutual Fund Work?
The pooled money from everyone is used to buy pieces of different investments. Instead of putting all the money into one investment (which can be risky), the fund manager buys multiple investments. This is called diversification, and it helps spread out the risk, so if one investment doesn't do well, others might still perform better.
