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Mutual Funds For Beginners Part Two

By Guest

In my first article in my series on mutual funds, I didn’t even get the opportunity to get to the subject of mutual funds! I very briefly covered securities, which we said is something that represents money. We looked at two types of securities, stocks and bonds. We spoke about stock markets and bonds markets, and how if you wanted to invest in or sell stocks and bonds you are going to need the help of a dealer or broker.

Now let us go over mutual funds. In essence, a mutual fund pools money from a number of different investors and invests in different sorts of securities. Mutual funds will have a fund manager that buys and sells the fund’s investments. Under United States law, the Securities and Exchange Commission (SEC) and the Internal Revenue Service tell mutual funds that mostly all of their net income that they bring in must be distributed to its investors at least once a year.

Mutual funds are structured as trusts or corporations, and the phrase mutual fund is another term for what the SEC sees as an open end investment company. All being open ended means is that at the end of every day, the fund will issue new shares to investors looking to buy into the fund, and the fund has to buy back shares from investors redeeming their shares.

Most mutual funds are monitored by trustees or a board of directors who make sure that the fund is being taken of care correctly and that it is being managed in the best interests of the fund’s investors.

It is mandated that mutual funds must be registered with the SEC and they must give interested investors something called a prospectus that contains information about the fund, the securities it invests in and the fund manager. To Be Continued In Part Three

Mallory Megan works for Rapid Recovery Solution and writes articles on medical collection agencies.

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Article Citation
MLA Style Citation:
Guest, Guest "Mutual Funds For Beginners Part Two." Mutual Funds For Beginners Part Two. 6 Jul. 2010. uberarticles.com. 29 Dec 2014 <http://uberarticles.com/finance/mutual-funds/mutual-funds-101-part-two/>.

APA Style Citation:
Guest, G (2010, July 6). Mutual Funds For Beginners Part Two. Retrieved December 29, 2014, from http://uberarticles.com/finance/mutual-funds/mutual-funds-101-part-two/

Chicago Style Citation:
Guest, Guest "Mutual Funds For Beginners Part Two" uberarticles.com. http://uberarticles.com/finance/mutual-funds/mutual-funds-101-part-two/


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