What are mutual funds?

Canada Life - Oct 05, 2023
Explore what mutual funds are and how they work so you can build your investment plan to help you reach your financial goals
Explore what mutual funds are

A mutual fund is a group of investments, such as stocks or bonds, in a single fund.

This way, mutual funds allow you to invest in different companies or bonds at the same time.

Investing in mutual funds means putting some of your money into a larger pool of funds managed by professional money managers.

Due to the large sum of money in the pool, and because your money is managed by specialists, mutual funds can help you diversify your investments, reducing your risk.

There are mutual funds available that unique as you are.

One strategy to diversify your investing 

Choosing a single company, industry or security isn’t always the best way to invest. Mutual funds can help you diversify your investments in many different companies and industries, or in bonds and other securities.

Diversifying your investments can help you deal with market volatility and manage risk when markets are turbulent.

Cashing out of your mutual fund 

Typically, mutual fund units can be redeemed – or “cashed out” – at any time. The redemption value will depend on how the fund’s sales charges are set up and the fund’s unit value on the day of redemption. This may be lower or higher than the original purchase price.

Mutual fund fees 

There are fees associated with investing in mutual funds.

Buying a mutual fund means investors can put their money into a variety of securities at a fraction of the cost of purchasing a similar mix of securities individually – a cost that’s shared with other investors.

You should also consider the other cost of do-it-yourself investing, such as potential lost returns and all the time it takes to figure things out on your own, versus working with an advisor.

I can help you pick mutual funds based on your comfort with risk and individual investment goals, putting you in control. Your choice of mutual funds can be updated as your life changes. 

What’s next 

Let’s meet to: 

  • Discuss how mutual funds may fit into your investment plan
  • Review your investment goals and risk tolerance