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You and I: The Common Investors in Mutual Fund Investments

By Edited May 30, 2014 0 0

Learn how to invest in mutual funds

The investors in a mutual fund

As early as the 1990s, the advent of globalization has been increasingly felt in modern economies around the world. Globalization means that financial exchanges are not only confined now to the internal economy of a particular country. As free fiduciary exchanges between countries emerged, more opportunities arise for individuals to participate in the booming economy of a country. The bigger the economy and the livelier it becomes, the more infrastructures, projects and companies invest in that country's economy.

As more corporations are established in a country, the use of mutual funds becomes very handy. A corporation just starting it business or wishes to expand its commerce reach will need vast amounts of money to be established. No man alone can do this, except with the help of investors. In this situation, a common investor can be a part owner of a big corporation through the participation in mutual fund investing.

A mutual fund basically pools money from a hundred or thousands of investors, and uses the collected large amount of money in investing in stocks, bonds, or to buy shares in a start-up company. Investing in a mutual fund is very beneficial, especially to those who cannot afford to invest large amounts of money. The investment income derived from a mutual fund is proportional to the number of shares that the investor purchased or to the amount that he has invested to the fund over time.

Mutual fund investment basically decreases the investment risk involve as the risk is also proportionally spread over the number of shares bought by the members of a mutual fund. If an investor can bear the mood swings in the investment market, then he can invest and buy more shares from the fund. However, if you are fearful that the financial market will crash tomorrow, then you have the option to buy minimal amounts of shares. You can be a conservative investor as you like or a multi-millionaire buying thousands of shares. All is fair in this game.

The beauty of a mutual fund is that everyone can participate in it. All that is needed to be done is to meet the minimum amount of initial investment then you're good to go. It's up to you whether to do a one-time lump sum investment amount to some millions of dollars, or invest using the famous "dollar-cost averaging," meaning you invest small amounts over time until your mutual fund shares value grows.

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