22. Mutual Funds 1: What is a Mutual Fund?

Mutual Funds explained in simple terms.

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[TheNipommu]

My risk tolerance is zero, I have $1000 Cnd, which would be the smartest choice for me? ETF or mutual funds? you didn't mention if mutual funds require a minimum or not. ETFs doesn't require any minimum. Could you help me with this? thanks.

[savingandinvesting]

@TheNipommu A zero risk tolerance is going to limit what you can do - strictly speaking only holding cash has no risk and in some cases even that can have risks. What I would suggest as a first step would be to get familiar with dollar cost averaging (to put money in slowly), tax savings, diversification - the minimums for a mutual fund are typically very low, but depends on the provider. Hope that helps a little bit.

[TheChapaqua]

For a mimimum of a long-term £1000 investment, would it be worthwhile to pursue a 'mutual funds' option?

[savingandinvesting]

@TheChapaqua In the UK, these products are unit trusts - timing a one-off investment of £1,000 if it represents a large part of savings is prob. not a good idea but one can make investments in ISAs (effectively unit trusts with no tax on gains) or unit trusts with much less - the other relevant points are to use dollar (or pound) cost averaging, to save an affordable amount, the time horizon, tax considerations etc. as per some of the other videos and the book please.

[MixMeAdrink]

What's the difference between mutual funds and hedge funds?

[savingandinvesting]

@MixMeAdrink There are also mutual funds that invest in stocks and bonds (often referred to as balanced funds). Main difference in this context relates to measurement/tracking vs. a benchmark as opposed to absolute return focus - other difs. include regulation, target investors, ability to short-sell - see answer below as well for MixMeAdrink - hope this helps - more in book as well - thank you for interest (not enough space here to cover fully) - best regards, Michael.

[salashaska223]

I am 15 years old and I would love to learn more about this stuff

[haveapooo]

WOW! thank you so much for this! i can actually understand it now. the f*****g book i'm reading doesnt make any sense! thanks so much!!!

[wraithmastr2]

I'm 14 and looking to invest and by stocks. Should I get a mutual fund?