Guidelines on Investing in a Mutual Fund

In the new millennium, mutual funds have grown at a pace which will make the industry a stronger one to deal with in the near future. The industry has helped in maintaining investor confidence despite the prolonged crisis, say, in Asia. It has minimized capital flight and has brought new perspectives in terms of the investment and savings maturity, even in third-world countries. Given the need for these countries to compete in the global market, mutual funds will certainly serve as a vital ingredient for their current and future development.

What is a mutual fund? How does one invest in it? When you invest in a mutual fund, your money is combined with the money of many other investors. Professional fund managers use this pool of money to create a portfolio of investments, which may include:

- Stocks: ownership of shares in publicly held companies;
- Bonds: interest-bearing certificates issued by governments and corporations; and
- Money Market Securities: short-term instruments, such as Treasury bills and certificates of deposit, that mature in less than one year. [Read Full Article]