19 Jun What are Mutual Funds?
What are mutual funds?
Mutual funds are one of the more popular options among Canadian investors. According to the Investment Funds Institute of Canada, 87% of Canadians have greater confidence in mutual funds than other financial products.
Mutual funds are pooled investments that allow a large number of investors to purchase a piece of an investment portfolio. When investors purchase a mutual fund, the money goes into the overall assets under management and the fund manager makes investment decisions based on the fund’s investment objectives. It’s a simple way for investors to access an already-built investment portfolio.
The benefits of mutual funds
A main advantage of mutual funds is it allows investors to create a well-diversified investment account with just one purchase. The manager of a mutual fund has access to options that individual investors may not have.
Another advantage of mutual funds is that investors can purchase a fund that aligns with their risk tolerance. The value of a mutual fund fluctuates daily based on the level of risk of the investments inside the mutual fund. Income funds don’t experience large fluctuations because they focus on lower risk investments, whereas equity funds will see larger fluctuations because they purchase riskier investments within the portfolio.
How to buy mutual funds
Mutual funds are a flexible investment. They can be purchased in all investment accounts, including registered and non-registered. Investors can choose to purchase mutual funds in a lump sum or continuously through pre-authorized contributions. Contact Harry Perler or David Olejnik to learn more about the benefits of investing in mutual funds.
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