Mutual Funds For Beginners Part One

Are you a newcomer when it comes to playing the stock market

? No big deal at all! This series of articles on mutual funds will make it simple for you to understand what a mutual fund is, what it is all about and whether it is worth your while to invest in one. My first three articles are called "Mutual Funds For Beginners" and they lay down the basics.

The next one is called "Expenses Associated With Mutual Funds" and it covers the basic things you can expect to be charged for if you decide to invest in a mutual fund. The last two are titled "Is Investing in a mutual fund worth your while?" and they go over the advantages and disadvantages of mutual funds. First let us break things down to a molecular level and talk about securities. The fancy definition of a security is a negotiable instrument representing financial value.

This definition is quite esoteric so let's look at an example of a security to help you get a better idea of what one is. A stock is considered a security. Stocks can be bought or sold, and thus have financial value, and a share of stock literally means that as a stockholder you "share" a portion of ownership in the business whose stock you own. Bonds, which are contracts to pay back money with interest on specific dates, are securities too. If you hold a bond, you know that you are going to receive money on these set dates, so bonds have financial value as well.

Stocks are purchased and sold at exchanges called stock markets, and bonds at bonds markets. A bonds market is generally quite different from a stock market. If you were trying to invest in stock, or sell the stock you have, you would enlist the help of a stock broker who would charge you a commission for performing this work for you.

Usually you are going to need some sort of a broker to help you do this, unless you already own stock from the company you would like to purchase from. The same goes for bonds - you are going to need a dealer. Now that we have the very basics down, let's go over mutual funds. See my article "Mutual Funds For Beginners Part Two!

by: Mallory Megan

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