What is a mutual fund?

When we buy shares so we buy shares in a mutual fund company trying to buy shares and other types of assets to get as high return as possible.

If the fund, for example, includes 11 shares, you will indirectly become the owner of all the eleven companies. Everyone who buys shares in a fund öget the fund jointly. For the trouble, so will the fund management company to levy a fee, so-called management fee, and there may be other types of fees or prestationsavgifter, where you may pay extra fee if the fund would perform very well in relation to any index.

With simple expressions, one can say that the mutual fund is a complete investment portfolio, where you have the opportunity to buy-in and avoid the hassle of having to sit and pick out which shares and other assets that you wish to purchase.

Advantages of saving in mutual funds:

  • simplicity
  • risk diversification
  • option
  • flexibility
  • professional management
  • regular savings

The back is, of course, that we have to pay for it.

 

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