- Mutual fund basics
When you buy shares of a mutual fund, you're buying into a portfolio of securities. There are many types of funds, and you should always read the prospectus before investing. Essentially, you are buying diversification that would be difficult to achieve on your own. As you make your selection, consider when you'll need to take money out of the fund and identify your tolerance for risk. You'll also want to consider a fund's past performance and look for a manager who has been with the fund for several years.