Let's recap what we've learned in this tutorial:
  • A mutual fund brings together a group of people and invests their money in stocks, bonds, and other securities.
  • The advantages of mutuals are professional management, diversification, economies of scale, simplicity and liquidity.
  • The disadvantages of mutuals are high costs, over-diversification, possible tax consequences, and the inability of management to guarantee a superior return.
  • There are many, many types of mutual funds. You can classify funds based on asset class, investing strategy, region, etc.
  • Mutual funds have lots of costs.
  • Costs can be broken down into ongoing fees (represented by the expense ratio) and transaction fees (loads).
  • The biggest problems with mutual funds are their costs and fees.
  • Mutual funds are easy to buy and sell. You can either buy them directly from the fund company or through a third party.
  • Mutual fund ads can be very deceiving.

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