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What is a Mutual Fund?

I don’t always enjoy explaining things, so today I lean on the great content by one of my favorite YouTube channels, Millenial Money, to educate you on what exactly is a mutual fund?  While I know what it is, and have experience investing in them myself, I figured I’d let Shannah Game do the explaining.  A change of pace isn’t bad once in a while, am I right?

Enjoy this very quick video along with the transcription below, and as always, thanks for my visiting retirement investing website.

Mutual Funds Explained

Shannah Game: Hey I’m Shannah Game. This is your millennial money. Today we have another Q&A. What the heck is a mutual fund? A mutual fund is probably the first place where you’re going to start investing. It’s usually in a 401K with your company. You know when you get that booklet and you have all those different choices of what to invest in and you have no idea what any of that is? That’s a mutual fund. A mutual fund is a giant pool of money. Not the type of pool that you swim in. This is a pool of money. That money goes to buy stocks and investments that then is managed by a manager, a professional manager which is what you want. If you were to go in the stock market you’d probably pick a stock like let’s say Apple or Google and you’d invest in that stock. What happens if there’s a giant disaster in that company? You’re probably going to lose your money. In a mutual fund because it’s tons of companies put together in a particular fund, if something happens to that company you don’t need to worry. There’s lots of other companies there to pull up that fund. It’s a really great idea to invest in a lot a lot of companies.

Let’s say you really like tech stuff that’s cool. Find a tech stock. Maybe they have Apple, and Google, and Motorola and all of these companies combined together in this big pool and they’re all swimming together. That’s what you want. The best thing to remember about mutual funds is don’t do what a lot of people do. Number one, don’t pick whatever your friend is picking that’s bad. Maybe they have a different reason for why they’re picking it. Don’t just follow the crowd. Do some investigation, gain some knowledge. Number two, please don’t do this. I see this all the time. This is really bad. Don’t close your eyes and just pick a fund. That is the worst thing you can do. Again, gain some knowledge, understand what mutual fund is. You wouldn’t just put your money someplace that you’ve no idea what you’re doing. That’s what people do a lot of times with mutual funds. Be smart. You know how to do this.

What are topics that you want us to tackle on our next Q&A. Let us know in the comment box below. As always, thank you so much for tuning in. Please be sure to subscribe to our YouTube channel. If you want to hear more you can head on over iTunes and check us out on our podcast millennial money. Till then, see you next week.

Are you getting the camera two in it? I can see this part of the camera. That’s cool.

Tim Schmidt

A Florida-based Entrepreneur, Author, and Life Hacker, Tim Schmidt decided to take control of his retirement portfolio several years ago by setting up a self-directed IRA. This blog shares his thoughts and opinions on the top of retirement and investments. You can follow his career and travels on his Official Website as well as on his Instagram page.