mutual fund
A pool of money collected from many investors that is used to buy a mix of stocks or bonds all at once. When you invest in one you own a small piece of everything inside it.
Where it is explained in full
Funds: what you actually own when you buy one. Both kinds are baskets. The differences are in how you buy them, how they are priced, how they handle taxes, and what it costs to hold them for decades.
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Words beside it
- bond fund
A pool of money collected from many investors that a fund company uses to buy a large number of different bonds at once. You own a small slice of that whole pool instead of one single bond.
- Emergency fund
Cash set aside for the unexpected, usually three to six months of expenses.
- fund
A pool where many investors put money together so a manager can buy a large collection of investments on everyone's behalf. You own a small slice of the whole pool rather than any single investment directly.
- Index fund
A fund that holds the components of a published index in the same proportions, changing only when the index does.
- Money market fund
A fund holding very short term debt; near cash, small yield.
- refund
This is money the government sends back to you when you paid more tax during the year than you actually owed. Filing a return is how you get it.
- Sector fund
A fund holding one industry. Concentration wearing a fund's clothes.
- Target date fund
A fund that holds a stock and bond mix and shifts toward bonds as its year approaches.
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