Mutual Funds: Mutual funds have become increasingly popular over the past 20 years, with the number of investors rising to 80 million people. That equates to half of American households owning mutual funds, and most have basic knowledge on the subject. A mutual fund is a group of stocks and/or bonds put together, to invest in as one, and similar to stocks, investors own shares, which means partial ownership of the fund. Making Money with Mutual Funds: Since mutual funds are a mix of stocks and bonds, investors tend to receive dividends on stocks and interest on bonds. While not as direct as when you invest in them, the funds distribute these dividends and interest to investors. - In the event that the fund sells securities, at a profit, a capital gain occurs, which in most cases is paid to investors. - If the price of the fund increases and remains unsold by a fund manager, it is possible to sell the fund joint with a profit. Advantages of Mutual Funds – One of the major advantages of mutual funds is that it is controlled by a team of professional investors and managers, thus attracting small investors, who do not have the knowledge or time to build their own investment portfolio. - Mutual funds can be considered less risky than stocks and bonds, since you invest in numerous stocks/bonds at the same time, and a loss will not have as big an impact as when you invest in just one. This means that the more shares you own, the smaller the loss, as it can be minimized by the gains of others. Furthermore, with mutual funds, you can invest in various sectors, thus reducing the possibility of large losses. Unlike individual transactions, mutual funds buy and sell a large number of securities at once and... half the paper. ......testing style or finding a specific fund that interests you, you can purchase it in numerous ways. Some mutual funds can be purchased directly through fund companies. Most commonly, funds are sold through financial institutions such as banks, financial planners, brokers and insurance agents. The downside of this route of purchasing a mutual fund is that you tend to pay the transaction fee and service. To avoid these costs, you can purchase funds through institutions or programs that do not charge for the service. Also commonly known as “fund supermarkets”, you can purchase numerous types of funds from different companies. Among the best-known examples of such programs are Fidelty's FundsNetwork, Vanguard's FundAcess, and Schwab's OneSource. Interestingly, although it is possible to purchase funds from a broker, many large-scale broker firms offer similar programs.