AboutWarren Boroson Expertise Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.
Experience Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.
Expert: Warren Boroson Date: 2/16/2006 Subject: mutul fund
Question sir,
What is mutual fund? How does it function? How can mutual fund helps to an ordinary people? How can one invest in a mutual fund? What are benifits of mutual funds? Please tell clear and breaf answers.
Answer Dear T. Marimuthikumar:
A mutual fund is basically a safer way to invest in stocks than buying stocks individually.
A fund pools money from a group of investors. The money is used to buy a variety of stocks and (perhaps) to pay a money manager to decide what to buy, and when, and what to sell, and when. When you invest in a mutual fund, you become part-owner of all the securities that the mutual fund owns.
So you get a LOT of stocks. Which means that your portfolio is safer. That's one major benefit of a mutual fund.
And you may get someone really capable watching out for your investments -- like Bill Miller or Mario Gabelli or David Winters or Peter Langerman or Marty Whitman. A second major benefit.
To invest in a mutual fund, you need (a) money to pay the minimum first investment and (2) an 800 number to telephone the fund to ask for a prospectus and an application.
You can get an 800 number by calling 800-555-1212, and providing the name of a fund --like Vanguard or Fidelity or T. Rowe Price.
Before investing in a mutual fund, read up on the subject. The Bible is Morningstar Mutual Funds, a newsletter that you can find in libraries.
To get started properly, invest in a no-load fund, a fund where you can send in your money directly, without a stockbroker or other middle-man.
My favorite family is Vanguard. You might start with its STAR fund, which requires a first investment of only $1,000.
But don't invest in it until you read what M* writes about it.
