What is Mutual fund?

Mutual fund or it’s also called as unit investment trust, it’s pool of funds which purpose is to invest in stocks and shares. The pool is made out of contributors which place a specific amount of money in the pool and together with other investors they can share the profits and losses together. This pool is managed by professionals like money managers and such. Where do they invest this sum it depends on the objectives which is detailed in the brochure. The gathered money can be invested in corporate securities or commodities or in options. Usually the manager of this fund charges a fee which is 1-2% from the yearly profit, also there might be additional costs. The profit is distributed depending on the invested capital by each person and this is calculated percentage wise. The main advantage of this mutual fund is that with even a small amount of investment a person can gain significant profit while not using this fund he wouldn’t be able to succeed.