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What is a mutual fund?

What is mutual fund? Often people have a dilemma in mind whether a mutual fund is same as stock or they are completely different investment tool.

As the name goes, a mutual fund is a fund where a pool of people contributes to build a fund.

For example, 10 people each having 100$ contribute to a fund a fund called 'Better investor fund' . So the 'Better investor fund' fund has 1000$ at its disposal to invest somewhere. Every fund has a manager called as 'Fund Manager' to manage the money put by investors. The 'Fund Manager' takes all decision with respect to how to use the money available in the fund. 

There are different type of mutual funds available in the market. 

Mainly:-

·        Stock-based mutual funds
·        Fixed income mutual funds 
·        Monthly income mutual funds 
·        Tax saving mutual funds 
·        Hybrid mutual funds 
·        Balance mutual funds 
·        Sector mutual funds
·        Floating rate mutual funds 
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