LIFE

What is a mutual fund, anyway?

A mutual fund is an investment that pools money from a bunch of different people to buy securities—a fancy way of labeling any sort of asset that is traded on the stock exchange, like stocks and bonds. When you put your money in a mutual fund, you pick which professional will manage your investment and what sort of things you want your money to be invested in.

Why is it a good place to put my money?

Mutual funds are a safe investment option because they are diversified, which means that whichever financial pro manages your money will pick and choose an assortment of places to put your hard-earned money—think stocks for big corporations and government bonds. Since you don’t need the money right away, these sorts of long-term investments are a great option. They’re low risk with good reward—far better than your standard savings account.

Where do I start?

Ask Mom and Dad to take you to the bank they use, and set up a meeting with the financial advisor there. Or if they have investments themselves, chat with them and see if they could connect you with their own investment manager.

Are you thinking about investing your money? Tell us in the comments!

by Brittany Taylor | 2/1/2016