Investing 101: What are mutual funds?

If you’ve ever wondered about a smart way to put your hard-earned money to work, then mutual funds may be a great option for you!

What is a mutual fund?

Good question! Think of it as a team effort in the world of investing. It’s like a big pot of money collected from a bunch of people. This money is then managed by experts, called fund managers. They’re like coaches who make smart decisions on where to invest the money to hopefully make it grow.

Diversification Magic

You know how people say ,”Don’t put all your eggs in one basket?”, well that’s where mutual funds shine! Instead of investing all your money in just one thing, mutual funds spread it out across lots of different investments. This is called diversification. So, if one investment doesn’t do well the others might make up for it.

Types of mutual funds

There are different mutual funds to choose from. Each has its own pros and cons. You should do your research.

Pro tip: look for Shariah-compliant mutual funds! There may be less Shariah-compliant mutual funds, but they are out there.

Start small, dream big

The cool thing about mutual funds is that you typically don’t need tons of money to get started. You can invest with a relatively small amount, which makes it a great option for beginners who are dipping their toes into the investing world.

How to get started
  1. If you are under the age of 18, you’ll need your parents’ permission and their guidance throughout the process.
  2. Learn about the different mutual funds and their performances.
  3. Once you have an idea of what you are looking for, pick a mutual fund that aligns with your goals.
  4. Put in money and let the fund managers do the rest. Remember that investing is a long-term game.

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