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• C HAP T E R •
How You Could Make Your
Million Owning Mutual Funds
What Are Mutual Funds?
A mutual fund is a diversified portfolio of stocks managed by a professional
investment company, usually for a small management fee. Investors pur-
chase shares in the fund itself and make or lose money based on the com-
bined profits and losses of the stocks within the fund.
When you purchase a mutual fund, what you’re buying is long-term pro-
fessional management to make decisions for you in the stock market. You
should probably handle a mutual fund differently from the way you handle
individual stocks.
A stock may decline and never come back in price. That’s why you must
always have a loss-cutting policy. In contrast, a well-selected, diversified
domestic growth-stock fund run by an established management organiza-
tion will, in time, always recover from the steep corrections that naturally
occur during bear markets. The reason mutual funds come back is that they
are broadly diversified and generally participate in each recovery cycle in
the U.S. economy.
How to Become a Millionaire the Easy Way
Mutual funds are outstanding investment vehicles if you learn how to use
them correctly. However, many investors don’t understand how to manage
them to their advantage.
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