Page 39 - Intelligent Investing (3)
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Mutual Funds/Index Funds
● Funds are a group of money pulled together by investors to purchase stocks,
bonds and other securities
● Bought and sold at Net Asset Value (NAV) which is based on the value of
securities inside the fund
● Composed of a variety of securities, sometimes more than 100 holdings
● Similar to buying a variety pack of stocks like a variety pack of chips at the
store
● Good for diversification but the cost of a mutual fund is known as the expense
ratio because someone is working to constantly update the investments in the
fund
● Index Funds hold a lower cost to shareholders and the same benefits granted
they aren’t updated as frequently as a mutual fund, Index Funds > Mutual Funds
