The Mutual Fund in Simple Terms SHP Financial

“Mutual fund” is a term that gets thrown around a lot when it comes to investing and retirement. If that’s a term you’re unfamiliar with, this article is for you.

On a basic level, a mutual fund is an investment tool where money from many people is pooled together to invest in a group of stocks, bonds, and other financial tools.[1]

The money that is in a mutual fund is managed by a professional money manager. That person allocates the money in the mutual fund toward financial options that align with the mutual fund’s goals. These goals are outlined in what is called a prospectus. Reading a prospectus can help you get a sense of what that particular mutual fund is aiming to do with its funds.[1]

A mutual fund’s performance is based on the portfolio of stocks, bonds, and other assets that make it up. If the parts of a mutual fund are doing well, then the mutual fund will do well. If the parts of a mutual fund are doing poorly, then the mutual fund will do poorly.[1]

You might gain money from a mutual fund in 3 ways:

  1. Income from dividends. Sometimes, the stocks in a mutual fund pay out dividends, and sometimes, these dividends are passed on to investors of the mutual fund.[1]
  2. When a mutual fund sells a security for a profit, those profits might be passed onto the investors of the fund.[1]
  3. Selling your shares in a mutual fund that has increased in share price.[1]

There are many kinds of mutual funds. Some focus on stocks, some focus on bonds, some focus on indexes, and some focus on other things or some kind of blend.[1] So it’s important to understand what your money is going toward! Not every mutual fund is built the same.

If you are interested in mutual funds as an investment option, one thing to keep in mind is that there can be many considerations when fitting them into a financial strategy. This article is only scratching the surface when it comes to planning to use mutual funds to meet your financial goals.

If you’re looking for someone to guide you through developing and managing your investment strategy, Click HERE to reach out to one of our professionals at SHP Financial today for a complimentary review of your finances. We can help you to understand a technical product like a mutual fund and help you to make informed decisions about where you want your finances to go.


The content presented is for informational purposes only and is not intended as offering financial, tax, or legal advice, and should not be considered a solicitation for the purchase or sale of any security. Some of the informational content presented was prepared and provided by tMedia, LLC, while other content presented may be from outside sources believed to be providing accurate information. Regardless of source no representations or warranties as to the completeness or accuracy of any information presented is implied. tMedia, LLC is not affiliated with the Advisor, Advisor’s RIA, Broker-Dealer, or any state or SEC registered investment advisory firm. Before making any decisions you should consult a tax or legal professional to discuss your personal situation.Investment Advisory Services are offered through SHP Wealth Management LLC., an SEC registered investment advisor. Insurance sales are offered through SHP Financial, LLC. These are separate entities, Matthew Chapman Peck, CFP®, CIMA®, Derek Louis Gregoire, and Keith Winslow Ellis Jr. are independent licensed insurance agents, and Owners/Partners of an insurance agency, SHP Financial, LLC.. In addition, other supervised persons of SHP Wealth Management, LLC. are independent licensed insurance agents of SHP Financial, LLC. No statements made shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional before investing. Both SHP Wealth Management, LLC. and SHP Financial, LLC. will offer clients advice and/or products from each entity. No client is under any obligation to purchase any insurance product.
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