A mutual fund is a group of stocks and bonds. When you purchase a mutual fund, you are pooling your money with that of a bunch of other investors. As a group, you pay an expert to select which stocks and bonds to buy and to manage the fund by reallocating money or buying and selling stock when necessary. Ideally, an expert will do a better job picking stocks and bonds than you will, so your return on investment will be higher. Mutual funds are also a good idea because by spreading your money around, you reduce the impact that a decline in any one investment’s value will have on you overall.
Why might you invest in a mutual fund?
A
if you don’t want to diversify your investments
B
if you want an expert to pick your investments
C
if you want to control your investments by yourself
D
if you want to invest your money only in bonds