What Are Mutual Funds? And How do they Work?

Assalamu Alaikum girlie🌺

It’s officially Q3 which means we’re kicking off our first ever Investing Series!! For the next few weeks, we’ll cover a specific topic about investing that’ll bring you one step closer to building wealth Inshaa Allah.

Have you ever wondered what mutual funds are and how they work? Today, we’ll cover:

• What is a mutual fund?

• How do mutual funds work?

• How to Vet a Mutual Fund

  Let’s dive in!📈

What Are Mutual Funds? 

A mutual fund is like a big pot where many people (investors) put their money together.

This pot of money is then used to buy a variety of stocks, commodities or other types of assets. When you invest in a mutual fund, you own a small piece of all the investments in that fund.

How Do They Work?

1. Pooling Money Together: Investors pool their money into a single fund.

2. Professional Management: A professional fund manager decides how to invest that money, aiming to grow it over time.

3. Diversification: The fund buys a mix of different investments, reducing the risk of losing money since it’s spread out.

4. Shares: You buy shares of the mutual fund, which represent your portion of the total investments.

How to Vet a Mutual Fund 

Before investing in a mutual fund, here are some things you should consider:

1. Fund Performance: Look at the fund’s past performance over several years. Consistent returns can indicate a reliable fund.

2. Fees: Check the expense ratio, which is the annual fee you’ll pay to the fund to cover costs like portfolio management, administration, etc. Lower fees mean more of your money stays invested.

3. Fund Manager: Research the experience and track record of the fund manager. A skilled manager can make a big difference.

4. Investment Strategy: Understand the fund’s investment strategy. Does it align with your financial goals and risk tolerance?

You can use apps like Zoya to get some of these answers.

And that, my friend is one of many investment tools that you can use to build wealth.

Got any questions? Schedule a 30-min call let’s get you straight! (It’s FREE- no strings attached)

If not… I’ll catch you next week Inshaa Allah

Spend wisely and make money,

Fatimah ✨

p.s. respond to this email with any topic you’d like to learn about have)