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How do I pick a mutual fund?

Mutual funds are one of the best—and easiest—ways to diversify your investments.

Picture of Teddy Nykiel

Personal finance and education journalist

Long story short

Mutual funds are collections of stocks, bonds, and other types of investments. When you buy a mutual fund, you’re essentially investing in all of the stocks or bonds within the fund. There are thousands of mutual funds available focused on a variety of different investment goals.

  1. 1

    What are the different types of mutual funds?

  2. 2

    How do mutual funds work?

  3. 3

    How do I pick a mutual fund?

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1

What are the different types of mutual funds?

Between actively and passively managed funds—as well as index funds, stock funds, bond funds, and more—there are many different types of mutual funds. Here’s what you need to know about each.

Questions people ask

2

How do mutual funds work?

Mutual funds raise money from many investors and use it to buy stocks, bonds, and other types of investments. When you buy shares of a mutual fund, you get a slice of the fund’s portfolio. The value of your shares can go up and down, depending on the fund’s overall performance. 

Questions people ask

3

How do I pick a mutual fund?

With thousands of mutual funds available on the market, it can take research to find the best ones for you. As you evaluate different mutual funds, consider each fund’s investment objectives, past performance, and fees.

Questions people ask

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