When you invest in a mutual fund, you are contributing to a pool of money that will be…

When you invest in a mutual fund, you are contributing to a pool of money that will be…

A. Given to hundreds of local charities in your area

B. Invested in a mix of stocks, bonds and money market accounts

C. Taxed based on each individual investor’s annual salary

D. Put into a separate savings account for your children to inherit someday

Answer – B. Invested in a mix of stocks, bonds and money market accounts.

Mutual funds consist vast portfolio of the bonds, securities and stocks which are overseen by the professional fund managers. The mutual funds are mainly traded on the exchanges and provide access to the investors towards a wide portfolio of the assets that are selected for funds. The professional fund managers aim at handle the mix of investments and the goals and assets of the funds are properly detailed within the prospectus. The individuals who deposit into the mutual funds from the paychecks can offer the automatic investments. The lower risks based on investments are faced by individuals in comparison to the purchasing the stocks and most of the funds also have the diverse holdings. When the individuals aim at setting their money aside for investing in the mutual funds the households can provide access towards the vast range of different investments. The investors can earn appropriate returns related to performance of the funds. Mutual funds are considered to be appropriate investment choices for people in middle America. When an individual purchases the mutual funds, they gain appropriate ownership based on underlying assets that are owned by the funds. The performance levels of funds are mainly dependent on the performances that are depicted by the collective assets. Moreover, value of shares can also decrease due to the decrease in value of the assets. The reason behind rejection of the first option “A. Given to hundreds of local charities in your area” is that the investments made in mutual funds do not have any relationship with the amounts that can be donated to the charities. Moreover, the rejection of the third and fourth options “C. Taxed based on each individual investor’s annual salary” and “D. Put into a separate savings account for your children to inherit someday” is based on the lack of their relationship with the aspect of mutual funds.