Mutual fund
InvestingDefinition
A pool of money from many investors, used to buy a basket of stocks or bonds. When you buy a share of the fund, you own a tiny slice of everything it holds. Two main types: actively managed (a professional picks the stocks and charges a fee), or index funds (which just try to match a benchmark like the S&P 500, with very low fees).
Mutual fund prices only update once per day after the market closes. They have mostly been replaced in taxable accounts by ETFs, which trade all day like stocks and cost less. Mutual funds are still the dominant option inside 401(k) plans.
Mutual fund prices only update once per day after the market closes. They have mostly been replaced in taxable accounts by ETFs, which trade all day like stocks and cost less. Mutual funds are still the dominant option inside 401(k) plans.
Example
Vanguard Total Stock Market Index Fund (VTSAX) owns every publicly traded US company weighted by size. The fee is just 0.04% per year, meaning $40 per $100,000 invested. It updates once per day at 4 PM Eastern.
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