A mutual funds buys stocks and bonds and then sells shares in those securities to the public. A mutual fund is a company that pools money from many investors and invests it in securities such as stocks, bonds, and short-term debt. The mutual fund's portfolio is made up of all of its holdings.
Mutual fund shares are purchased by investors. Most mutual funds fall into one of four categories: money market funds, bond funds, stock funds, and target date funds. Each type has distinct characteristics, risks, and rewards. Bond funds are riskier than money market funds because they seek higher returns.
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