If you’re currently investing through a bank or with an investment advisor, there are two questions that need to be asked.
- Do I own mutual funds?
- If yes, Why?
We’ll get to the reasoning behind the second question in a minute.
Mutual funds have been around for many years and began to gain widespread acceptance in Canada in the late 1980s. At the end of February 2021, Canadians had approximately $1.81 trillion invested over 5,700 different mutual funds.
What is a mutual fund
In its simplest form, a mutual fund is a pool of money. You, your neighbour, and thousands of other Canadians can invest within the same mutual fund.
Once there’s money in the pool, the fund manager decides what securities (stocks) to purchase. These securities generate returns in the form of dividends and gains.
These returns, either positive or negative, are then shared amongst the investors in the mutual fund.