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Mutual funds are portfolios of bonds, stocks, and other investments that are managed by professionals. The funding for mutual funds comes from people who are willing to pool their resources to get access to a wider range of investments than what they can get on their own. In practice, this means interested individuals buy shares in mutual funds, which represent portions of the investments held by those same mutual funds. This investment vehicle can be a powerful investing tool, so long as individuals know what they are doing.

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1. Figure Out Your Investing Goal

If you are interested in mutual funds, start by figuring out what you want from your mutual fund investment. One person might want to increase their current income, while another person might want to maximize the value of their investments in the long run. Likewise, there are plenty of people who invest to fund a future cost, such as higher education. Keep in mind the goal for your mutual fund investment is not necessarily the same as the goal for your investment portfolio.

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