Definition of 'Fund'
There are many different types of funds, each with its own set of risks and rewards. Some of the most common types of funds include:
* **Stock funds** invest in stocks, which are shares of ownership in a company. Stock funds can be either actively managed or passively managed. Actively managed funds have a manager who makes decisions about which stocks to buy and sell. Passively managed funds track an index, such as the S&P 500.
* **Bond funds** invest in bonds, which are loans that are issued by governments or corporations. Bond funds can be either short-term or long-term. Short-term bond funds invest in bonds that mature in less than one year. Long-term bond funds invest in bonds that mature in more than one year.
* **Cash funds** invest in cash, such as money market funds and certificates of deposit. Cash funds are the least risky type of fund, but they also offer the lowest returns.
When choosing a fund, it is important to consider your investment goals, risk tolerance, and time horizon. If you are not sure which fund is right for you, it is a good idea to consult with a financial advisor.
Funds can be a great way to save for your goals, but it is important to understand the risks involved before you invest. Talk to a financial advisor to learn more about funds and how they can help you reach your financial goals.
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