5 H A P T
THE SHOPPING MALL OF INVESTMENTS
utual funds are attractive to investors for many reasons. First, they offer the investor the ability to enjoy the benefits of investing in multiple compa- nies. Second, investors may be able to purchase more shares of a mutual fund than of individual stock. Third, mutual funds offer investors the chance to diversify their holdings simply by the type of fund they own. M
Mutual funds have become increasingly popular over the past decade and a half. You can’t even turn on your television set without seeing an ad for a mutual fund company like Oppenheimer or Janus. But many people don’t understand what a mutual fund is, how it works, and what its advantages and disadvantages are.
A good analogy for mutual funds is that they are like shopping malls. If you own one store and it goes bankrupt, you lose everything.