When investors invest in a mutual fund, they give money to a company that spreads their investment out over multiple securities to create a diversified portfolio – typically stocks and bonds.
Many view mutual funds as a safe investment because one poorly performing inventory doesn’t translate to financial ruin. Additionally, mutual funds make it more affordable for investors to invest in high-value securities because the fund pools the resources of all investors.
However, investors must trust that those who administer the fund make good choices and that investment advisors provide the best guidance for their clients. This isn’t always the case. Financial advisors can and do employ deceitful business practices to lure investors into allocating their money to specific funds while they collect commissions.
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