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I remember when I was first trying to learn about a mutual fund. Thanks to the internet, I was able to harvest an abundant amount of information at a very basic level of description. Even I could understand it. I include several links below to get you started
A mutual fund is not a specific investment. They can vary greatly in the types of investments they participate in. Mutual funds can include any of the following combinations in a short or long term strategy: stocks, options, warrants, futures, commodities, | government bonds, corporate bonds, cash, money market investments, real estate investments, foreign investments, precious metal, and more. These strategies are explained in the prospectus of a mutual fund.
You do not have to track any of the investments inside a mutual fund. That is the fund manager's job. All you have to do is continuously place money into the mutual fund account.
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(warning, this is my opinion)
Don't get caught up in mutual fund 'loading' for long term investments. Loading is a distraction for long term investors. There is reason for charging you money to manage your investments. Some aggressive investments are costly to cover transactions, but are long term winners. For example, I give two mutual funds $1000 of my money to invest by their ways. In five years, 'Fund A' gives me back $2000, but charged 5% somewhere in the middle to achieve it. 'Fund B' is a 'no-load' fund, but only gave me back $1800. I don't care that 'Fund A' took more money from me because they required it to achieve the better gains. | Many articles and advisors in personal finance advertise the term 'no-load' for mutual funds. It is often irrelevant to a long term investor. The short term investor may want to consider loading, but it gets more complicated in figuring out the best strategy.
Some mutual funds, like Fidelity Destiny, have a 50% front load for an initial investment startup period. This high front load strategy has more purpose to it than just helping the manager pay for transactions. I'll briefly describe it. The high front-end load keeps speculators out to prevent unecessary price fluctuations in the fund price. It also allows the fund manager to keep capital during periods of value buying (i.e. the market is going down, adjusting, correcting), which is typically a period when their customers try to withdraw and take important capital away from the manger.
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