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High-Powered Investing All-in-One For Dummies, 2nd Edition by Consumer Dummies

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Chapter 3

Getting to Know Mutual Funds and ETFs

In This Chapter

arrow Sorting through mutual funds

arrow Considering some of your ETF choices

Making money trading single stocks is really hard for an individual investor. To reduce portfolio risk, you should hold about 30 different stocks, and it takes a lot of money and time to accumulate that many. You could buy individual bonds, as well, but minimum prices start at $1,000, making it costly to build a diversified portfolio of those. What if you don't have a lot of money to get started? What if you don't have a lot of time to spend analyzing securities and making trades? What if there were easier ways to invest? Well, there is an easier way: mutual funds.

Another option is exchange-traded funds (ETFs). In a world of very pricey investment products and very lucratively paid investment-product salespeople, ETFs are the ultimate killjoys. ETFs allow people of average means investment opportunities that don't involve shelling out fat commissions or paying layers of ongoing, unnecessary fees. And they've saved investors oodles and oodles in taxes.

In this chapter, you discover what you need to know to get started making money with these popular, powerful investment vehicles.

Going Over Mutual Fund Basics

Mutual funds are simply investment companies. ...

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