Mutual Fund is an investment company that pools, collects or combines investors' money and uses this to buy portfolio of securities such as stocks, bonds, commercial paper or any combination there of. Like any other companies, mutual funds issue shares of stock and sell these shares to public investors in exchange for cash.

Mutual Funds are ideal investment vehicles that allows your hard-earned savings to grow and assist your retirement, children's education or build up long-term cash resources.

Advantages of Investing in Mutual Funds

1. Diversification - For low minimum investment, an investor can own thousands of individual security issues through a single fund and spread risk over a substantially broader base. A fund may invest no more than 10% of its assets in any single security except for government securities to reduce risk. This provides wider diversification, limiting potential losses.

2. Professional Management - The fund has knowledgeable investment managers, with expertise in buying companies' or government's securities. These are fund managers with investing experience, market knowledge and proven strategies.

3. Convenience - Investors are relieved of day-to-day tasks involved in researching, monitoring the market and buying and selling securities.

4. Liquidity - You can purchase and redeem your shares on any business day, at the current price, which may be more or less than the original cost. It makes it easier and cheaper for you to convert your shares to cash, or exchange your shares for other shares you may prefer.

5. Security - Mutual Fund companies are regulated by the Securities and Exchange Commission (SEC). SEC requires all mutual funds companies to provide their prospectuses to all potential investors before effecting a purchase. The prospectus contains the fund's objectives, management, fees, past performance, and details of operation.

6. Lower investment outlay - Mutual funds allow investors to place small amounts of funds and gradually add to their investment.

7. Tax exempt - Proceeds from the sale of mutual funds are exempted from the computation of gross income under the Comprehensive Tax Reform Package of 1997.