Very similar to an ETF. A collection of stocks, bonds, or other investments bundled together and managed by a professional. The main differences: mutual funds don’t trade throughout the day the way ETFs do (they update their price once daily), and they tend to cost a bit more to own than ETFs.
- $300From each paycheck
- PooledWith other investors
- 4 PMPriced once a day
Walk through the numbers
Your 401(k) offers a target-date mutual fund. You put in $300 each paycheck, and after the market closes the fund buys shares at that day’s price.
Mutual funds are common in workplace retirement plans, so knowing how they work helps you pick well from your plan’s menu.
Related terms
For education only and not personalized investment advice. Examples are hypothetical illustrations, not a prediction or a promise of results. All investing involves risk, including the possible loss of principal.