If you’ve ever participated in a fundraiser then you probably understand what a fund is and just don’t know it. It’s a sum of money that gets collected and used for a specific purpose. In investing, a fund is created by pooling your money plus other investors’ money into, well, a fund. Usually, a fund manager will hold the cash in the fund and use it to buy and sell investments.

Example: A mutual fund is a type of fund. In that mutual fund are securities such as stocks and bonds. You invest in the fund along with tons of other people and in return, depending on how much you invested, you are part owner. This means that if the fund generates cash, part of it’s yours.

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