How You Can Make Money Grow Faster Through Mutual Funds

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Mutual funds will generally respond better than money market accounts or savings accounts. Discover how mutual funds represent a selection of different equities with help from a portfolio manager in this free video on personal finance and money management.

Part of the Video Series: Stocks & Bonds
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Video Transcript

Okay, so you're wondering how can you make money faster investing in mutual funds. I guess the first question is versus what else are are are you looking at? If you're looking at say, a money market account, or a savings account mutual funds generally will will respond better. You really depends on the mutual fund that you're looking at. Mutual funds are invested in the stock market. They represent a whole selection of different equities that they've purchased across all different sorts of industries, or one very focused industry, and those mutual funds will have reported returns over the last year, three years, five years. It really depends how long they've been around. But you want to look for a good diversified mutual fund that represents a lot of different companies, and possibly a lot of different countries. And the return on that in the market, classically, is more than you will make in a savings account, and so forth. There the risk is, and the thing you should be aware of is that the market can go down. When the market goes down you will lose money in in your mutual fund, you'll lose value in it, and you'll lose money if you take the money out. If you were to leave it in and wait for the market to come back up then you'll make some money again, but of course, the problem there is the time, and it's not liquid. So, if you want liquid money you would take a lower rate of return, and invest in a, say for example a money market account. If you cannot worry about the money for a while and let it make money in the in the stock market then that's great. Just understand that you may have to wait through a down time to get back up.

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