{"id":210629,"date":"2021-03-28T20:00:00","date_gmt":"2021-03-29T00:00:00","guid":{"rendered":"https:\/\/milesopedia.com\/news\/the-basics-of-mutual-funds-in-canada\/"},"modified":"2024-05-31T13:17:24","modified_gmt":"2024-05-31T17:17:24","slug":"the-basics-of-mutual-funds-in-canada","status":"publish","type":"post","link":"https:\/\/milesopedia.com\/en\/personal-finance\/investing\/the-basics-of-mutual-funds-in-canada\/","title":{"rendered":"The Basics of Mutual Funds in Canada"},"content":{"rendered":"

[vc_row][vc_column][vc_column_text el_class=”checkmarks”]If you’re investing for the first time, you may have heard about mutual funds but have no clue what it even means!<\/p>\n

Mutual funds are a collection of investments, including bonds, stocks, other funds owned by a group of investors, and a portfolio manager. The portfolio manager manages the fund daily and will buy or sell investments according to its investment goals. A mutual fund can either invest in various investments or focus on a specific type of investment.<\/p>\n

By purchasing a mutual fund, your money gets pooled along with other investors, and you essentially buy shares or units of the fund. The fund will issue new shares or units as more people invest.<\/p>\n

Mutual funds can get held in a Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA), and non-registered accounts.<\/p>\n

Canadians can gain access to a diverse range of mutual funds.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_custom_heading el_id=”how_to_make_money_from_a_mutual_fund” text=”How to Make Money From a Mutual Fund” google_fonts=””][vc_column_text el_class=”checkmarks”]There are two methods that you can earn money from a mutual fund in Canada:<\/p>\n

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  1. Capital gains<\/strong> \u2013 You will have a capital gain if your mutual fund gets sold for more than what you paid for it. You will have a capital loss if your mutual fund gets sold for less than what you paid for it.<\/li>\n
  2. Distributions<\/strong> \u2013 Depending on which fund you bought, you can receive capital gains, interest, distribution of dividends, or any other income the fund earns from its investments. You get given a choice to reinvest the distributions back into the fund or receive the cash.<\/li>\n<\/ol>\n

    Ensure you understand the fees and expenses associated with a mutual fund, as Canadians get subjected to some of the highest in the world! These fees and expenses reduce your investment’s return. You will pay for some of these fees, and the fund will pay the others.[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_custom_heading el_id=”the_pros_of_mutual_funds” text=”The Pros of Mutual Funds” google_fonts=””][vc_column_text el_class=”checkmarks”]Let’s look at a few pros of a mutual fund in Canada:<\/p>\n