Investing in a mutual fund is an easy and convenient way to increase the funds you have. Mutual fund participants receive a share of a common portfolio of financial instruments managed by a professional team. The created portfolio corresponds to predetermined investment goals and strategy. Investing in a mutual (contractual) fund has a number of advantages, including: professional management, high liquidity, portfolio diversification, transparency and tax relief. Mutual funds are designed for people with a longer investment horizon.

Mutual funds are attractive to investors because they offer diversification i.e. investments in different types of assets, thus minimizing the risk. The mutual fund is a ready-made solution for anyone who wants to invest, but does not have the time and expertise to select different types of assets to include in their portfolio. Some mutual funds can invest in thousands of different companies. Mutual funds are highly liquid i.e. investors can easily and quickly buy and buy back shares of them.

There is a great variety of mutual funds. Some of the main ones are: investing mainly in bonds; investing mainly in shares; funds that distribute assets into shares and bonds, as well as so-called index funds.

Funds that invest in bonds hold fixed income securities. These bonds pay regular interest to their holders. The mutual fund distributes dividends to its investors.

Funds that invest in shares of different companies seek to benefit mainly from the rise in shares over time. This type of funds often have a strategy for investing in companies based on their market capitalization i.e. the total value of the issued shares of the company.

Balanced funds consist of a combination of bonds and shares. The distribution of shares and bonds in these funds varies depending on the fund's strategy.

Index funds follow the movement of a relevant index, such as the S&P 500 or DAX. This type of funds is managed passively i.e. the shares of the companies in the index fund are the same as those of the monitored index.

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**The material is of an educational nature and is not advice for buying or selling financial assets. Trading on the stock markets can be extremely risky and bring not only profits but also serious losses for investors. Make sure you are fully aware of all the risks before you decide to invest in the financial markets. If possible, it would be good to consult with certified financial advisors.