David John MarottaDavid John Marotta is the President of Marotta Wealth Management, a fee-only financial planning and asset management firm in Charlottesville, Virginia. He is an oft-quoted writer and speaker on financial matters and his weekly financial column can be found at www.eMarotta.com
Host: What is a mutual fund?
David Morotta: A mutual fund is run by a mutual fund company and they collect all of the investor s money together and then they make purchases on the investor s behalf. Some of the very earliest mutual funds were run in England and they were in the emerging market of America, back in the 1700s. So, all of that the companies that ended up sending over business to get started in America that was all part of mutual fund companies.
So, when you pull investments together, you decrease your risk because you can put the money in a lot of different places, and you also have the expertise of the people who are running the mutual fund itself.