Mutual Funds come in two varieties:

Open end: These funds are investment companies that continually offer new shares of a fund to the public. Mutual funds sell their shares at the fund net-asset value per share which may be regarded as the value of the investment in the fund.

Closed end: Unlike the open end funds, these funds are traded in a secondary market and work as follows. The fund issues only a limited number of shares and when the company publishes information about their net-asset-value, the shares get traded on a over-the-counter market or a secondary market. An important feature about closed end funds is that their market values and their net-asset-value may differ. This happens because the NAV of the investment in the fund may be different than the value per share that investor are willing to pay for the fund.

Balanced Funds: These funds have as objective to provide a balanced investment combining safety, income, and capital appreceation. The idea of balanced funds is to invest in a mixture of equities and fixed-income.

Bond Funds: Bond funds or “income’ funds have as a purpose to provide a current income. These funds can pay higher returns than money market or deposits, but have risk. In addition to its main purpose the funds may also appreciate in value.

Custodian: Is the financial institution that has the legal responsibility for a customer's securities. Custodians also imply management as well as safekeeping.

Equity Funds: Equity funds invest in common stocks, and represent the largest category of mutual funds. The type of investment in this class of funds is long-term captital growth with some income.

Global Funds: These are funds that invest all over the world including your home country. It can be safe, and also very risky depending on where you invest.

Hedge Funds: A fund invested in a way to provide balance against risks taken as a result of other investments.

Index Funds: Index funds are a type of mutual fund that replicate the activity of a market index such as S&P 500 or DJIA. index fund investors believe that most managers won’t beat the market. Investors then benefit in a form of low fees from the market returns.

International Funds: Are funds that invest only outside your home country.

Manager: The individual responsible for making decisions related to any portfolio of investments.

Money Market: This is a type of investment that consists in a short term debt, mostly T-bills. Investing in the money market won’t produce high returns, but is safe, so investors won’t have to worry about loosing their principal.

Net Asset Value (NAV): Is the total value a fund's portfolio less liabilities. The NAV is usually calculated on a daily basis .

Pension Funds: Are long term investment funds arranged specially for retirement. Payouts to the beneficiary of this fund can vary depending on the type of plan. Usually the capital is paid monthly and it cannot be collected until a certain amount of years.