Investors desire to minimize specific risk is why mutual
    funds got started.

Advantages:
    1. Mutual funds permit investors to diversify with out a lot of money
    2. The money in a mutual fund is managed by professionals
    3. Mutual funds provide instant liquidity (mutual funds are open ended)

Fact:  It takes 12 carefully chosen stocks to get rid of most specific risk (after 12 stocks the benefits of diversification begin to diminish)

    If you buy stocks in round lots (to save in commission) 12 stocks at an average of $60 a share would cost = $72,000

    Therfore the theory is that if you are not investing $72,000 than you should invest in a mutual fund if you want to be properly diversified

Types of mutual funds:

Passive fund:
    A fund that tries to match the market
    Uses CAPM
    Cheap
    Always in market
    No specific risk
    Beats most of the Active funds

Active fund:
    A fund that tries to match the market
    More active so more expensive
    Can shift out of the market
    Chance to do better (or worse) than the market
    Takes chances with specific risk
   Attempts to selects undervalued (avoids overvalued) stocks.

NAV per share = Divide Portfolio by # Shares out:

                     Total value of portfolio
    Number of shares outstanding in the fund

 Load fund – Buy at offer price and sell at the NAV
 No load – Buy and sell at NAV

Mutal funds are always in family of funds so when your risk tolerance changes you will be able to switch into a mutual fund (within that company's family of funds) that is best suited for your goals.