Mutual Funds

Another form of a safer investment compared to stock trading is through mutual funds. Although most of all mutual funds available still contains stocks, the level of exposure is relatively safe.

A mutual fund is a pooled investment with many investors' money being combined in order to give the fund manager more leverage than an individual investor could have alone. Mutual funds usually are comprised of companies from many sectors of the market and use their diversification to minimize losses. Mutual funds are characterized by the fact that a fund manager tightly manages them. The fund manager directs which corporations' stocks are included within the fund and to what degree. Mutual funds have the highest cost associated with them because they are so carefully managed.For the vast majority of short sellers, mutual funds are not something they need to be concerned with because they focus more on the long term.