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{"id":411,"date":"2022-03-30T01:48:00","date_gmt":"2022-03-30T01:48:00","guid":{"rendered":"https:\/\/affordingfreedom.com\/?p=411"},"modified":"2022-03-31T15:10:57","modified_gmt":"2022-03-31T15:10:57","slug":"investing-101-funds-passive-income-made-easy","status":"publish","type":"post","link":"https:\/\/affordingfreedom.com\/investing-101-funds-passive-income-made-easy\/","title":{"rendered":"Investing 101 — Funds: Passive Income Made Easy"},"content":{"rendered":"\nHello and welcome to the wonderful world of passive income! There are many ways to generate passive returns, but my personal favorite is the stock market. The stock market can often feel like an overwhelming place full of gamblers and “gurus” alike. Because of this, investing in the stock market can feel incredibly daunting, exciting, scary, and everything else in between. What if it didn’t have to be? The stock market has ways of generating passive income that create consistent, safe returns over the long haul. If that sounds good to you, then you are in the right place! Today, we will differentiate between three types of funds: mutual funds, exchange-traded funds (ETF), and index funds. We will go over what they are, the benefits of each, and how they can be a part of your passive income strategy!<\/p>\n\n\n\n
Purpose of Funds:<\/h2>\n\n\n\n
So let’s start with the basics; why the heck invest in a fund, and can it really generate passive income? When you hear about any type of mutual fund, index fund, or ETF, think of diversification. The basic idea of diversification is not putting all your eggs in one basket. When you have one asset, let’s say a stock, and that stock goes down, your entire investment goes down. If you have multiple stocks and one goes down, not as big of a deal. Diversification seems like a bright idea, right? The hard part of investing in the stock market for the individual investor whose job is not managing stocks is having a well-diversified portfolio of investments. <\/span>The reason funds exist is so individual investors can have a well-balanced portfolio without the headache of selecting and maintaining an actively managed portfolio.<\/p>\n\n\n\n