On the fence about whether to invest in mutual funds or individual stocks? You shouldn't be. For the vast majority of investors, mutual funds are the way to go. Barden Winstead in the Rocky Mountain Telegram reviews the inherent advantages mutual funds have over other investments:
Mutual fund investing may offer several benefits for individual investors. For starters, funds are managed by experienced, full-time money managers. They research market and economic trends, and then use the information they gather to make decisions about buying, holding or even selling securities to enhance returns.
Another distinct advantage is diversification, one of the basic tenets of successful investing. By spreading your money over a number of investments, a mutual fund doesn't depend on any one investment for your return. And on the other side of the coin, the impact of one poor performer on your entire portfolio is also reduced.
Mutual funds also offer several convenient features, such as automatic reinvestment, systematic payments and no-cost exchanges. If you choose to, you can automatically reinvest any dividends and capital gains (profits) to purchase more mutual fund shares. Mutual funds can also provide you with monthly or quarterly automatic withdrawals."
Winstead also cites mutual funds' liquidity and low minimum investment requirements.
Please note: Winstead works for a full service broker, and forgets to mention that many mutual funds are sold without loads of any kind. There is also no discussion of the main downside of mutual funds: expenses. Of course you can always find out if a particular fund has sales loads or is just expensive right here at MAXfunds.com by typing in the fund ticker symbol into our handy dandy Fund-o-Matic search window and then perusing our fund analysis page.
On the fence about whether to invest in mutual funds or individual stocks? You shouldn't be. For the vast majority of investors, mutual funds are the way to go. Barden Winstead in the Rocky Mountain Telegram reviews the inherent advantages mutual funds have over other investments:
Mutual fund investing may offer several benefits for individual investors. For starters, funds are managed by experienced, full-time money managers. They research market and economic trends, and then use the information they gather to make decisions about buying, holding or even selling securities to enhance returns.
Another distinct advantage is diversification, one of the basic tenets of successful investing. By spreading your money over a number of investments, a mutual fund doesn't depend on any one investment for your return. And on the other side of the coin, the impact of one poor performer on your entire portfolio is also reduced.
Mutual funds also offer several convenient features, such as automatic reinvestment, systematic payments and no-cost exchanges. If you choose to, you can automatically reinvest any dividends and capital gains (profits) to purchase more mutual fund shares. Mutual funds can also provide you with monthly or quarterly automatic withdrawals."
Winstead also cites mutual funds' liquidity and low minimum investment requirements.
LINK
Please note: Winstead works for a full service broker, and forgets to mention that many mutual funds are sold without loads of any kind. There is also no discussion of the main downside of mutual funds: expenses. Of course you can always find out if a particular fund has sales loads or is just expensive right here at MAXfunds.com by typing in the fund ticker symbol into our handy dandy Fund-o-Matic search window and then perusing our fund analysis page.
See also: MAXuniversity Part II