Over the last few years, mutual funds have grown in popularity to the point where finding an investor who's not using mutual funds is harder than one who is. The popularity of mutual funds is no surprise when you consider that they are one of the easiest investments to use and require very little knowledge of the financial markets. When it comes to mutual funds, there are 4 main advantages offered to every investor.
Mutual funds offering professional management of your investment dollars is the first advantage. Fund managers run mutual funds and they watch over your investment daily. It's difficult to find that kind of investment management without paying huge management fees.
In mutual fund investing, the second advantage is that mutual funds are extremely liquid. Any investor can sell his shares in a mutual fund any day that the stock market is open. Compare that to investing in real estate, CDs or even stocks that have low trading volume which can takes weeks to months to liquidate your stake. With liquidity of mutual funds, investors are able to get out of the investment quickly if they need to.
Mutual funds' third advantage is the diversification that they offer. Tens or even hundreds of different stocks, bonds, or money markets is what mutual funds invest in. Very high trading fees could be the result if you try to duplicate this type of diversification in your own portfolio, plus the huge headaches you're bound to get trying to monitor hundreds of stock positions. This will lead us to the 4th advantage of mutual funds which are lower fees.
Mutual funds have very low fees due to their ability to take advantage of economies of scale. Mutual funds can buy stocks in larger quantities since they're pooling the investment dollars of so many investors, leading to lower fees for mutual funds investors. Fees of some mutual funds are under 2 or 3%.
Mutual funds are growing at a feverish pace as more and more investors put their money in them. Mutual funds have great advantages being offered to the average investor up to the guy with a multi-million dollar portfolio.
Mutual funds offering professional management of your investment dollars is the first advantage. Fund managers run mutual funds and they watch over your investment daily. It's difficult to find that kind of investment management without paying huge management fees.
In mutual fund investing, the second advantage is that mutual funds are extremely liquid. Any investor can sell his shares in a mutual fund any day that the stock market is open. Compare that to investing in real estate, CDs or even stocks that have low trading volume which can takes weeks to months to liquidate your stake. With liquidity of mutual funds, investors are able to get out of the investment quickly if they need to.
Mutual funds' third advantage is the diversification that they offer. Tens or even hundreds of different stocks, bonds, or money markets is what mutual funds invest in. Very high trading fees could be the result if you try to duplicate this type of diversification in your own portfolio, plus the huge headaches you're bound to get trying to monitor hundreds of stock positions. This will lead us to the 4th advantage of mutual funds which are lower fees.
Mutual funds have very low fees due to their ability to take advantage of economies of scale. Mutual funds can buy stocks in larger quantities since they're pooling the investment dollars of so many investors, leading to lower fees for mutual funds investors. Fees of some mutual funds are under 2 or 3%.
Mutual funds are growing at a feverish pace as more and more investors put their money in them. Mutual funds have great advantages being offered to the average investor up to the guy with a multi-million dollar portfolio.
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