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Why Should I Invest in a Mutual Fund

By investing in a mutual fund investors significantly decrease the risk of losing their money. This security of investment is similar to the one found in certificates of deposit or other investments of a fixed income type. Additionally, if you want to make your investment grow substantially, mutual funds will provide you with the desired levels. In case you are too busy to manage your investment yourself, by investing in a mutual fund you are provided with the services of a professional management team, which will diversify your portfolio from time to time.

As compared to certificates of deposits and other investments of fixed income character, mutual funds offer higher interest rates. Even though fixed income investments provide security, they are of a fixed potential of growth. On the other hand, you can achieve greater potential of growth through the investment in individual stocks, but putting your money in just one stock greatly increases the possibility of losing everything you have. Additionally, private brokers and investment advisors provide advisory services, which unfortunately are for a fee, which in turn represents an expense that is overcome through the investment in mutual funds.

Why to choose a mutual fund investment

Mutual fund investing has greatly gained popularity in recent years. Statistics show that more than $6 trillion is being invested in mutual funds and every one of two US households allocate money for mutual fund investing. The major reasons for the high popularity of mutual funds are:

  1. The achievement of capital growth and income preservation is greatly facilitated in an easy and less expensive way.
  2. Diversification and professional management services are automatically provided through the investment in a mutual fund.

Since mutual funds represent financial entities that accumulate the money of many investors for the purposes of investing and the provision of diversification, some of the target investments are:

  • Stocks
  • Bonds
  • Money market securities
  • A combination of the above

One of the major advantages of mutual funds is the fact that as an investor you get professional management of your assets and record keeping of your account. Additionally, mutual funds provide for a high degree of diversification experienced by no other investment option. What is more, most mutual fund companies allow for small initial investments, which can gradually be increased to higher levels. As a result even small investors can invest in mutual funds.

Finally, mutual funds come in a variety of forms representing different levels of risk tolerance, investor objectives and growth potential.

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