As with any other type of investment, there are mutual fund pros and cons. Many investors swear by them while others won’t even consider including them in their portfolios – however, regardless of which school of thought you tend to subscribe to in this matter, there is no denying that mutual funds offer a host of benefits which are not available when otherwise dealing in stocks.
As the old saying goes, there is safety in numbers – and when you are investing in a mutual fund, you are actually pooling your resources with other investors to buy bonds and/or stocks and effectively sharing the risks. Even at the cost of shared benefits, many will agree that the security obtained this way is well worth it. Diversification is key in minimizing your risks while investing. Having your money spread across various different industries and / or investment types will help if one of these areas takes a blow, and at the very least you won’t be losing everything at once. One of the mutual fund pros is that you do not need to worry about that – the fund ensures this diversification for you. In most cases, even when investing in multiple funds you won’t end up with too similar bonds or stocks, unless you have searched specifically for such funds. Also one of the mutual fund pros is the fact that the fund manager is generally a trained professional, able to make the best decisions in any given situation. This means you won’t need to hire your own financial advisor in order to make good use of your investment, and the savings could easily be converted into additional investment funds, reaping you even higher profits!
Furthermore, the manager will always have the fund’s best interests at heart and will pursue them relentlessly while you are free to take care of your regular activities. One of the greatest mutual fund pros is that the transaction fees are much lower than normal. As many seasoned investors know, the transaction fees can sometimes kill the profits entirely. The reason the individual fees seem smaller is because they are not supported by a single individual, but by a group of people making a large purchase. As a mutual fund investor, you have the ability to withdraw your money at any time. While this is also possible in stocks, that does not mean it’s true to the same extent – most of the time, cashing out on short notice in stocks means you’ll be losing a lot of your initial investment. In mutual funds, you typically recover the whole initial amount, and may even reap a profit on occasion. Many people don’t realize it, but investing into a mutual fund being as easy as it is, especially when comparing the process with stock investments, certainly counts as another one of the mutual fund pros.