There are many different advantages of mutual funds from the fact that usually you can buy them at a lower cost to start with and continually buy. Instead of investing in one share of stock you are able to invest in many different companys at the same time for one low cost. This makes it that if one company were to go bankrupt you wouldn't loose everything thus minimizing risk.
The disadvantages alot of them have high buy ins, from 3,000 and up this makes it imposible for some/ Most people to get into. 2nd there are fee's that sometimes have to be taken into some when you buy your charged 2-5% right off the bat, others you are charged a broker fee of 10-20$ depending on who you go through and how much you buy.
Learn about the advantages and disadvantages of mutual funds to make sure you are properly managing your investments. read more
I am a huge fan of mutual funds for many reasons, like professional management for instance. There are teams on analysts that do a lot of research before the fund invests into a company, like interview the officers, the managers, even call the suppliers to evaluate the companies reliability to get the resources needed to make profits, partnerships, and so forth. All of this is done because instead of investing say $100k as an individual investor the mutual fund might invest a $100 million plus. Keep in mind its not the dollar figure that I mentioned that is important but the concept, professional managers usually spend a lot more quality time doing their homework.
Some other advantages of mutual funds are.
Low cost to start investing, some of my clients who still teenagers start at $50 a month, and the neat thing is their $50 bucks is managed the same was as the guy who has $5 million in his account. Now that is awesome.
Mutual funds are usually better diversified than average portfolios.
Also Mutual funds are highly liquid which means that your money that is invested is readily available. If you have saved up $50k in there and need money fast you can have that money wired to you within a couple of days or you can have check writing or debit card privileges for your account. That is very good too.
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When investing, do you prefer to use mutual funds, or purchase stock in individual companies?
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