Advantages of Mutual Funds

There are many advantages of investing your retirement money in mutual funds.

Mutual funds allow you as the investor to take advantage of investing in stock of larger companies which would require minimum block purchases. Since mutual funds have large buying power, you can benefit from this type of stock purchase.

Mutual funds allow you as the investor to take advantage of professionals in the industry who’s job it is to know about and deal with stock markets. You therefore do not have to be a financial expert in order to invest in the stock market.

Mutual funds allow you as the investor to place your money in certain themed categories without having researched all the particular companies. For example, if you want your money in banks or resources or want all eco-friendly companies in your portfolio all you need to do is look down the list of the mutual funds to find what you are looking for. The fund managers have done the job for you of finding companies with your particular area in mind.

Mutual funds allow you as the investor to have a more hands off approach to investing. If you managed your own money you would have to keep track of the stock prices daily and know when to buy and sell to achieve an overall good return on your money. With mutual funds, a fund manager does this for you as their full-time job, taking the onus from you for daily monitoring and the decision making process of when to buy and sell.

Mutual funds allow you as the investor many great advantages, BUT it is still not without risk. Not all mutual funds report profits yearly and sometimes not even for several years. You as the investor still need to set some goals as to what you expect form you investment in terms of a yearly return. If this is not met each year and your criteria are not too outlandish then you need to find a new investment, either a different mutual fund or a different mutual fund investor.

One final note, as an investor, you must also look at your bottom dollar amount from year to year. Your statement may say that your fund made an overall return of a percentage which you are quite happy with but if the management fees and taxes you need to pay yearly take away all your gains, then you actually have not made any money. Be aware of your actual dollar gain on your account rather than the advertising from the mutual fund company reporting the growth of your mutual funds in general.

Happy investing and don’t forget the old adage “Never put all your eggs in one basket.” So, don’t put every dollar you are investing in one mutual fund or invest all your money in mutual funds.
Stocks. GICs. Guaranteed income funds. Real estate. Cash.