Should I invest in mutual funds? My uncle made a fortune with them!
Do you want to start making money in the market? Are you ready to take the plunge? Or do you want to play it safe? Like many first-time investors, you might feel most comfortable putting some of your savings into mutual funds.
That way, you’re in a pool with hundreds, often thousands, of investors who count on experts to buy a wide variety of stocks, bonds and other securities for them. You own small chunks of many different companies, lowering the odds of losing your shirt on a few firms that may not fare well.
MUTUAL FUND MANAGERS research hundreds of industries and analyze their financial statements to find the best investments for the future. They keep tabs on all financial markets, to make sure your savings are invested wisely. They know when to buy and sell. Fund managers need good minds for money. They are often grads of top business and finance schools. Besides making decisions for your portfolio, most professional traders handle millions, sometimes billions, of dollars regularly.
What are some advantages of mutual funds?
Small investment requirements
You can invest as little as $50 or $100 in funds without costly fees vs. paying higher commissions for just a few shares of a single company. If you invest regularly, your small purchases in mutual funds add up over the years.
There’s a cost for everything, but the most efficiently managed mutual funds often charge less than 1% per year in fees. Since these funds are bought and sold in tens of thousands, commissions are lower than they would be to buy or sell a few dozen, even a hundred or so, shares on your own. Multiple investors save on fees with bulk rates.
Since mutual funds are made up of many different options (stocks, bonds, money markets, etc.) your risk is widely spread. You can also choose a level of risk that makes you comfortable – and you can adjust that level as your circumstances change. Most funds offer a range of stakes: conservative, low or moderate to high-risk/high-gain.
All mutual fund managers are required to disclose data on their fund’s investment returns, operating expenses and other fees. These disclosures are checked for accuracy by the Securities and Exchange Commissions (SEC). Several firms, including Morningstar, Inc., also provide monthly reports on hundreds of fund statistics, comparing performance, risk and other factors. You can relax a bit, because your investments are monitored on your behalf .
Ask a certified financial planner for more mutual fund advice
To decide on the best mutual funds for you, see certified planner Ronald Van Surksum: firstname.lastname@example.org