Five Big Benefits of Mutual Funds

You can invest in stocks, you can invest in bonds, you can invest in Treasury bills, you can invest in real estate, but in the end your resources will limit you to one or maybe two securities which increases your risk to about the level of going to the local casino or buying a lottery ticket. The reason Mutual Funds are so popular is because they decrease the risk and increase the probability of enjoying high returns. Following are the top five big benefits of investing in Mutual Funds.

1. The Advantage of Professional Investment Management.

Ã¢Â?Â¢ Mutual funds provide full-time, high quality professional management services by pooling the resources of many hundreds of investors. The high level of professional management is a vital key to profoundly satisfying results mutual funds enjoy in today’s complicated and volatile markets. The fund manager’s goals and interests are tied to your success because their paycheck is based on how well the fund performs rather than on sales commissions. The fund manager has instant access to real market information and is able to make trades on very large and therefore cost effective securities packages.

2. Diversification.

Ã¢Â?Â¢ A major advantage of mutual funds is that they invest in a wide range of options from stocks to bonds to money market securities. This diversification limits risk because a decline in the value of any specific security is offset by the stability or increasing value of other securities in the package. Shareholders benefit from a level of diversification made possible by the amount of pooled investment dollars that most individual investors would not be able to achieve.

3. Low Cost, High Quality Investing

Ã¢Â?Â¢ An average investor could not create a well balanced portfolio holding a meager 50 stocks. It would be too expensive. The investments alone would be about $150,000 and then there would be fees and commissions and accountants compensations on top of that. A mutual fund lets you buy into a diversified portfolio for as little as $50. in some circumstances. Typically you can get started in a well managed fund for under $1000.

4. Convenience and Flexibility.

Ã¢Â?Â¢ Mutual Fund managers study the market, analyze the securities, make all the decisions on what to buy and sell, clip the coupons, collect all the interest payments and make sure dividends on the fund’s securities are received, recorded and disbursed. They protect the interest of the shareholder (you) and are available to answer questions or to buy and redeem fund shares either online or on the telephone. While you own just one security you have all the benefits of a widely diversified portfolio.

Ã¢Â?Â¢Other services may include automatic reinvestment of dividends and exchange privileges.

5. Mutual Fund Investments are Liquid and Easy to Withdraw

Ã¢Â?Â¢ Mutual Funds can be traded in (redeemed) at anytime so cash is available in an emergency. You can request (redeem) funds by electronic transfer, letter, phone, or simply by writing a check against the shares depending on the type of fund you are invested in. The money will be in your hand in about three business days.

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