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A mutual fund offers investors the opportunity
to pool their money with other investors in an investment
that is managed by professional investment managers.
Mutual funds invest in stocks, bonds, or other securities
according to each fund’s objective.
Investors turn to a mutual fund
because of 4 distinct advantages they may offer
over investing in the individual securities.
These advantages are professional management,
diversification, affordability and liquidity.
First, professional management.
A mutual fund offers investors access
to full-time professional money managers who have the expertise,
experience and resources
to actively buy, sell and monitor investments.
Second, diversification.
Buying shares in a mutual fund is an easy way
to diversify your investments across many securities,
which is just another way of saying
you won’t have all your eggs in one basket.
If one investment decreases in value,
another investment in the portfolio may increase.
Third, affordability.
For many people it would be more costly to purchase directly
all of the individual securities held by a single mutual fund.
By contrast, the minimum initial investments for most mutual funds
are more affordable.
And finally, liquidity.
Most mutual funds allow you to sell your fund shares
on any day the stock markets are open.
So you have easy access to your money.
Of course the value of your shares, when redeemed,
may be worth more or less than their original cost.
Mutual funds come in many varieties,
designed to meet different investor goals.
There are stock funds, bond funds and even multi-asset funds,
which invest in a portfolio of many types of securities.
Talk to your financial advisor today
to find out if a mutual fund is right for you.
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