In the last few years, mutual funds have become more and more popular. Now, it's harder to find an investor who doesn't use mutual funds than one who does. Mutual funds are very popular, which is not surprising when you think about how easy they are to use and how little you need to know about the financial markets. This article will show you the four main benefits that mutual funds offer to every investor.
The first benefit of investing in mutual funds is that your money will be managed by professionals. Mutual funds are run by fund managers, who basically keep an eye on your money 24 hours a day. Almost nowhere else can you get that kind of help with your investments without having to pay huge fees.
The second benefit of investing in mutual funds is that they are very easy to sell. When the stock market is open, any investor can sell his shares in a mutual fund. Investing in real estate, certificates of deposit, or even stocks with low trading volume can take weeks or even months to sell. Mutual funds are liquid, so investors can get their money out of them quickly if they need to.
The third benefit of mutual funds is that they help you spread your money out. Mutual funds put their money into tens or even hundreds of different stocks, bonds, or money markets. If you tried to do the same thing with your own portfolio, you would have to pay very high trading fees and have a lot of trouble keeping track of hundreds of stock positions. This brings us to the fourth benefit of mutual funds, which is that they have lower fees.
Because they can take advantage of economies of scale, mutual funds have very low fees. Since mutual funds pool the money of so many investors, they can buy more stocks at a lower cost. Fees for a lot of mutual funds are less than 2 or 3 percent.
Mutual funds are growing quickly because more and more people are investing in them. But it's not really a surprise when you think about how great mutual funds are for everyone from the average investor to the guy with a multimillion-dollar portfolio.
