|
The advantages of investing in a
Mutual Fund are:
- Diversification: The best
mutual funds design their portfolios so individual investments will
react differently to the same economic conditions. For example,
economic conditions like a rise in interest rates may cause certain
securities in a diversified portfolio to decrease in value. Other
securities in the portfolio will respond to the same economic
conditions by increasing in value. When a portfolio is balanced in
this way, the value of the overall portfolio should gradually
increase over time, even if some securities lose value.
- Professional Management:Most
mutual funds pay topflight professionals to manage their
investments. These managers decide what securities the fund will buy
and sell.
- Regulatory oversight: Mutual
funds are subject to many government regulations that protect
investors from fraud.
- Liquidity: It's easy to get
your money out of a mutual fund. Write a check, make a call, and
you've got the cash.
- Convenience: You can
usually buy mutual fund shares by mail, phone, or over the Internet.
- Low cost: Mutual fund
expenses are often no more than 1.5 percent of your investment.
Expenses for Index Funds are less than that, because index funds are
not actively managed. Instead, they automatically buy stock in
companies that are listed on a specific index
- Transparency
- Flexibility
- Choice of schemes
- Tax benefits
- Well regulated
|
