Advantages of Mutual Funds

[Lord]

What are the advantages of mutual funds you may ask, but my list below tries to evaluate them to enable you get a complete overview of everything good about mutual funds.

1. Professional Management:
The primary advantage of mutual funds is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolios. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments.
2. Diversification:
By owning shares in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to investing a large number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of own, the less any one of them can hurt you.
3. Economies of Scale:
Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than what an individual would pay for securities transactions.
4. Liquidity:
Just like an individual stock, a mutual fund allows you to request that your shares be converted into cash at any time.
5. Simplicity:
Buying a mutual fund is easy! Pretty well any bank has its own line of mutual funds, and the minimum investment is small.

You have read the advantages. If you have other advantages to add or you want to comment on any advantage. Then join the discussion.

[pinoycity]

The advantage of a mutual fund can be a disadvantage to some. For example, mutual fund will give you an expert fund manager but, if you are a control freak, you would not want others to control your money. But since, you need lots of money to play in the market, you put your money in a pool.

[avir0ckerx]

Mutual funds is for people like who do jobs and have extra funds they can invest it in any sort of mutual funds and look for returns after 5-20 years later it might fetch them good returns but if the Mutual fund manager whaps the money it is your bad luck so you should invest in good mutual funds.

[pinoycity]

There are some mutual fund programs that will give you back your principal after a year or two. But it is usually being advised to go for a 5-year plan. You can also give advise to your fund manager as to where you want to see your money invested.

[kyriousrobert]

There are some mutual fund programs that will give you back your principal after a year or two. But it is usually being advised to go for a 5-year plan. You can also give advise to your fund manager as to where you want to see your money invested.

i agree with you i have friend who invested on mutual funds and it really is a very good investment option you just have to get the right one

[khanafr]

Well, almost all the advantages are mention here, the only thing, not found here is " Tax Advantage". Investor also avails the benefit of tax, if he/she invest in to mutual fund for more than 3 years. every thing i find in the discussion, the one i have mention is not found.

[pinoycity]

The tax system in this kind of investment is not really clear to me. I am not sure if the government will get income tax from your earnings from a mutual fund. Or if there is some other kind of tax.

[speedbus]

But, the term is too long right > 5 years is some time.. although they return the principal after 1 -2 years, its still a long way to go and then we have the taxes !

[Forumtech]

My question here is; can mutual fund be invested online? because as it is, i wonder how some one will leave fund online for 5-10yrs. Well, the above listed advantages of mutual funds are true, but i don't think it reduces or manage tax issue or maybe i don't undastand what khanafr meant by tax advantage in mutual funds. Why i say so is, is because i have a mutual fund investment with one company in my country. Or do any country applies to it, by adding up tax to one's mutual account.

[khanafr]

Well, Forumtech you agree that all the listed advantages are true, can benefit for the investers. Coming to your question is, can mutual fund be invested online?. yes you can take mutual fund online, and i find no wonder leaving fund online for 5 - 10 years. we all know the facility of direct debit, people are using the facility for their online and offline investments, this reduces the paying your installments manually, and also you can know the status of your investments online regularly.

[pinoycity]

If you know for certain that a mutual fund company is trust-worthy, you can invest online. Meaning, a company that has a head office and government-registered and you can check their track record when it comes to investment.

[karinabartram]

The best mutual funds design their portfolios so individual investments will react differently to the same economic conditions. 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.

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[Jazpa]

The advantage of a mutual fund can be a disadvantage to some. For example, mutual fund will give you an expert fund manager but, if you are a control freak, you would not want others to control your money. But since, you need lots of money to play in the market, you put your money in a pool.

I agree with pinocity. We should not settle only with merits. We should be aware of the harsh part too and that is disadvantages. Though mutual fund can make our life easier, we need lots of money to invest like pinoycity described. So well in case of failure, we will be losing all that money.

[MisterTickle]

I prefer ETFs over mutual funds. ETFs are just "mirrors" as they mirror a sector, industry, or index. Mutual funds are hand picked and the contents can change. This is not frequent, but it is still not pleasant.

[pinoycity]

The only thing I know about ETF is that it is another investment program. Seldom do I read about ETF in the business section of the newspapers I read and it seems hard to understand this program.

[Tuspee4love]

First and foremost, you do not know whether there is anybody in the house that knows about this mutual funds or rather you never can tell if every one really knows about this so you should have not just gone straight telling us the advantages because it is when we directly know the meaning of something that we will now request for the advantages or even look at the disadvantage so i want to know if it is really in form of stock or what.

[pinoycity]

It is upon the discretion of the fund manager to choose where to place the money in the fund. But, I believe, that the investors can also suggest where they want to see their money. Sometimes, the investors cannot invest in some programs because of lack of funds that is why they pool their money.

[segiade]

Another advantage is that you can also use the miscellananeous certificate to obtain loans at any financial institution like the commercial banks, the merchant banks, the morgage banks and other institution.

[rexway]

well if mutual fund assign a mamager for me or broker who will manage my account and money for me I think there is no objection abaut this but the problem is will these program always return my principle after a year or two?

[pinoycity]

Another advantage is that you can also use the miscellananeous certificate to obtain loans at any financial institution like the commercial banks, the merchant banks, the morgage banks and other institution.

Yeah, this can be used as a collateral for a loan. And you can even use the certificates when you are applying for a visa. You can just present these certificates in order to show that your are financially capable.