Mutual funds provide you with a cost-effective alternative to direct purchases of stocks or bonds – you don’t need to be wealthy to invest in them, and depending on the fund you choose, shares can be purchased with little or no minimum investment. Mutual funds offer you a number of benefits including:
- Professional Management
As a shareholder, generally you also receive easy-to-read account statements, detailing information on account values, share transactions, and dividend and capital gains distributions.
Hmmmm… There are disadvantages too
diversification is the main advantage…
Unfortunately convenience and the perception that some genius is going to invest their money wisely and make them rich at retirement are their reasons for investing in mutual funds. The fact is of course that management fees and poor management decisions usually make the returns mediocre at best and seldom beat inflation. The perception of growth is just that, perception. The way CPI figures are manipulated the poor investor doesn’t realize until its too late that he could have put a list of stocks on a dart board and done better. And dollar cost averaging, well that’s another myth.