Reasons to Put Your Money in Mutual Funds

Investing in the stock market can be very lucrative and risky. If you know what you're doing, or you are very lucky, you can make a lot of money. The historical average return is around 13% or maybe more, which is higher than many other available investments such as bonds. Further, a mutual funds investment created. Basically, a mutual fund consist of collection of stocks and/or bonds. If a mutual fund composed of stocks, why not buy stocks?

First, not all the invested funds in mutual fund are composed to entirely of stocks. The investment manager, who manages the funds, will invest them in bonds, real estate, currencies, commodities and other investments. That alone is a great reason to invest in mutual funds instead of stocks. We could have investment diversification. If you invest $ 1000, with mutual funds, your money is pooled with others so you can get a small portion of hundreds of investments that will greatly reduce the risk of your investments.

This brings us to our next point, affordability. Most of us probably cannot afford the $ 20,000 investment required to have a well diversified portfolio. With a mutual fund, you do not have to worry about diversification, as already done by the fund manager for you. Moreover, investing in stocks can have a lot of costly fees. If you choose mutual funds, you do not have to pay fees. Even there is a fee, it will be small amount. You do not have to worry about trading fees that can be very abrupt in the buying and selling stocks.

Finally, mutual funds are easy investment. When we invest in stocks, we have to do some kind of stocks research, such as reading financial statements, hot news, reviewing history , and understanding of what you are doing. This takes much time and effort that can only happen if you pay a financial adviser or broker enough money to do this for you. With mutual funds, we can invest without professional fees and stock picks. Now I understand that no one can successfully predict the stock market 100% every time, but a financial professional, at least you can do better, possibly, what you choose.

If you finally realized the need to invest your money and you do not know how to invest or what to invest, start with mutual funds. See your money grow. And if you ever feel confident enough that you can buy your own stock picks. Until then, do not waste precious time, start investing immediately!

Happy investing :)

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