Mutual Funds

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What are the benefits of mutual fund investing versus buying individual securities?

  • Diversification
    A mutual fund can hold hundreds of different stocks or bonds — providing far greater diversification than an individual could ever manage investing alone. Diversification is a proven tool for reducing risk and enhancing returns. Of course, if you only own one mutual fund that invests in a particular area — for example large company stocks or long term bonds — you are diversified in those particular areas, but not in the market as a whole. Also be aware that some specialized mutual funds may not be truly diversified — read a prospectus before you invest. See Diversification.
  • Professional Management
    The fund’s investments are bought and managed by trained specialists with the expertise, resources and time to thoroughly research stocks and bonds, and uncover opportunity.
  • Lower Costs
    Mutual fund shares let you own investments in many different stocks and bonds for less than you’d pay to buy individual securities.
  • Convenience
    You can buy mutual fund shares online, through the mail, or through brokers, financial advisors, and many banks.
  • Liquidity
    You can buy and sell mutual fund shares whenever you like.    More
  • Affordability
    Mutual funds have low minimums for opening an account — $2,500 … $1,000 … even $500. So you can own a broadly diversified portfolio for less than you could buy a couple of shares of many stocks. And less than the cost of a single bond.