Invest in the Best: The Top Benefits of Investing in Mutual Funds
26 Feb 2019
Are you considering investing in mutual funds, but aren’t sure if they’re the right move? Read on to learn the benefits of investing in mutual funds.
Whether you’re looking to diversify your portfolio or earn a side income, mutual funds are a viable option. According to a 2016 report, the average return on equity mutual funds was 4.67 percent over the past two decades. That may not seem much, but if you make regular investments, the earnings will add up.
Mutual funds are a simple, convenient option for beginner investors. Instant diversification, fair pricing, and advanced portfolio management are just a few of their perks. Additionally, they carry fewer risks and offer greater flexibility than other investment vehicles.
Perhaps one of the biggest benefits of investing in mutual funds is that you can get started with a relatively small amount of money.
You can buy shares or units anytime for just a few hundred dollars. Plus, you’ll have peace of mind knowing that a professional portfolio manager takes care of your investment.
Interested to find out more? Let’s take a closer look at the key advantages of mutual funds.
Ease of Investing
Mutual funds are ideal for investors who have a limited budget or wish to take calculated risks. Anyone can get started for as little as $100 per month. Sure, the more you invest, the higher your earnings.
A small investment won’t get you too far, but it’s a good start, especially for newbies. It allows you to learn about this business model and understand how it works while keeping risks to a minimum.
A diversified portfolio helps minimize risks by spreading your investments across various asset classes. Investing in mutual funds, gold, real estate, stock, and other assets ensures that your portfolio won’t lose its value in case something goes wrong.
Mutual funds provide instant diversification as they come in various types and categories. Depending on your goals and preferences, you can invest in mutual funds covering government or corporate bonds, value stock, growth stock, index funds, and more.
Compared to other investment vehicles, mutual funds are easier to manage and provide greater convenience.
The moment you purchase mutual funds, a professional will manage your money and research investment opportunities. This will free up your time and ensure that your money is in good hands.
Furthermore, this type of investment gives you greater control over your money. Most times, you’ll have 24/7 access to a website or an online platform featuring detailed reports.
Withdrawing money from a mutual fund is quick and easy. Depending on the fund, you can do it online, over the phone, by check or wire transfer, and so on. Some investors prefer to do it via their online fund account, while others simply contact their portfolio manager.
If you decide to withdraw money from a 401(k) or another retirement account, consult an investment advisor beforehand. This process has tax ramifications and can get you in trouble if you do it wrong.
Be Smart about Investing in Mutual Funds
As you see, investing in mutual funds has its perks. This option is affordable, convenient, and flexible. However, it still carries some risk. Over-diversification, poor control over your portfolio, and fluctuating returns are just a few to mention.
Discuss your options with a financial planner. A professional can help you understand this business model works, what to expect, and where to invest based on your short- and long-term goals.
Ready to get started? Check out our guide on how to choose the best mutual funds and mitigate risks!