Beginners may feel keen to know the advantages of mutual funds as a good fit for investment needs. Even advanced investors feel that mutual funds are best-suited for your financial goals and lifestyle. An investor will devote his time and attention into meticulous mutual fund comparison only when he is well-acquainted with the various advantages of investing in mutual funds. The following are the top benefits –
1. Simplicity: mutual funds are basically easy to understand, and you hardly need to have any knowledge of experience of economics, financial statements, or financial markets to be a successful investor.
2. Accessibility: being offered at brokerage firms, discount brokers online, mutual fund companies, banks, and insurance companies, mutual funds are easy to buy.
3. Diversity: a single mutual fund can tap investments across innumerable diverse securities. Hundreds or possibly thousands of such securities can be tapped for increasing diversification. This broad marker exposure is one of its key plus points.
4. Variety: as your portfolio of mutual funds grows, you may want to diversify into various mutual fund categories and types.
5. Affordability: with the minimum initial investment requirement, most mutual funds are highly affordable.
6. Frugality: the adding up of transaction costs, annual fees paid to a brokerage firm, and the cost of research tools or investment advice will show you that mutual funds are less expensive than the typical portfolio of stocks.
7. Professional management: Investors can save on time and energy that would otherwise been expended in analysis and research that are prerequisites for quality investments in a portfolio. A team of experienced professionals will take care of all these while you can invest that time in some other desirable pursuit.
8. Flexibility: You can invest in just one fund or a wide variety of funds. Annuity sub-accounts, automatic deposits, dividends, systematic withdrawal, short-term savings, 401 (k) plans and long-term savings are available along with near-unlimited investment categories. These contribute in making mutual funds the best overall investment type for beginners and advanced investors alike.
