Should I Buy a Mutual Fund?
12 Reasons Why You Will Be Happy With a Stock Mutual Fund
Here are the reasons you should buy a mutual fund.
- Buying a mutual fund takes less research and time than buying individual stocks. The manager of the mutual fund does the research and buys the stocks.
- You can buy shares of a mutual fund with less money, and add more shares later.
- The price of a mutual fund is less volatile than the prices of many stocks, so your risk can be less.
- You can buy many mutual funds conveniently online through your stockbroker.
- Some brokers charge no commission when you buy mutual funds from them.
- A mutual fund owns shares of many companies, more than you could buy for yourself. This gives you a diversified portfolio and less risk.
- A mutual fund encourages a long-term buy and hold stock investment strategy, one that is likely to be more profitable.
- When you buy mutual funds, you can choose from thousands of funds. Many companies offer a family of mutual funds. Some of these companies are American Century, Dreyfus, Fidelity, Franklin Templeton, Goldman Sachs, Invesco, Janus, T. Rowe Price, and Vanguard.
- You can buy shares in an index fund. An index fund is a mutual fund that owns shares of all the stocks in a popular stock index. You can buy the Dow Jones, the S&P 500 Index, the Russell 5000 Index and many others.
- Index funds, in particular, have very low annual management fees, so your investment grows faster.
- You can buy a mutual fund that meets your personal investing needs. Mutual funds invest in different groups of stocks called sectors. For example, there are large-cap mutual funds that buy the stock of large companies, mid-cap funds and small-cap funds.
- You can buy shares in a mutual fund that targets special sectors for investing, like Emerging Growth, China, Gold or Dividend Stocks.
In summary, you should buy a mutual fund for the convenience, the diversification, less risk and lower cost. You can take advantage of special mutual funds, like index funds and sector funds.
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