Invest | Why Should I Invest In Mutual Funds Instead Of Stocks?

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

First, not all funds are made entirely of stocks. Some funds are bonds, real estate, currencies, commodities and other investments. This is only one great reason to invest in mutual funds instead of stocks, you get instant diversification. If you want to invest $ 1,000, there are only so many different companies' stock you can buy. With mutual funds, money meets with other people money 's so you can get some hundreds of investments that will greatly reduce the risk of their investments.

This brings us to our next point, affordability. The average person probably can 't afford the $ 20,000 to initial investment required to have a well diversified portfolio. With a mutual fund, you don 't have to worry about diversification because it' s already done by the fund manager for you. In addition, investing in stocks can have a lot of expensive charges. If you choose not to mutual funds, which don 't have to pay any fee. You don 't have to worry about trading fees that can be very strong in the buying and selling shares.

Finally, investment funds are easy. If you invest in stocks that have research by reading the populations of the financial statements, reviewing history, and understand what you are doing. This takes 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 you can invest in a no-load fund has no positions and obtain professional stock selections. Now I understand that no one can successfully predict the stock market 100% every time, but a financial professional can at least make selections, possibly better than you.

If you 've finally realized that you have to invest your money and you don' t know how to invest or what to invest, start with mutual funds. See your money grow, and if you feel confident enough you can buy your own stock picking. Until then, time to don 't waste precious start investing immediately!