There are many reasons to buy a mutual fund, including diversification, systematic investing and accessibility. We narrowed down the many benefits of mutual funds to 10 reasons these investment securities can be smart tools for your financial objectives. Mutual Funds Offer Diversification. Diversification may be the greatest benefit of mutual funds. The beauty of investing in mutual funds is that you can buy one fund and obtain instant access to hundreds of individual stocks or bonds. Otherwise, in order to diversify your portfolio, you might have to buy individual securities, which exposes you to more potential volatility.
When you can keep expenses low, and buy quality funds at the same time, your long-term returns are likely to be superior.
#top 5 growth and income mutual funds#top ten growth and income mutual funds#best fidelity growth and income mutual funds#top performing growth and income mutual funds#tracker funds#best vanguard growth and income mutual funds#investment calculator#top growth and income mutual funds#top growth and income mutual funds 2018#best growth and income mutual funds 2019#top 10 growth and income mutual funds#best growth and income mutual funds 2017#best growth and income mutual funds 2016#10 best growth and income mutual fundsrating
The Basics of Mutual Fund Taxation
Mutual Funds are Professionally Managed. Many investors don’t have the resources or the time to buy individual stocks. This is where professional management is valuable. Investing in individual securities, such as stocks, not only takes resources but a considerable amount of time. By contrast, mutual fund managers and analysts wake up each morning dedicating their professional lives to researching and analyzing current and potential holdings for their mutual fund.
Think of mutual funds as investment baskets of securities. Each basket has its own objective and manager (or management team). The manager also has a team of analysts that assist in doing the research. Also keep in mind that, when it comes to management, mutual funds fall into two primary categories — one is active management and the other is passive management. Managers of actively-managed funds will use their resources to try and ”beat the market,” which is to say that they’ll attempt to outperform a certain benchmark, such as the S&P 500 index. However, the manager of a passively-managed mutual fund will not try to beat the index but will instead buy and hold a basket of stocks that will replicate the holdings and performance of the index.