Mutual Funds Are Diversified Investments. The nature of mutual funds as pooled investments that are professionally managed means that investors generally can easily accomplish one of the most important standards of smart investing — diversification. To diversify means to spread market risk by holding a variety of several different securities, rather than just a few. Most mutual funds invest in dozens or hundreds of stocks or bonds within one portfolio. Depending upon the type of fund, this accomplishes the fundamentals of diversification with as little as one or two mutual funds. However, when building a portfolio of mutual funds, especially as investment assets and objectives grow more complex over time, investors are smart to diversify across several funds in different categories.
This is work that most of us are not interested in, do not have the time for, and, most importantly, are probably not as qualified to do. By purchasing shares of a mutual fund, you’re also purchasing the money management and investment skills of the fund manager whose job it is to invest and reinvest the mutual fund’s capital based on the fund’s established goals.
#vanguard s&p smallcap 600 index fund admiral#vanguard admiral shares s&p 500 index fund pick#vanguard s&p 500 index fund ticker symbol#vanguard stock#vanguard s&p 500 index fund vs etf#vanguard s&p 500 index fund investor shares#bond recommendations#vanguard s&p 500 index fund etf#vanguard s&p 500 index fund performance#vanguard s&p 500 index fund or etf#vanguard s&p 500 index fund etf shares (usd) voo#vanguard s&p 500 value index fund etf shares#income bonds#vanguard s&p 500 growth index fund etf#vanguard s&p 500 index fund etf voo#vanguard s&p 500 index fund admiral shares price#vanguard s&p index fund buffett#vanguard s&p index fund buffetrating
Opening an Account to Buy Mutual Funds. If you don’t already have an investment account at a brokerage firm or mutual fund company, you’ll need to open one before you’re ready to make your first purchase. Opening an account doesn’t require money; all you need to do is choose the company where you’ll invest and follow their procedures.
Avoiding the Dave Ramsey Mistake
Since most investors are buying mutual funds for the long-term, and most are moderate investors that want to take some risk to get higher returns (but not a high level of risk) we’ll focus on building a portfolio for this investment objective (long-term, medium risk). Here are some of the best funds to start a long-term portfolio: