Investing in mutual funds can be a scary proposition for a lot of novice investors.
After all, the dreaded years between 2007 and 2009 saw asset values slashed dramatically, leaving a lot of investors desperate for a recovery that has either happened or is in the process of happening (depending on their actual portfolio).
In spite of the poor performance that many mutual funds recorded in that period, these investments make the most sense for investors with a limited amount of cash to set aside for a long-term fund, whether saving for emergencies or some specific goal.
Expertise What a lot of investors will realize almost immediately is that mutual funds offer a great level of investment knowledge.
Considering that most fund managers, their analysts and trading team come with reams of qualifications, one might wonder why they are able to get this level of expertise for no up-front, monthly, or annual fee.
In fact, investors are able to essentially "hire" the brightest and best investment minds for as little as $25 per contribution in some cases.
Access In fact, mutual funds are among the most accessible investment options that people have.
Investors have plenty of different options when purchasing these types of investments and, as noted above, can start with as little as $25 per contribution.
(Almost every mutual fund will have a minimum entry requirement of $500, at which point the $25 contributions can begin).
Systematic Contributions In addition to the low entry level and low minimum contributions, almost every fund allows investors to contribute on a systematic basis.
This often means a minimum investment is made with every pay check, whether weekly, every other week, monthly and so on.
By adopting a systematic approach, investors are better able to budget and will also realize other benefits, such as dollar cost averaging.
Units Unlike stocks which require full ownership of an actual share, funds allow fractional ownership of units.
This means that an investor can own 145.
687 units (versus 147 whole shares if one were to buy shares).
For this reason, an investor's full contribution is invested immediately, meaning one can start enjoying market increases as soon as the investment is made instead of having to sit on the sidelines and wait until a whole unit value has been amassed.
Summary Given the above, mutual funds provide investors with a tremendous opportunity to save that little extra cash that they either have left after every payday or can live without through some minor sacrifices ($25 per contribution is less than a case of beer, for example).
Not only will longer term investors enjoy great long-term growth by saving this way, but they probably will not even notice that the money has been invested!
After all, the dreaded years between 2007 and 2009 saw asset values slashed dramatically, leaving a lot of investors desperate for a recovery that has either happened or is in the process of happening (depending on their actual portfolio).
In spite of the poor performance that many mutual funds recorded in that period, these investments make the most sense for investors with a limited amount of cash to set aside for a long-term fund, whether saving for emergencies or some specific goal.
Expertise What a lot of investors will realize almost immediately is that mutual funds offer a great level of investment knowledge.
Considering that most fund managers, their analysts and trading team come with reams of qualifications, one might wonder why they are able to get this level of expertise for no up-front, monthly, or annual fee.
In fact, investors are able to essentially "hire" the brightest and best investment minds for as little as $25 per contribution in some cases.
Access In fact, mutual funds are among the most accessible investment options that people have.
Investors have plenty of different options when purchasing these types of investments and, as noted above, can start with as little as $25 per contribution.
(Almost every mutual fund will have a minimum entry requirement of $500, at which point the $25 contributions can begin).
Systematic Contributions In addition to the low entry level and low minimum contributions, almost every fund allows investors to contribute on a systematic basis.
This often means a minimum investment is made with every pay check, whether weekly, every other week, monthly and so on.
By adopting a systematic approach, investors are better able to budget and will also realize other benefits, such as dollar cost averaging.
Units Unlike stocks which require full ownership of an actual share, funds allow fractional ownership of units.
This means that an investor can own 145.
687 units (versus 147 whole shares if one were to buy shares).
For this reason, an investor's full contribution is invested immediately, meaning one can start enjoying market increases as soon as the investment is made instead of having to sit on the sidelines and wait until a whole unit value has been amassed.
Summary Given the above, mutual funds provide investors with a tremendous opportunity to save that little extra cash that they either have left after every payday or can live without through some minor sacrifices ($25 per contribution is less than a case of beer, for example).
Not only will longer term investors enjoy great long-term growth by saving this way, but they probably will not even notice that the money has been invested!
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