To invest in Mutual Fund is beneficial for investors.How?

Question

mutual fund is what?
types of Mutual Fund



benefits

Answer 1

I actually don't like mutual funds. Mutual funds deprive you of the opportunity to learn to pick, manage, track and trade your own investments.

Investing is not for the lazy. For every stock you're in you better be prepared to spend an hour a week or so. You can get the basic know how at www.investopedia.com. You can even play a stock simulator to test out what you've learned.

If you don't want to invest that much time, you can often do just as well as a conservatively invested mutual fund at www.prosper.com. Proper is a person to person lending site. It's cheap, fast and fun. You can get in for as little as $50, earning interest rates between 5% and 29% (depending on how much risk you are willing to tolerate).

Good luck.

Answer 2

Mutual funds is an indirect investment in the stock market and other financial market. You do not pick the stock yourself. You give the money to the fund manager who then invest in the stock market.

You will benefit from the professional of the fund manager. Every fund manager have difference competency. So picking the right fund manager will earn you profit in the long run.

Investing in mutual fund could be safer than stock since you have professional who do the investment for you. But you need to pay the fund institution management fee.

If you don't like to pick stocks yourself and find it hard and no time to do so, mutual fund would be a better investment.

Survey your fund manager and company before making your investment.

Answer 3

While I could not find the exact number, the last I heard, there were over 7000 different stocks traded on the public exchanges in the US. There are also more than 7000 stock brokers in the US, meaning there are more than 1 professional per stock in the US.

What a mutual does is put your money in the hands of a professional. Through various fees, you pay for this service.

A mutual fund is a pool of money that is managed by a person(s) or a company. The goals of a particular mutual fund usually determine what these managers invest the money in.

Lets say you have $5000. With that $5K, you can buy a few bundles of individual stocks. There is nothing wrong with this, I have dome it myself. However, $5K is a very small sum of money in the stock market. With such small sums, it is hard to diversify your portfolio to minimize risk to yourself. If you buy one or two shares of each stock, the trading fee will begin to take a big chunk out of your profits. Besides this, you have to know what stocks to buy or what bonds to buy. This takes quite a bit of research to do effectively. If you want to invest in something other than stocks and bonds, like real estate, $5K will buy you nothing.

This is where mutual funds come in. You are paying someone to pick investment vehicles for you, based on the goals of the fund. As I mentioned, there are many more money professionalsin the US than publically traded companies. Unless you are an insider, you will never know about something before Wall Street does. Mutual fund managers supposedly have the experience and connections to pick the best investment vehicles. Many of these managers have connections to get information fast.

When you pool your money with other peoples in a mutual fund, it allows the fund to buy many more investment vehicles than you could by yourself. This diversification helps minimize one type of market risk. Going back to the Real estate example, where your $5K can't buy anything, throw your $5K with 1000 other people's and all of a sudden, you hold a bunch of mortgages, an apartment building, or a shopping mall.

So the benefits:
Pay for manager's trading experience
Diversification
Save time (though research on mutual funds still needs to be done)
Allows you to buy a part of premium or high priced assets

Downfalls:
Some managers suck
Managers don't always have to follow fund goals
Can be expensive
Fees can be confusing


Types of mutual funds:

Stock funds (there are many sub types...index, value, equity, income, small cap, mid cap, foreign, sector)
Bond funds (again there are many types, short term, mid term, long term, municiple/tax-free, international, treasury, high-yield/junk bonds)
Blended funds (these funds have a blend of stocks and bonds...the percentages can change as with a retirement fund or can be pretty stable like with a STAR fund)
Specialty Funds (these are specialized funds like Real Estate, Precious Metals, Healthcare, Energy, etc...)
Index Funds (these are funds that track an index. The S&P 500 is the most popular, but there also is the Wilshire 5000, DOW, etc...these funds have minimal manager input).

I hope all this makes sense.

Answer 4

Mutual Funds are the managed funds by a investment managed company.and they are meant for the people who would like to invest with less risk and earn a modest return. For investing in mutual funds you need not have much knowledge in stock market, doesn'nt require concentration on certain stocks on a day to day basis as they follow the market trend
Two main types of MF's sre

open ended - which can be withdrawn any time
Closed ended which can be withdrawn only after a specified period of time

Also you can find diffrent types of schemes like
Dividend plan : Where the profits in ur investments are paid to you in regular intervals
Growth Plan : Where ur profits are not distributed instead get reinvested in the MF units,

Answer 5

Mutual funds are generally the best investment for people who don't want a lot of risk and don't want to work at investing. They are a pool of money from several investors and typically have a variety of investments. They will also have a professional fund manager who does the investment work for you and hopefully has a good track record at making money for the fund. Mutual funds can cover almost any category of investment area. For instance, some specialize in cash and bond related investments, others in utilities, other in aerospace companies, etc. They spread of investment across a number of different stocks helps protect from a significant decline in one stock or area.