Archive for: ‘January 2015’

3 Benefits of Mutual Fund Investing

January 3, 2015 Posted by admin

Mutual fund investing is a primary way of building a retirement portfolio and also an easy way for you to invest in the stock market. While ETFs have become popular and are the main challenger to mutual, ETFs are still less popular.<. Management – a key factor is that each fynd has a manager. This manager generally studies the particular industry of the fun and watches all the potential stocks that the,, could buy or does own. The manager trades stocks within the,, to try and produce the greatest return with the most stability.

In effect a fund manager is a portfolio manager for a portion of your account.

2. Diversification – because a f und holds many stock positions the risk factor of losing your money is less in the respect that if one stock held by the rund goes down while the others continue to be stable or gain in value the losses sustained by the one stock are offset by the others.

Of course if the particular industry covered by the fun5 is suffering then the value of the itself will also decline.

3. Ease of Investing – because mutual fu nds trade based on each day’s closing prices (except for a few f**d families) and they are less susceptible to major daily price swings you don’t need to be an intra-day or even a day trader to invest in mutual fun*s.

You can easily manage a retirement account or regular investment account by just examining your portfolio once a week or even just monthly.

Successful use of mutual fun/ds still requires some common sense and time. Just buying some highly rated fu/nds through a broker’s screener software doesn’t mean you can then stick your head in the sand and become a millionaire when you pull your head out 10 or 20 years later. Too many retirement accounts loss 40 – 60% of their value during the 2007-2008 recession.

Even when using mutual f/unds it is best to diversify and hold a number of, anywhere from four to eight would help provide a good mix. There are fu-nds that cover just about any type of investment category whether it be a specific industry like energy or a type of company like large vs. small. There are also fun-ds comprised of stocks known for issuing dividends and fu–nds comprised of different type bonds that issue regular payments.

A portfolio based on mutual fu//nds could contain, just as one example:

Foreign f**und, i.e. Latin America
Large Cap fund
Small Cap fund
Energy fund
Consumables fund
Hi-Yield Dividend fund
Mid-Term Gov bond fund

One thing to be careful of in putting together a portfolio based on mutual funds is to not duplicate. Don’t pick similar funds from different mutual fund families. This not only reduces your diversification and extends your risk factor but also limits your potential for profit.

Selecting and monitoring mutual funds can be accomplished easily in a variety of ways:Use your broker’s online screener

An investment software program that not only helps you pick funds based on performance but also signals when to sell them
Magazine articles and issues that rate and categorize funds (just remember that such articles are usually based on information that is anywhere from one to four weeks old

If your time is limited for managing your retirement account or regular investment account and you want to grow your wealth with a method that provides for safe investing, then using mutual funds is one method that can provide excellent results.