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ARE MUTUAL FUNDS GOOD FOR ME?

A mutual fund is a healthy addition to most investment plans. But keep in mind,every investment has its advantages and disadvantages. It’s also important to remember that features that matter to one investor may not be important to another. Here are a few important considerations when thinking about investing in a mutual fund.

1. Professional Management

A financial plan is nothing without good people. Most investors don’t have the time or the expertise to properly manage their own investment portfolios to achieve their financial objectives. That’s why a professional, knowledgeable mutual fund manager is so important. These managers research, select, and monitor the performance of the securities the fund purchases and sells. Mutual funds provide you with the opportunity to benefit from their professional skill and focus on achieving the objectives of the fund.

2. Diversify Your Risk

In other words, “Don’t put all your eggs in one basket.” Spreading your investments across a wide range of companies and industry sectors can help lower your risk if a particular company or sector doesn’t perform well. Most investors will find it easier to achieve diversification through ownership of mutual funds rather than through ownership of individual stocks or bonds.

With a low minimum investment, an investor can own hundreds or thousands of securities through their mutual fund, spreading their risk over a very large base – something that was previously impossible for the average investor.

3. Convenient Investing

Another advantage of a mutual fund is the ability to buy and sell investments with ease. When buying a mutual fund, it is easy as completing the application form and writing a cheque. The fund manager will then purchase as many shares as your money allows. Selling shares is just as easy. The major benefit over many other investments is that you don’t need to find a buyer or a seller, the mutual fund itself provides that convenience.

4. A Little Today. A Lot Tomorrow

Mutual funds accommodate investors who don’t have a lot of money to invest. By setting relatively low dollar amounts for initial purchases and subsequent monthly purchases, you can add as little or as much as you want. Remember, mutual funds should not be seen as a short-term investment because, with time, they can provide long-term returns and the assurance that a little can go a long way.