Why Invest in Mutual Funds?

Below are the advantages of Investing in a Mutual Fund:

PROFESSIONAL MANAGEMENT        
      Investors avail of the active professional fund management from full time investment experts. They are backed up by research teams focusing on seizing market opportunities.

DIVERSIFICATION         
      The pooled fund enables it to spread it in various securities resulting to greater propensity to earn more and spreads the risks across the different securities.

LIQUIDITY          
      Mutual fund shares are redeemable shares. The fund readily buys back shares to be redeemed based on the current NAVPS. Moreover, fund’s portfolio consists of liquid assets mostly marketable securities.

SAFETY         
      The industry is highly regulated by the Securities and Exchange Commission (SEC). Moreover, securities are kept with a custodian bank separate from the management company. The shareholder records are with the transfer agent. An external auditor oversees financial issues.

TAX FREE          
      Earnings from mutual funds are excluded from items classified as taxable income. This is a provision of the Comprehensive Tax Reform Package (CTRP) of 1998.

Source: Philamfunds


Mutual fund is a good start for newbies in investing.  Taking someone professional to manage your fund would be of great advantage.  These could the safest form of investment, lesser risk than stocks investment. But bear in mind also that risk is directly proportional to gain. The more the risk the more the gain one could have for taking greater risk.  As a starting point take the lesser risk first and learning as it goes in time then moving forward to higher level of risk.