Mutual funds

Mutual funds

Discuss the advantages and disadvantages of owning mutual funds and examine the cost considerations when buying mutual funds.

2. How to assess and select funds that are compatible with the investment needs of the individual?

3. How to measure mutual fund performance?

Answer preview…………

A mutual fund is an investment that is funded from many investors for the purpose of investing in stock, bond, and other investments.

The advantages of investing in mutual funds are that due to the high capital the mutual funds are likely to make huge profits for its investors. The mutual funds can invest in many investments which result in security of money invested. When one investment fails there is the guarantee of company continuity. The main disadvantages for the investor are the high possibility of loss of the investments in the mutual funds since majorities of mutual funds are self-regulated by the management. When buying mutual funds one needs to consider the cost of the mutual funds in terms of the assets owned by the mutual funds, the investments and the profit margin the mutual funds is making and the investment strategies as well as the methodology approach to the market (Billingsley, Gitman & Joehnk, n.d.).

To asses and select the funds that are compatible with the investment, one needs to do an investment plan in order to know how much money is available and how much money needs to be invested. Checking the mutual funds’ charges is a consideration since overcharges can lead to high investment charges to the investor. Also, the investor needs to do a research of the investors in order to select the investors to avoid (Billingsley, Gitman & Joehnk, n.d…….

APA 314 words