Advantages of a mutual fund

Advantages of a mutual fund

1.Disversification

2.Professional Management

3.Minimal Transaction Cost

4.Flexibilty

5.Service 

Diversification: 

Investing in a single security i.e. stock or bond can be risky, where as owning a mutual fund that holds numerous securities reduces risk significantly.

Professional management:

It is difficult and time consuming to pick the best stocks and bonds for your portfolio. It requires continuous and sustained effort. Allowing a professional mutual fund manager to make decisions about stocks and bonds for you can save you time and frustration.

Minimal transaction costs: 

Buying individual stocks and bonds is expensive in terms of transactions costs. Each time an investor buys or sells, they have to pay a brokerage fees along with many other expenses. Since, the scale of purchases and sales are huge, the transaction cost for mutual funds are less. 

Flexibility: 

Owning individual stocks and bonds does not allow for much flexibility in terms of liquidity, or the ability to access your money. Where as in a mutual fund, you can withdraw your investments in two working days. 

Service: 

Mutual fund companies may also offer other services, including automatic investment and withdrawal plans; automatic reinvestment of interest, dividends, capital gains and help with taxes. Transparency: Strict government regulations and high disclosure policy makes it a good investment option. This also makes it safe.

-goodreturns

Stocks and Share Analyst

MR.K.P.PRABHAGHARAN,

KKP CAPITAL, 9894333189