Mutual funds collect money from many investors and invest this money to stocks, bonds, cash, or other securities. If you are starting investment, it is the efficient way to buy mutual fund at the beginning of investment experience. When you invest to a mutual fund, you buy the shares of the fund.
There will be some advantages of buying mutual funds to you. They are;
- Built-in diversification : Instead of you, portfolio manager will manage the markets risks, and then the allocate the money to the securities that get maximum benefits from the current market situations.
- Professional management: You do not have enough time and information to follow the markets and catch the opportunities. Thus portfolio manager will take the decisions daily.
- Convenience and daily liquidity : You can also sell and buy mutual funds as you do in individual securities.
- No transaction fees : When you make the transactions of individual securities, you could pay many transaction fees to the brokerage companies, leading your earnings. However, when you buy the mutual fund, you will just pay the fund management fee, which is highly lower than your possible transaction fees if you invest yourself.