Finance, Forex and Investments

Mutual Funds?

I need to know the Advantages and Disadvantages of mutual funds

Public Comments

There is no advantage to mutual funds.The disadvantage is I can tell that you have almost no financial education.I say this notr to insult but to open your eyes,get edjucated read Why we want you to be rich by trump and kiyosaki
Advantage: a Mutual Funds is pool of money gathered from other investors that is professionally managed by a Portfolio Manager. Most funds have an investment objective; growth, income, etc. There are many trades in the fund, that are recommended by analysts. So, biggest advantage is that professionals trade for you, and this ends up to be less expensive alternative. Disadvantage: Some less successful funds, will cost more, due to a profit driven business, so this may eat away from your performance. Also, you have to filter and track who are the best fund managers out there? At the end of the day. I would consulate a professional so your money will reflect your overall objective.
The advantages are instant diversification of your money. They allow smaller investor's to properly spread their money out accross different sectors of the market. Owning a mutual fund is like owning shares in several hundred individual stocks and bonds without having to go out and buy each company individually. They are also professionally managed by money managers who make decisions for you based on their expertise. The disadvantages are the fees and tax implications. Mutual funds often have upfront fees to get in to them (sales loads) and internal expenses called expense ratios and 12b 1 fees. Mutual funds will pass capital gains taxes on to each share holder of a fund whether or not you have realized a profit on the investment. Hope this helps...
The advantage is you become invested in hundreds of different stocks and bonds without having to do the research. Each fund has a different goal, some invest only in large companies, some only small, some just bonds, some just healthcare, some just international, this list goes on forever. The main key is to be diversified in having many different funds to avoid having all your eggs in one basket. The disadvantages include costs. There is either an upfront sales charge or a back end sales charge. Approximately 2%-5% of your purchase will be taken once you by with A shares and B shares hit you when you get out (back end sales charge). HOWEVER, if your investing in your compnaies 401k plan these charges do not apply. Also, there are maintiance fees for these funds which are ongoing. Some are expense and others cheap, but all take away from your bottom line. If you are a novice investor mutual funds are a good place to start. But there are better alternatives out there.
This has been a rather common question is this forum. I am surprised the Yahoo folks have not featured it. Advatages: 1 diversification 2. low initial investment for participants 3. many flavors to choose from 4. well evaluated by Morningstar 5. great for people who do not wish to research individual stocks Disadvantages 1. expense ratios are high 2. year end capital gains distributions are a real problem with mutual funds 3. open ended funds can only be purchased and sold after market close 4. 70% of mutual funds underperform their benchmarks 5. the really good funds are closed to new investors There is a sub class of mutual funds called index funds that have many of the advantages and fewer of the disadvantages. the disadvantages that they do not have 1. much lower expense ratios 2. most can be traded at any time the market is open. They are traded like stocks 3. virtually no year end capital gains distributions so very favorable tax treatment for most 4. do not by definition under perform their benchmarks except when subtracting the expense ratio which tends to run at less than 0.5% versus 1.5% for the average mutual fund. One of the really bid disadvantages of index funds is that some are capitalization weighted which means that they are not diversified investments.
....." There is no advantage to mutual funds.The disadvantage is I can tell that you have almost no financial education.I say this notr to insult but to open your eyes,get edjucated read Why we want you to be rich by trump and kiyosaki "............. i would go with the opposite of whatever this guy says here, tons of advantages in funds, diversification is a big one, professional management of your money, doesnt take alot to get into them and be diversified and trump and kiyosaki are about the last two people you should read for investment advice
Advantage, its easy to track their past performance,Disadvantage, undisclosed fees. This may bo of some help http://charting-the-market.com/