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Tip of the Week – Invest in Mutual Funds

A mutual fund is professionally managed investment vehicle that pools money from individual investors to purchase securities. Mutual funds have several major advantages over individual stocks. First off, they are professionally managed. Most of us barely have time to eat breakfast, let alone dissect individual stocks. But fund managers have the time and expertise to properly research and analyze securities. Second, they are a low cost way of creating a balanced portfolio. The transaction cost alone of creating a balanced portfolio using individual stocks make mutual funds a much more attractive option. Third, they simplify the process for individual investors. With one single purchase, an individual can create a diversified portfolio. Creating a diversified portfolio using individual stocks could take hundreds of transactions.