Are mutual funds investments safe
By ckriswa
@ckriswa (11)
India
September 2, 2007 9:10am CST
If you want to get the benefits of stock markets the better option is to invest through mutual funds.
Because investing through mutual funds are always safe to reap the stock markets benefits.
Mutual funds are managed by the expert peoples who have vast knowledge about the stock market and the companies listed in the stock market.
As an ordinary investor you may not have the chance to know about the companies profile, its trust worthiness, performance, etc.
But the peoples who manage the mutual funds investments have thorough knowledge about the companies they invest.
Further single dollar of your investment is diversified into various companies. Where as if you directly enter into stock market you cannot think about buying script for a single dollar.
Diversification of your investment is possible to various companies if your investments are through some mutual funds companies.
It is always safe if your investment remain for a minimum of 1 year and to a maximum of three years.
While investing through mutual funds you need not worry about the stock market volatility. It is the look out of the fund managers of the mutual funds you have invested.
1 person likes this
1 response
@laydee (12798)
• Philippines
2 Sep 07
Yes, it's much safer and you have a fund manager to watch over your investments.
It's safer due to several things:
1. Low capitalization.
2. Bonds are very safe because volatility is at a minimum (specially for those with low appetite for risk). Of course I'm only talking about the first type of mutual fund, there are actually 3 categories.
3. Some part of the investment is actually invested in the government (treasury bills, etc.) so meaning, the country must first shutdown before your fund/investments disappear.
4. No exit fees and taxes on gains. Specially if you exceeded the holding period.
5. Better performance than banks because portion of the funds are actually invested in top companies.
and the list goes on..
But of course, it actually depends on which company. If the company is legal, if it handles funds well, if you know exactly how mutual fund works, and where your company invests it in. Then it could be said to be safer.
After all, mutual fund investment is not about gambling it's about saving. There's no loss if you are saving actually. You just have to be patient and of course, add-in more.
=)
Pax!
1 person likes this
