Mutual funds\nhave enjoyed a distinct love from investors in the US. Currently, it is the\nmost popular investment channel, mainly due to the safety and returns it\nprovides. It’s not that Mutual Funds are all rosy. They do have some\nnegatives specific to their case, which cannot be overlooked.<\/p>\n\n\n\n

Thus, you must\nknow about the pros and cons of dealing with mutual funds before you put your\nhard-earned money into it.<\/p>\n\n\n\n

Improved portfolio management<\/strong><\/p>\n\n\n\n

You will need\nhelp from a professional portfolio manager for trading stocks and bonds. In\nexchange, he\/she will demand a management fee to keep the records updated.\nThus, you get expert guidance to improve the investment portfolio on a\nrelatively small price. <\/p>\n\n\n\n

Automatic reinvestment<\/strong><\/p>\n\n\n\n

Mutual funds are\npopular for reinvesting acquired dividends to buy extra shares. Subsequently,\nthe interest income is used to magnify investment and gain more profit. <\/p>\n\n\n\n

Reduced risks<\/strong><\/p>\n\n\n\n

Generally,\nmutual funds invest the pool of money in almost fifty to two hundred\nsecurities. The diversification dramatically marginalizes the risk of\nindividual investors. There are many stock index mutual funds that hold more\nthan one thousand stock roles. <\/p>\n\n\n\n

Ease of use<\/strong><\/p>\n\n\n\n

Mutual funds are\nnot scary to understand at all. They do not demand huge investment, nor are\nthey traded every second. You can start with anything more than $2,500 with a\nkeen look at their daily closing NAV, net asset value. <\/p>\n\n\n\n

Thus, the risks\nand complications of price fluctuations are scrapped. Plus, there are no\narbitrage events as in case of day trading assets. <\/p>\n\n\n\n

Disadvantages<\/strong><\/p>\n\n\n\n

Sales charges <\/strong><\/p>\n\n\n\n

In case you\nstill don\u2019t know about mutual fund sales charges and the expense ratio, then\nit\u2019s time to brush up your knowledge. Mutual funds that charge more than\n1.20% expense ratio are ranked on the higher cost pedestal. Also, be sure about\nthe sales charges and 12b-1 advertising fees too. You must research for the\nmutual fund that charges the least management fees.  <\/p>\n\n\n\n

Unlawful practices <\/strong><\/p>\n\n\n\n

Managers are\nknown to abuse their powers by window dressing, turnover, and churning. They\nare more likely to indulge in excessive replacement, unwanted trading and sale\nof losers before the quarter-end to maintain the books. <\/p>\n\n\n\n

Tax compulsions <\/strong><\/p>\n\n\n\n

Investors have to pay taxes at tax filing<\/a> irrespective of the size of their capital gains. They are obliged to pay the government on gains, turnover, redemptions, and losses in securities for the entire year.<\/p>\n\n\n\n

Unattractive trade practices<\/strong><\/p>\n\n\n\n

We advise you\nnot to indulge in mutual fund trade before the cut-off time on the day\u2019s NAV.\nIn this case, you will be getting the same price NAV for selling or buying the\nmutual fund. On the other hand, people who are interested in a faster trading\npace can never be impressed by mutual funds.<\/p>\n\n\n\n

Conclusion<\/strong><\/p>\n\n\n\n

Mutual funds are\ngreat in case you are starting your investment career. They provide adequate\ncushion for everyone who is not sure about taking bigger risks. You should\ncontinue investing in them with indulgence in other platforms like stocks. With\ntime, you will create a more diversified and beneficial investment portfolio.\nDon\u2019t hesitate; buy your favourite mutual fund now.<\/p>\n","protected":false},"excerpt":{"rendered":"

Mutual funds have enjoyed a distinct love from investors in the US. Currently, it is the most popular investment channel, mainly due to the safety and returns it provides. It’s not that Mutual Funds are all rosy. They do have some negatives specific to their case, which cannot be overlooked. Thus, you must know about the […]<\/p>\n","protected":false},"author":2,"featured_media":360,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-359","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"\n