subject: Mutual Funds Trading For Small Investor [print this page] Investing in the stock market can be a fun and exciting way to make money. With all of the various options one has to invest in, there is always profit to be made. For some, it is the investment of stocks, while for others it is the bonds. Of course in today's day and age, more people are turning to mutual funds. Many investors though are asking whether these mutual funds are safe for the small investor.
The first thing that you have to realize is that a mutual fund is actually a large portfolio of stocks already diversified for you. When you open an account, you are not simply choosing to invest in the stock market, but you are hiring a professional investor who only makes any real money if you do.
The mutual fund is much like opening a managed account in that you have a professional investor handling the portfolio. This investor has many years experience in the stock market and is trusted to handle large sums of money. When you op-en an account, you join countless others who have also invested and all of that money is pooled to give the investor greater leverage in trades. This increased buying power means more profits for you.
Mutual funds are considered to be one of the most liquid investments around. If you are in need of some extra money, depending on your broker, an order will usually result in the cash being available for you by the end of business hours that same day. When investing in both stocks as well as bonds this is not at all possible.
You can open your mutual fund account with the bare minimum and then with each paycheck, you can deposit a little more towards your investment. There are no fees for the trades and no need for even keeping an account of all of the shares of stocks either. The broker handles all of these aspects for you and makes the whole process rather simple.
When it comes to investing in stock, it is best for those who have large sums of money to invest to ensure that the portfolio is well-diversified; this prevents dramatic losses on ones investment. For the small investor though, the mutual fund can be considered one of the best possible investments you can choose from because they are considered to be very safe. At any time, a corporation can go bankrupt and its stocks become worthless, but the mutual fund does not fall quite that easy.
As a small investor, not only do you want a safe investment, but you also want one which is very profitable. Mutual funds are perfect for you. You can even look at the mutual fund as a high-interest savings account if you wish.
