There is no golden rule that “Mutual Funds Are Better Than Stocks” but for majority of investors you can safely say that “Mutual Funds Are Better Than Stocks” and so let us discuss more on this today. Before I begin let me make it very clear that investing in mutual fund is no difference than investing in stocks and if share market crashes today then mutual funds would also crash and the crash in funds may be more than some individual stocks.
First let me explain the concept of mutual fund in a very simple possible language.
Mutual fund is a pool of money contributed to by investors of various type and sizes. There will be a fund manager hired to invest this accumulated cash with a goal of this fund manager is to maximize return with minimalistic risks. To do this funds are primarily composed of variety of stocks but depending on the type of fund it may also include debt and other fixed income part to maximize return with minimize risks.
Mutual funds have an edge over stocks for majority of investors and so it is important to understand the advantage mutual fund have over direct investment in stock.
Mutual funds are not all glittering gold and they also come with disadvantages
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