Is it hard to get excited by a title like that? Sorry, this really isn’t a get rich quick kind of of website. I’ve been away for a while but I’m back hoping to post a little more regularly and share my thoughts on the world economic market. So let’s get back to the point which is of course mutual funds. I know they are dull but they are a great investment regardless of how the stock market is. So here’s the breakdown, you can make your own mind up at the end if it’s something for you!

Strengths of Mutual Funds

The main strengths are of course diversification and liquidity. If you’ve been reading this site for any length of time you’ll know I’m a big promoter or diversitication. Not everyone agrees. I’m a bit more cautious than most. The general idea is that you spread the risk by by spreading your investments across different holdings as well as different areas. This means that if one is suddenly thrown into turmoil you won’t have to panic about losing all your cash. Liquidity gives you the option to cash out and run to the hills with the cash equivalent of your holdings! I’m not sure what you’d do in the hills with all the money but hey, that’s up to you.

 

Weaknesses of Mutual Funds

It’s a bit dull. Yes I said it. You can’t impress your friends with all the mutual fund goodness. If this is something that you’re into then back away now. I’m sure there’s some new tech company wanting your dollar. If it’s not then stick with me, we’ll get through this dullness to a pot of gold. That’s assuming the fund manager knows what’s he’s doing and with that comes another weakness of mutual funds. You lose the power of control as someone else is making all the decisions. I actually look at this as a bonus as it’s one less thing for me to worry about.

Buy Mutual Funds

Mutual Funds are a necessary bore

Personally, I love index funds which basically buy up a whole portion of the stock market. The Motley Fool is a fan too so don’t just take my word for it. I’m off now to watch my mutual fund increase very slowly in value. Check back later for a full breakdown of types of mutual funds and just why I love index funds so much!