Browse > Home / Invesments / Investments – Some of the Benefits of using Mutual funds

Investments – Some of the Benefits of using Mutual funds

October 11, 2009

Mutual funds are a kind of investment where investors pool funds for the sole purpose of trading in stocks, shares, bonds, securities and real estate. One of the key advantages of this kind of investment is the ability of the shareholder to reinvest the dividend distributions or capital gains accrued by buying additional stocks or bonds to add to his portfolio. This allows investors to build on their portfolio through dollar cost averaging giving you more shares and in the long run, helping you to avoid excess tax.

Something i do not like about mutual funds is their apparent transparency, from their delays in reporting to their lack of proper information. These delay is caused by the managers failure to immediately disclose their source of gains for fear that the competition would learn about their endeavors. In most cases, they tend to lead people through the wrong path by giving information on the prospectus that does not contain all the factors that determine what the return on your investment would be.

Mutual funds are liquid, meaning that when you need to withdraw from the fund, you only inform the fund company and you will get your money within the next business day. Since people are constantly saving into the fund and others withdrawing the money at the same time, the fund managers are forced to maintain a lot of liquid money in their bank account. This money does not help you because it does not trade and therefore does not contribute in any way to the dividends that the fund pays.

Mutual funds are subject to public scrutiny and each company must submit to the auditor general, annual audited statements of accounts. These records should be accurate and reliable in order to boost the trust of the investors. If, for any reason, the mutual fund company goes under, the shareholders will receive an amount that is related to the ratio of investment they hold in that company.

Your tagged: consort mutual funds.
Share this post:   Stumbleupon  |  Digg  |  Del.icio.us  |  Technorati

Tags: invest, mutual funds, Some of the Benefits of using Mutual funds, using Mutual funds
Written by Herry · Filed Under Invesments 

Comments

Got something to say?