Jasmine
VIP Contributor
One significant downside of investing in mutual funds is the potential for lower returns compared to the stock market. For instance, if you invested $100 in the stock market, your shares could potentially grow to $1000 in five years. However, if you opt for mutual funds and receive a 20 percent return, you would only earn 20 percent of $100, or $20 per year. When there is a loss, your $100 investment in the stock market could fluctuate and possibly decrease to $10, however, with mutual funds, you're assured a fixed return, regardless of market conditions. However, if you calculate the average returns along side risks, stock market is always better.
