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the advantage and disadvantage of holding mutual funds.
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[QUOTE="Wiserr, post: 192737, member: 57806"] holding mutual fund has advantages and disadvantages. Advantages of Holding Mutual Funds include 1.Diversification Mutual funds invest in a variety of assets. The funds spread their holdings across various investment vehicles, reducing the effect any single security or class of securities has on the overall portfolio. Because mutual funds contain hundreds or thousands of securities, investors are less affected if one security under performs. 2. Affordability Affordability - As a small investor, you may find that it is not possible to buy shares of larger corporations. With Mutual Funds small investors can get started because of the minimal investment requirements. Some apps such as Cowrywise give one the opportunity to buy mutual funds for as low as N100 per month. 3. Transparency Mutual fund holdings are publicly available. This ensures that investors are getting what they pay for. Investors can also see the underlying securities (stocks, bonds, cash, or a combination of those) that the mutual fund portfolio holds. All of the information you need to know, plus some you don’t need for investing, would be found in the mutual fund prospectus, which could easily be found on the mutual fund company’s website. 4. professional Management many investors don’t have the resources or the time to buy individual stocks. This is where professional management is valuable. Investing in individual securities, such as stocks, not only takes resources but a considerable amount of time. On the contrast, mutual Fund accounts are managed by qualified professionals. These professionals invest only after careful analysis of the performance and prospects of different securities. It is a continuous process that takes time and expertise which will add value to your investment. 4. liquidity You enjoy easy liquidity of your investments as you can easily get out your capital or profits from the mutual funds. With your mobile phone, you can request to have your funds and your money will be credited to your account. However, charges may apply to your interest if you liquidate before a stipulated period after investment 5. regulations Mutual Funds are required to be registered with the Securities and Exchange Commission. They are obliged to follow strict regulations designed to protect investors. Disadvantages 1. performance the performance of your holdings is limited to that of the underlying assets the fund owns. For example, with an equity mutual fund, the performance of the fund is limited to the performance of the stocks it owns. 2. No Control Over Portfolio If you invest in a fund, you give up all control of your portfolio to the mutual money fund managers who run it. The managers of mutual funds make all of the decisions about which securities to buy and sell and when to do so. This can make it difficult for you when trying to manage your portfolio. Another disadvantage of mutual funds is that you pay management fees. However, most prospectuses and fact sheets provide information on the total expense ratio (TER), so you can shop around for those with lower fees. [/QUOTE]
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the advantage and disadvantage of holding mutual funds.
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