Mutual Funds - The Mutual Fund Retirement Plan For Long - Term Wealth Building

By Adidas Wilson

Mutual funds have become popular among investors and they are easy to understand. They offer benefits and simplicity to investors with limited money, time, or knowledge. If you are still undecided about whether mutual funds are great for you, check out these advantages. Asset diversification is a key rule of investing for small investors and large ones. Diversification is the combination of various types of asset classes and investments within a portfolio. It helps in managing risk. To have a diversified portfolio, it is wise to purchase stocks that have different capitalization from various industries as well as bonds with different maturities from various issuers. This strategy may be costly for an individual investor. When you buy mutual funds, you get the advantage of instant asset allocation and diversification without the high cost that you would have incurred when creating individual portfolios. The downside to this is that a single mutual fund may not provide you with enough diversification. Check whether the fund is industry or sector specific. For instance, if you invest in a certain sector, you may have your money spread over multiple companies. However, if that sector falls, your investment may suffer. To understand economies of scale easily and quickly, think of volume discount; the more of an item you purchase, the cheaper it becomes. The same applies when buying and selling securities. Buying a single security at a given time will see you pay higher transaction fees. Mutual funds lower their investors' transaction costs by taking advantage of selling and buying volume.

• Language: English
• Publisher: Adidas Wilson
• Release date: Feb 19, 2019
• ISBN: 9781386433699

Book preview

Disclaimer

THE AUTHOR HAS MADE every effort to ensure the accuracy of the information within this book was correct at time of publication. The author does not assume and hereby disclaims any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from accident, negligence, or any other cause.

Table of Contents

Introduction

Ch. 1 - Money Market Fund

Ch. 2 - How to Invest in Mutual Funds

Ch. 3 - Mutual Funds: Picking a Mutual Fund

Ch. 4 - When to Sell a Mutual Fund

Ch. 5 - Mistakes to Avoid When Choosing Mutual Funds

Ch. 6 - Mutual Funds: The Costs

Ch. 7 - How to Buy Mutual Funds Online

Ch. 8 - Different Types of Funds

Ch. 9 - Bond Funds to Buy for the Long Term

Ch.10 - Compound Interest

Ch.11 - Net Asset Value – NAV

Ch.12 - Building a Profitable Portfolio

Ch.13 - Invest in Small-Cap Stocks

Ch. 14 – Exchange Traded Funds

Ch. 15 - Fidelity Funds to Buy

Ch. 16 - Vanguard Funds to Hold for the Long-Term

Conclusion

References

Introduction

Mutual funds as an investment vehicle are becoming popular by the day among both seasoned and newbie investors. Mutual funds are diversified in nature and, therefore, offer a lower risk of loss. This has paved the way for many people to invest in the open market. The mutual fund of today is a little bit different from the ancient one; thanks to the combination of several investment models. It is not very clear when the mutual fund was developed. However, there are stories that began in Europe and spread to the rest of the world. They give a rough idea. The most popular one is that of a Dutch merchant called Adriaan Van Ketwich. In 1774, he came up with the idea of getting modest investors to create a pool of investments. He began the Eendragt Magt (translates to unity creates strength). Unity Creates Strength offered small-time investors the opportunity to own a part of a diversified fund that consisted of income from securities and bonds. According to several experts, this was the first closed-end fund. Some see Ketwich as a hero became his idea came at a time when it was needed the most—the European financial market was troubled. To manage the risks of the fund, the investments were spread out to Southern and Central America, Russia, Sweden, Spain, Germany, Denmark, and Austria. In 1775, the shares were open to Amsterdam. Two managers were responsible for making decisions concerning the portfolio’s composition. The Unity Creates Strength fund was liquidated in 1824. Mr. Van Ketwich’s model inspired other groups. One of the groups that came up after this was the Voordeelig en Voorsigtig (translates to profitable and prudent). This one was started by bankers from Utretch, a Dutch town. Following the success of Unity, Mr. Van Ketwich created a second fund in 1779, Concordia Res Parvae Crescunt (translates to small matters grow by consent). It was different from Unity in that, portfolio managers were