Everyone who follows the financial news has heard of mutual funds and knows the stock market has generally risen (with various ups-and-downs) for over 200 years. In fact, by most measures, the stock market has made more money for more people, and done it more reliably, than any other investment over the past 100 years! If you want to accumulate substantial wealth, you must include stocks in your investments!
But, most people who "invest" don't study the market. They don't understand it, and they don't have time to manage their portfolio wisely. That's where mutual funds come in. I respect that other people have other opinions, and certainly not all mutual funds are well managed ? you MUST choose wisely and use appropriate caution! But, for most folks, a good, solid, boring mutual fund is the golden path to riches.
Here are my Top 10 reasons to us mutual funds:
1. Selection. You can select from thousands of funds (you'll find one to suit your needs) and you can get information on them easily. Magazines like "Money" are easy to find. Most credit unions have information, and your local library is a goldmine ? and there's the Internet.
2. You Can Start Small. Most mutual funds will let you start with less than $1000, and if you set it up for automatic deposits, some will let you start with only $50. I've spent more than that in a restaurant! There is NO reason not to consider this!
3. Simplicity. You deposit 10% of your income every month. Just pay yourself first, then pay the mortgage, then pay everyone else.
4. Professional management. I don't always have time to research, select, and monitor individual stocks. So, I pay a professional a small fee to do it for me. A good fund manager will make you rich!
5. Compound interest. Depending on what index you pick, the U.S. stock market has gone up an average of over 12% per year for the past 10 years, and it's been almost that high for the past 20 years. The market fluxuates, but the beauty of this is, you don't care! Over 10, 20, or 30 years, the system works every time!
6. Dollar-cost-averaging. The details are complicated, but by investing every single month, whether the market is up or down, you get a tremendous boost from the mathematics. Your "average cost" will always be less than the "average price" you paid! And that is money in your pocket!
7. Diversification. A broad-based growth fund typically invests in dozens of companies in different industries, sometimes even in different countries around the world. If one stock goes down, hopefully dozens of others will go up. There is excellent protection and sound risk management built-in to these funds.
8. Specialization. If you prefer, and if you do the research, there are funds that invest in only a very small number of companies. If you can accept the additional risk, you can invest in one particular industry, or one country, or in companies of a certain size or that are environmentally responsible. This specialization offers the potential for even greater profits, but it can also bring greater potential risk. Study before you invest!
9. Fund "Families". Most mutual funds are offered by management companies that sponsor several different funds, with different objectives. They make it easy to move your money between funds, so as your goals change, you can adjust your investements with a quick phone call, or on the Internet.
10. Momentum. Once you get started, your enthusiam builds. Once you have money "in the market", you'll track it, manage it, and in all probability, your desire to save will increase. If you've had difficulty saving in the past?START! Those monthly statements will be positive reminders to do even more. Yes, you should invest in tax-sheltered retirement plans first, and yes, there are other investment possibilities. And yes, there is some risk, because the market can go down. But to retire wealthy, pick a great, long-term growth fund, invest regularly, and let the system work for you! The key, as always is: GET STARTED!
Here's to your success!
? Copyright 2003 by Philip E. Humbert. All Rights Reserved. This article may be copied and used in your own newsletter or on your website as long as you include the following information: "Written by Dr. Philip E. Humbert, writer, speaker and success coach. Dr. Humbert has over 300 free articles, tools and resources for your success, including a great newsletter! It's all on his website at: http://www.philiphumbert.com
Lincoln Stretch rentals Alsip ..Well, not really. What I mean is I don't mind... Read More
The Winter Games for the Olympics are coming up soon... Read More
The broker told me not to sell because the mutual... Read More
1. Do not spread your money too thin.My friend has... Read More
Right now there doesn't seem to be any "gold fever".... Read More
On the 40 year journey through the turmoil of a... Read More
Profitable day traders recognize that momentum trading is among the... Read More
One of the great "secrets" of successful people is discipline... Read More
With the internet such a huge part of our daily... Read More
Never lose money in the stock market again. Yeah, I... Read More
Ever have one of those sample boxes of candy? Each... Read More
The debate rages all over Eastern and Central Europe, in... Read More
If there is one term over-used when talking about making... Read More
Why? Because I am going to shatter your conventional wisdom... Read More
One of the greatest challenges of investing in stocks is... Read More
Two weeks ago I wrote about what the Securities and... Read More
I read a comment by a forum member on another... Read More
One of the basic laws of physics is that a... Read More
A stock market index is a statistical measure of changes... Read More
Every day I hear someone on CNBC proclaim that "this... Read More
In a previously written article, we expanded the use of... Read More
After some forty years of banking and investments, I retired... Read More
Several times each month I am solicited by various market... Read More
The stock market has been in an up trend for... Read More
What account size do I need?How much money can I... Read More
Western Springs shuttle limo ..With an insecure job market, overworked employees, insufficient retirement savings... Read More
In one of my previous articles (Investing in the stock... Read More
I use the P/E ratio as a secondary indicator for... Read More
Are you attracted to the idea of being in control... Read More
When it comes to mutual funds, there is a lot... Read More
The higher the market goes the more confusing are the... Read More
You must take the time once a month to review... Read More
During the month of January the Dow Jones Industrial Average,... Read More
Outlined below are some of the advantages and disadvantages of... Read More
For some "long term" would mean holding a stock position... Read More
Every publicly traded company is required by the SEC(Securities and... Read More
If you have been dealing with mutual funds for any... Read More
Well, not really. What I mean is I don't mind... Read More
The World Bank claims that some two billion of the... Read More
When most analysts, financial planners, fund specialists and investors try... Read More
If you were to find that you had some severe... Read More
I am hearing predictions by brokers, financial planners, talk show... Read More
Ever have one of those sample boxes of candy? Each... Read More
This is the continuing story of our two imaginary traders,... Read More
Every day I hear from the "experts" on CNBC-TV and... Read More
In 1960 an engineer working for a watch company in... Read More
Do you own any mutual funds? In an IRA or... Read More
Money: the most charged word in the planet. It means... Read More
Invest in the stock market for the RIGHT reason, using... Read More
(1) Stock Market is Tough Place to Make Any Money... Read More
Stocks & Mutual Fund |