Making money through investing is not free. It might seem like free money because you don't have to go to work, do your job, and then get a paycheck. In actuality you are paying for it with your time. When you decide you want to buy some stock, you don't just think it and watch it happen. You have to find a broker, research the stock you want, and pay a commission. That is not free.
One of the easiest types of investments are mutual funds. With a mutual fund several to hundreds of people pool their money together. A fund manager uses this money to buy lots of different stocks and/or bonds. With some mutual funds, you have to pay a commission, usually as a percentage. For example, if you earned 9% this year and they charge a 2% commission, you will only earn 7%. On the other hand, you could invest in no-load funds and pay no commissions.
There are many obvious and not so obvious advantages to no-load funds. When you don't pay a commission, you save money. Also, the money you save is purchasing you more investment which also earns you more money.
By investing you are making your money work for you. The more you invest, the more money you'll make. Investing in no-load funds allows you to do this seamlessly.
As I mentioned, another way that investments cost you is through time and effort. If you are buying stocks and bonds, you have to research the company you are buying shares of stock from. If you just invest in a company that you blindly pick from the newspaper, you are greatly increasing the risk of your investment.
There is yet another time costing activity to investing directly in stocks. You need to know how to invest and how to research stocks. This is going to take quite a bit of time and learning. Once you get going, this time will reduce, but you'll always be honing your skill.
With a mutual fund, you don't need to know much about investing because the fund manager does all this for you. On top of that, they have years of experience in choosing stock and can probably do a better job than you. You save hours and hours by only spending a small amount of time choosing a mutual fund. Mutual funds stay diversified, so you really only have to make this choice once.
You can choose a loaded fund, but you'll pay for it. Even if it does earn more than a no-load fund, the earnings will probably even out in the end. Plus, you can never be guaranteed a rate of return. Invest in a mutual fund for the easiest, most diversified portfolio, instantly. - 21151
One of the easiest types of investments are mutual funds. With a mutual fund several to hundreds of people pool their money together. A fund manager uses this money to buy lots of different stocks and/or bonds. With some mutual funds, you have to pay a commission, usually as a percentage. For example, if you earned 9% this year and they charge a 2% commission, you will only earn 7%. On the other hand, you could invest in no-load funds and pay no commissions.
There are many obvious and not so obvious advantages to no-load funds. When you don't pay a commission, you save money. Also, the money you save is purchasing you more investment which also earns you more money.
By investing you are making your money work for you. The more you invest, the more money you'll make. Investing in no-load funds allows you to do this seamlessly.
As I mentioned, another way that investments cost you is through time and effort. If you are buying stocks and bonds, you have to research the company you are buying shares of stock from. If you just invest in a company that you blindly pick from the newspaper, you are greatly increasing the risk of your investment.
There is yet another time costing activity to investing directly in stocks. You need to know how to invest and how to research stocks. This is going to take quite a bit of time and learning. Once you get going, this time will reduce, but you'll always be honing your skill.
With a mutual fund, you don't need to know much about investing because the fund manager does all this for you. On top of that, they have years of experience in choosing stock and can probably do a better job than you. You save hours and hours by only spending a small amount of time choosing a mutual fund. Mutual funds stay diversified, so you really only have to make this choice once.
You can choose a loaded fund, but you'll pay for it. Even if it does earn more than a no-load fund, the earnings will probably even out in the end. Plus, you can never be guaranteed a rate of return. Invest in a mutual fund for the easiest, most diversified portfolio, instantly. - 21151
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