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They say that investing in mutual funds may be the smartest financial decision you are yet to make. In the past decade, more and more people are beginning to invest their hard-earned savings in mutual funds. Why the craze? What are the features of mutual fund investments that seem so attractive to investors? Mutual funds provide different features which makes them a generally smart investment choice. Here are some of these characteristics:

Theoretically, the primary advantage that mutual fund investment has is the professional fund management that comes with buying shares in pooled funds. When you buy a portion of a mutual fund and become a shareholder, you are also choosing a professional fund manager. This manager is in charge of the pooled money and sells stocks using these funds. Instead of thoroughly researching investment opportunities, you have a mutual fund manager that has been trained to handle it for you.

Diversification is a smart investing strategy that spreads your investments across a broad range of industry sectors and companies. Spreading the funds helps lower the risk of losing money in case a company or sector fails. Over-all risk is greatly minimized by proper diversification since losses in one investment can be easily off-set by profits in another. Mutual fund investments provide you an access to a diversified pool of ponds achieving more diversification compared to owning individual stocks or funds.

Transaction costs in mutual funds are lower than an individual’s securities transactions since a mutual fund purchases and sells huge amounts of securities in one go. When you acquire a mutual fund, you are able to diversify your investments without the plentiful commission charges. Commission charges can eat up a good deal of your savings and compounded with the transaction fees, you are left with little to no gain. With mutual funds, you are able to do large scale modifications to your portfolio for less money.

In mutual fund investments, you can redeem your shares at any time and only need to hang around several days to be able to access your funds. You are also able to sell your shares in a short period of time without much difference between the selling price and the most up-to-date market value.

Mutual fund investments also provide a relatively higher potential for returns. Investors are given access to potentially greater yields that are normally available to them. The investment manager also makes sure that the pooled investments generate the best possible returns of the given degree of risk of the mutual fund.