There are a lots of pros and cons to every investment you can possibly do now on days. And mutual funds arent any different from other investments.
Of course there are many investors who will say that mutual funds have almost zero cons to it but that not true. Mutual funds have decent amount of cons to it.
Mutual funds are one of the top tools Americans use to grow their wealth and save for retirement. There were over $21 trillion dollars only invested in funds back in 2019 and now on days this amount have more likely grown with at least couple of billions.
Pros To Mutual Funds
Mutual funds are easy to buy and sell. And as well as they are very easy to keep the track of.
All funds are in greater or smaller level managed by professionals whom been in the market field for a while and knows probably much more than you do when it comes to investing.
Which for you means that proffesionals managers in these funds you choose will do the hard work for you
Funds lets you diversify your portolio much faster and easier than most other investments you can do. Because when you buy funds you buy x amount of invidual stocks at once in only one transaction. This means that you buy x amount of stocks from different companies at once.
Cons to Mutual Funds
If you invest in funds you will need to pay a annuak fee for the running of the fund. This is most known as an expense ratio and the whole idea behind it is based on a small percentage of the total value of your shares.
Lack Of Control
You will not have control over what invidual stocks the fund buys or seels, because it is up ti managers of the funds and that the one who have investent the money in the fund.
Lets say that one or two of the comapnies in that fund is doing amazing and they have a big return. But you who own their stocks through a fund will get a lesser return than a investor who owm their strocks directly and not through funds. Because funds will for the most part use that return to balance out the fund on other stocks.
You arent owning stocks directly
When you are investing in funds you arent owning any stocks but rather giving the money to the fund who owns the stock. And the fund is sort of saying that you own a stock when you invest in funds.