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Ontario|Investments & SecuritiesStocks, Bonds, and Mutual Funds 281 Mutual Funds: Risks and rewards A mutual fund raises money by selling shares or units to individual investors. The fund uses this pool of money to purchase a variety of investments. The mutual fund makes money by trading a variety of securities. As an investment, mutual funds offer three main advantages.
- Professional Management
First, mutual funds provide an affordable way for individual investors to benefit from professional investment management.
- Easy way to diversify investment
Second, mutual funds are an easy and low-cost way for individual investors to diversify their investment portfolio. All investments come with some risk, but by purchasing several investments and diversifying your investment portfolio, you can lower your overall investment risk. For individual investors to diversify on their own can be expensive. But because mutual funds represent ownership in a wide variety of investments, buying shares in a mutual fund will help an investor diversify their investment portfolio and minimize their overall investment risk at a relatively low cost.
- Liquidity
Third, most mutual funds are very liquid investments. It is fairly easy for investors to buy or sell mutual fund units. There are a wide variety of mutual funds available. You can contact an Investment Advisor for more information about what mutual funds are available. An Investment Advisor can also help you determine which funds meet your investment objectives.
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