Your Questions About Advantages And Disadvantages Of Investing In Mutual Funds

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David asks…

Please help me. If you answer these 5 questions I will give you 5 stars. It has to do with math :))?

1. How would you start achieving your financial goals, or have you already started planning? (Give some specific examples.)
2. Which of the following savings/investment accounts would you invest in: saving bonds, CDs, traditional IRAs, Roth IRAs, 401K, 403(b), stocks, mutual funds, pension, and annuities?
3. Why did you select the aforementioned savings/investment accounts?
4. What are the advantages of the account(s) that you chose for your investment strategy?
5. What are the disadvantages of the account(s) that you chose for your investment strategy?
Just tell me about yourself, so I will have an idea how to do mine.

financi4 answers:

Overall, these questions have NOTHING to do with math.

1. Not answering, do it yourself.
2. If I was a conservative, I would do savings bonds.
3. Safest investment.
4. Guaranteed money
5. Not much return.

Michael asks…

What are the advantages and disadvantages of investing in mutual funds?

If you could tell me the same about life insurance and certificate deposits that would be great

financi4 answers:

Some advantages:

Diversification, professionally managed, low costs and excellent value, wide variety and flexibility, SEC oversight, virtually no risk of bankruptcy, good liquidity, and at good no-load places, no slimy sales reps to deal with.

Some disadvantages:

Very few; but if you want to pick and choose every last company you want to put money in, a fund might not suit you. Also, if the place you are getting the fund at is sticking it to you with high fees, sales loads, and klepto 12b-1 fees, you are getting sorely pickpocketed.

For CDs, they are safe and secure, but right now interest is so pathetic that you are essentially losing money when inflation is factored in.

Life insurance (term) can be good to protect your family if fate has it in for you. But as an investment
life insurance (typically whole, variable life, or universal) is not a good investment choice. You should use tax advantaged choices like 401k’s and Roth IRAs. And while if you die early the money they give your family is not subject to inheritance taxes, the insurance agents usually charge high commissions and mutual funds usually beat them as investments. You’d have to be pretty freaking wealthy for this to make it worth it.

James asks…

What are the advantages and disadvantages of investing in mutual funds?

financi4 answers:

Advantages: certain mutual funds might invest in areas where they have more knowledge than you and if you want to invest in those areas, a mutual fund offers advantages. These might include micro-cap stocks, small cap stocks, any number of various foreign stocks, bonds perhaps because the funds can negotiate much better prices than individuals can but a bond mutual fund never comes due which is a big disadvantage.

For beginning investors specifically mutual funds offer diversity of investments with very little capital commitment. Very little if any specific risk.

Disadvantages: You pay an annual fee for the privilege of investing in a mutual fund.

The investment management team might not be cracked up to what it is supposed to be. Most mutual funds are evaluated on past performance. That may not extrapolate into the future.

Many mutual funds have billions in assets. I can’t even imagine trying to manage billions in assets. The more assets a mutual fund has the more difficult it is to better the norm, which is why many but not all would buy a mutual fund to begin with.

If you are looking for annual income most mutual funds should be avoided. Their management fee puts paid to annual income with some certain exceptions those being leveraged closed end mutual funds.

Richard asks…

Please help me. If you answer these 5 questions I will give you 5 stars. It has to do with math.?

1. How would you start achieving your financial goals, or have you already started planning? (Give some specific examples.)
2. Which of the following savings/investment accounts would you invest in: saving bonds, CDs, traditional IRAs, Roth IRAs, 401K, 403(b), stocks, mutual funds, pension, and annuities?
3. Why did you select the aforementioned savings/investment accounts?
4. What are the advantages of the account(s) that you chose for your investment strategy?
5. What are the disadvantages of the account(s) that you chose for your investment strategy?
Just tell me about yourself, so I will have an idea how to do mine.

financi4 answers:

Sorry that I’m not providing an answer to these questions, but I’m very curious to know the answers myself. I’ll be keeping an eye on this to see if anyone has some good answers. I know only a little and will chime in (edit my response) if no-one has been able to tell you anything about the above mentioned investments! Love the questions!

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