There’s no doubt mutual funds remain one of the most popular investment choices. The better-known funds are fairly safe, have occasionally better returns and take a lot of the guesswork out of investing for the shareholder. In these ways, they are an alternative to the blue-chip stock for investors who want to either participate in an entire category or automatically diversify their portfolio without all the heavy lifting.
However, mutual funds are not the answer for every investor. There are some situations where having the extra bulk of a fund can work against an investor. Believe it or not, there are some financial advisors who prefer to downplay these potential disadvantages because they believe the offsetting benefits of a mutual fund can make up for the shortfall.
If you have always believed mutual funds are one of the only ways to invest, read on. There are some important things to consider before choosing a mutual fund.