Why Invest In Mutual Funds?

by Paul Market

For the investor who is looking to begin a savings program that allows for profit without taking serious risk, mutual funds are those type of commodities. A mutual fund is a managed group of stocks in several companies that are bought and sold for profit by the funds professional managers. As a retirement vehicle, buying into a mutual fund with a retirement investment income of $500,000 or more is a wise decision.

Since the investor in a mutual fund is pooling his money with other investors, the risk of losing money is shared by all of the owners in the mutual fund. The fact is that some mutual funds do lose money but investors should buy low into a mutual fund and keep the fund as part of their portfolio allowing the fund to make money in some years and if losing to bounce back in succeeding years. An investor should keep in mind that the money he is investing in a mutual fund is not money that he will need to maintain his living expenses.

One of the most popular U.S. mutual fund because of its high return to investors, 25% this year, is AMOBX or Morgan Stanley Focus Growth. The mutual fund is invested in large American corporations. Another mutual fund that is very popular and has nice returns is Fidelity Investments. Investors can contact these mutual funds directly or through a stock broker for their prospectus.

Predictors of financially profitable stocks to invest in are pointing investors towards American growth stocks. Therefore, those mutual funds that invest in U.S. growth funds are the mutual funds to buy into for good returns. The purpose of buying into a mutual fund is to make a nice profit and a safe one. The top 10 mutual funds have reported returns to investors of 10% and upwards. These mutual funds that were the most profitable were invested in financial companies like Visa and in medical industry stocks.

If one is interested in researching a mutual fund, one needs their prospectus which can be ordered from the fund itself. An example of information found would be as follows. For the mutual fund Columbia Select Cap Growth that sells as UMGLX, the return to investors for 2010 was 22% which makes it an excellent high performing mutual fund. The fund is managed by Thomas Galvin, Richard Carter and Todd Herget who have invested the fund's assets into shares of stock from Amazon, EOG Resources and MasterCard. Buying into a mutual fund like UMGLX would have been a good investment. The return could be used as income or as reinvestment into the fund. The fund's prospectus would give the investor options that he can choose when buying in.