If you are one of those fortunate people whose portfolio consist of having multiple shares of Facebook, Google, Amazon, and a few other “high” price stocks, this article may not interest you. This is because your portfolio is probably valued at thousands of dollars, and that is not a position many of us are in.
However, if you are like the rest of us, who are still trying to make it day by day by choosing to invest in something safe that we know about, like “MUTUAL FUNDS”, you may enjoy this read.
Investing in “mutual funds” is an old-school product that dates back to the 1970’s. The objective of a mutual fund is not to invest in one company but to invest in a group of companies. In using this investment strategy, the risk of losing your investment dollars are minimum because it’s spread out among a basket of stocks. The people who invested in mutual funds for a long period has done very well financially. This is great for you when you are coming up to your retirement days.
However, with today’s high-pitched marketing campaigns, everyone wants to invest in the new exciting products, of index funds, stock sectors, options, swap leveraging hedges, stock futures, crypto coins, and a few more financial instruments. Many of these products we don’t understand but it’s the new thing.
The young people of today have no interest in wanting to invest in mutual funds which has a good track record over time. They don’t like it because it takes too long for them to see big gains.
The market performance of these new fancy products has had mixed results. They may be a big hit today, which everyone loves to brag about, but they also can drop like a brick in water. When these new financial products swing up and down like a yo-yo, and they do so often, not many people have the stomach to watch this volatile activity.
Let me share a secret with you about investing, the prices will normally go up slowly, but they will also come down at a speed which would drive you crazy. And in doing so, they may not bounce back and that would be a painful experience for you.
On the other hand, owning “mutual funds” don’t have all those bells and whistles. It is a product that is steady, safe and accumulates over time by reinvesting their dividends. If you invest in a low-cost mutual fund, it is preferable as the administrative cost are lower which helps in your portfolio performance.
Lucky enough I elected to follow the advice that I received years ago, by investing in mutual funds. In owning this boring and unattractive financial product, I can say that this investment has worked well for me and my family.
However, I must also warn you that I have owned mutual funds for over 30 years there is now a large list of different mutual funds available. Like all investments, some have done very well, and others have been a disappointment. As a result, you need to check with a professional person to help make the right decision for you as it can be difficult.
In closing, I’m not telling you not to invest in those newer financial products, as noted above. I’m saying this because that is a risk that you may be willing to take. Some people like to swing for a home run, while others are comfortable having singles and doubles hits. I just want you to understand the risk that is involved in making these critical decisions.
The people older like myself, have been able to travel abroad to London, Italy, France, Hungry, and other countries because we had funds invested in this old fashion product. We did so because we didn’t sleep on “MUTUAL FUNDS” and I’m, suggesting that you don’t sleep on them, as well.