Benefits of a Mutual Fund
Own a Portfolio with Small Sums of Money
Imagine, one magical evening, as you sip your coffee after an unusually productive day, you feel optimistic. One ought to feel optimistic. Under the spell of fresh breeze, the golden sky and brimming optimism, you make a decision – you decide that you would own share in each & every company in S&P 500!
At the time this is being written, the current share prices indicate that you need at least USD 50,000 to action your decision. I must remind you that this amount will buy you “only one share” each in every company that’s included in the S&P 500.
Many of our friends, especially those at the beginning of their investment journey, do not have the prescribed amount. In Egypt, you’d need something like EGP 3,000 to own one single share in each & every company in EGX 30. Not as much as what you need for S&P 500, but a tidy sum, nevertheless.
Here comes the benefit of mutual funds.
With just USD 400 investment in a right mutual fund you could own shares in S&P 500; in EGX 30 with just EGP 15. A far smaller investment amount than you’d have needed, had you invested individually.
Professional Fund Management
Why do we enlist a certified fitness trainer? Or a proven nutritionist?
Just as a fitness trainer is accountable for achieving your fitness goals in a given time frame, while ensuing your short term and long-term safety, a professional fund manager ensures that you steadily move toward your financial goals in the given time frame while ensuring that your money is safe.
Just a fitness trainer extracts the maximum out of you, a professional fund manager extracts the maximum out of your money without compromising on its safety.
Just as your trainer notes how your body reacts to external forces beyond your control, a professional fund manager maneuvers your investments in the ever-changing financial highs and lows.
Many people are not experts in money management. Some learn the ropes (it’s no rocket science after all!) on their own, others prefer to do activities they find more interesting than dabbling in stocks & bonds. Whatever category you put yourself in, you may like to have a professional fund manager – either to discuss your ideas or to entrust them fully with your hard-earned money. Hiring a personal fund manager may be far more expensive than having a professional mutual fund manager.
A mutual fund is managed by professional fund managers, who spend years earning the qualification and license to work as a fund manager and then spends all their working hours, along with a team of researchers, figuring out the best way to manage your money. As the pool of money is bigger in a mutual fund (with many individual investors chipping in), it makes it possible to afford the cost of entrusting the fund management to a professional.