Answer:
People consider mutual funds a more convenient investment than stocks or bonds because of the following:
1. Mutual fund is less risky compared to stocks or bonds
2. There is comparatively higher returns compared to stocks or bonds
3. Mutual funds are managed by experts compared to stocks or bonds
4. Liquidity
5. Mutual funds are convenient compared to stocks or bonds
Explanation:
Mutual fund is an investment whereby funds are mobilized from different investors to buy shares, stocks, bonds of different entities operating in different industries.
The total investment is known as a portfolio. Such investment is managed by experts known as portfolio managers.
1. Mutual Fund is Less Risky Compared to Stocks or Bonds
Unlike stocks or bonds, mutual funds invest in securities of varying risks thereby diversifying the entire portfolio.
2. There is Comparatively Higher Returns compared to Stocks or Bonds
Unlike stocks or bonds, mutual funds invest in different industries and sectors thereby ensuring some stability and high returns
3. Mutual Funds are Managed by Experts Compared to Stocks or Bonds
Mutual funds are managed by skilled individual who are highly knowledgeable about the market, but such skill may be lacking for individual investors who wants to invest in stocks or bonds.
4. Liquidity - Mutual funds enjoy some degree of liquidity as they are allowed to buy or sell their share of the fund once a day at the close of the market at the fund’s net asset value
5. Mutual Funds are Convenient Compared to Stocks or Bonds
Unlike stock and bonds you do not need to do personal research before investment with mutual fund. stock monitoring is done by the fund manager.
