Content provided courtesy of USAA.
If you're interested in investing but are concerned that you lack the skills to go it alone, mutual funds could be a solid choice.
That's because there's power — and often safety — in numbers, says JJ Montanaro, a CERTIFIED FINANCIAL PLANNER™ professional at USAA. A mutual fund pools money from a group of individuals who invest in the fund. A professional fund manager invests the money, choosing which stocks, bonds or other securities to buy. Because a fund typically owns many investments, the risk associated with owning any particular security can be reduced. Mutual funds charge fees to cover operating costs, including paying its managers.
Fund managers use their expertise to invest your money, which relieves you from trying to pick out individual securities and determining when to buy and sell. All you have to do is pick the fund and make your investment.
"Mutual funds let you hand over the day-to-day investment decisions to a professional," Montanaro says. "That way you can focus on the things you should be doing for your financial well-being, like saving and creating a budget."
A financial advisor at USAA or another mutual fund company can help you get started. All mutual funds are different, though, so it's worth keeping these things in mind: