Why mutual funds buying is the best investment
LONDON: Mutual funds may not look sexy, but for most people, they're the best way to achieve financial goals. That's because mutual funds are professionally managed and offer diversification, which you don't get when you buy individual stocks.
First, let's consider why professional management matters. When you buy a fund, the fund takes your money and pools it with others' money into one big pile. The fund manager's job is to decide which stocks to buy, sell, and hold-while you're busy at work and raising children. Each manager uses a methodology or discipline to select stocks or bonds. Every day, fund managers and their team of analysts examine the companies they own to see if they still fit their criteria for securities selection. Fund managers spend a lot of time visiting the companies in which they invest. Sure, they can read a research report about a company. By meeting company executives face-to-face, fund managers can get a much better sense of how the company operates and what advantages it has over competitors. Fund managers also visit with a company's competitors. Plus, managers do what's known as "channel checks," which means they visit the company's stores or customers. For example, if a fund manager owns shares of Best Buy (BBY), he'll visit a store to see how many customers are there and what people are buying. -Afp