Diversification is the main idea behind mutual funds. Smart investors should hold man types of assets, which includes stocks, bonds and cash. Diversification can lower risk because when some assets are up in value, others are usually down in value. The spreading of trading costs over a larger investment in-turns brings the percentage of transactions cost down in a mutual fund. Additionally, each investor does not have to worry about doing research which further saves expenses. Mutual funds also keep track of when people buy and sell. This makes tax reporting easier and lowers record keeping costs. Before buying a mutual fund, one should consider the following five key questions. First, how has it performed? Second, how risky has it been? Third, what does it own? Fourth, who runs it? Lastly, what does it cost?
Vanguard Explorer is a small growth fund that produces above average returns and has little volatility compared to its peers. The performance
If I had the money......
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