What are the benefits of mutual funds? Are there any hidden charges in mutual funds?

The main advantages of Mutual Funds are diversification. They tend to spread your investment over Many stocks. Many more than you could possibley buy as an individual. They are especially good for long term investing.

They are an excellent vehicle to define your asset allocation. If you want some small value stocks get a small value Mutual Fund..

As an example my Asset allocation for stocks consists of

Vanguards Small cap fund.
Vanguards Small Cap Value Fund
Vanguards S&P 500 Index fund (lg blend fund)
Vanguards LG Cap Value Fund
Vanguards Reit Fund
EFA Index Foreign (Europe Far East and Australia)
EFV Index (Same as above but Value)
Vanguards Emerging Market Index

Although weighed towards Value(My Choice not necessarily a good Idea for everyone) I have pretty fair Diversification

With Mutual funds you can tailor The exact Asset Allocation you desire.

COSTS COUNT

Generally Mutual Fund costs come in a few o flavors.
First is ER Expense Ratio.This is basically a Mutual Funds cost of doing business. It is in % ex .28 or 1.24. The higher the ER the more it cost you.

Second is 12 B1 Costs were a hidden cost now they have to tell you. Read the Prospectus all fees are included.

Third Front End Sales load This is the Sales Commission paid to someone so you can have the honor and priviledge of owning that fund. It is my suggestion you buy Mutual Funds that are No Load. There are exactly 54Srillion mutual Funds you can find one that is about the same content with no load if you look.

Fourth Deferred Sales Loads These are fees charged to you when you sell the Mutual Fund another Sales Commission.

There are assorted other fees charged by Mutual funds like A sales % If you sell before 90 Days , 1 year...etc.

The key is READ THE Prospectus all fees are there.

Another sort of hidden fee isTurnover (The % of itself a company buys and sells each year.. shows up mostly in ER) Generally high turnover is not good.

If for example you may keep your mutual fund for 5 years add all 1x fees /5 + yearly fees and you get the % yearly that a mutual fund costs you.

If you are picking an INDEX fund go for the cheapest usually Vanguard or one of a group of Low Cost Mutual Funds.

You can check fees on Mutual Funds by doing ...

www.yahoo.com
pick Finance
put in Mutual Fund Ticker symbol
pick Profile - will show you that Mutual Fund's fees as well as a bunch of other neat stuff.

I personally like Low Cost, Passively Managed Mutual Funds

Good Luck Gerry (I talk a lot lol)

There are charges in any investment you buy. I don't know if they are considered hidden. They are always fully disclosed in the prospectus. Please read my profile.

Past performances have proven that mutual funds are amongst the best investment options available to investors. Some of the advantages of investing in mutual funds are portfolio diversification, professional management, low transaction costs, liquidity, transparency etc. It is advisable to read the offer document of a mutual fund scheme before investing to get a detail regarding the scheme, objectives, charge structure etc.

Benefits of mutual funds is that u get more profit than on the fixed income instruments and less risk compared to trading in a share market

The principal benefit of mutual funds is that they provide diversification. You'll have your investment savings spread out among a lot of different companies. Even if some of them turn out to be Enrons, others could turn out to be Googles. Mutual funds save you from having to research individual companies yourself, which could involve a lot of time and effort.

The fees should be disclosed by the fund.

those who are not interested in direct involvement in share markets can select the mutual funds as a way to invest. the fund manager will invest on our behalf of and gives us return on invest ment. there are several mutual funds in public sector and private sector such as sbi. punjab national m.f, tata, birla,kotak mehandra, sundarm paribus, dbs cholamandalam, fidelity, auig, tata, reliance u.t.i abn amro, etc. basically all the schemes are divided into two one is growth and dividend options. it is better to wait minimum 3 years toget good return on investment all the best ammu.

ETF index funds are good too.

the benefits are: 1.u will get good and handsome fund growth if u keep for long term,if u invest through private insuarance companies.2.u will get 5 times insuarance coverage3.u will get 80c (entry to the income tax benefit)4.at the time of maturity u will get your money back with no deduction under 10,10d.,but their is charge deduction like allocation charge and service charge,but dont withdraw your fund before 7-8 years.

There are hidden fees. Read this:

http://www.zeroalphagroup.com/news/mufucost012404.cfm

Make sure you look at the expense ratio. Look at how fees hurt you over time:

http://www.retireearlyhomepage.com/advise.html

Avoid financial advisors. They are usually product salesmen and will cost you a fortune. People that use them get much worse returns than people that do their own investing:

http://www.bankrate.com/brm/news/BoomerBucks/20061206_investment_advice_a1.asp

Buy index funds. They have much cheaper costs and usually beat funds that are actively managed. I like Vanguard.

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