Question

Why do many people choose to invest their money in mutual funds?

Mutual funds pay dividends every month, which is more often than other investment options.


The pool of investors that buy mutual funds is small, so the potential for loss is limited.


Mutual funds favor bonds over stocks, which guarantees investors some return.


The stocks and bonds purchased by mutual funds are chosen by financial experts.

Answer 1

Among the reasons why an individual may choose to buy mutual funds instead of individual stocks are diversification, convenience, and lower costs. Actively managed funds require a portfolio manager who constantly updates their holdings, while a passively managed fund's portfolio is built on a buy-and-hold strategy.

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