No-load mutual funds can help reduce costs
You may have heard of no-load mutual funds. With a no-load fund, you would not be charged a commission or sales charge when you make or sell your investment. This may be one benefit of making a purchase directly with a mutual fund firm versus with a brokerage firm, although there are discount brokerage firms that may not charge commissions or fees, as well.
Leverage professional investment management
With a mutual fund, a professional investment manager determines which asset classes belong in your portfolio. You eliminate the need to build your own portfolio and manage this daily to stay in line with your investment objectives. This likely will reduce the time you spend managing your investments and allow you to plug into a team of experienced financial professionals. Some investors choose mutual funds simply for the convenience and time-saving aspects of having a team of professionals working to manage their investments.
Increase diversification of your investments
Diversification—the practice of owning a broad range of investments to mitigate risk—is a fundamental tenet of investing. Someone who invested all their money in just one stock could lose their entire investment, theoretically, if that stock became worthless. Someone who invested in that stock plus many others would face less risk.
One of the benefits of mutual fund investing is that it allows you to own a diversified portfolio for potentially less than it would cost you to build a prudently diversified portfolio on your own. Buying just 100 shares of a $30 stock, for example, would cost $3,000. Bonds are often sold in denominations of $1,000, $5,000 or higher. By contrast, a $3,000 investment in a mutual fund could get you a stake in a portfolio containing dozens or hundreds of individual securities, providing far greater diversification. Although diversification cannot eliminate risk, it may help mitigate losses in a down market.
If a mutual fund sounds like it may fit your needs, your next step may be to learn more about different types of Thrivent mutual funds.