Bill Gates probably doesn’t invest in mutual funds (funds), maybe because most of his money is tied up in Microsoft stock.  Warren Buffet made his billions by managing investments, so he does not need their help, either.  But, if you have money to invest and don’t really know how to invest and manage an investment portfolio, you should consider investing in mutual funds.  Millions of average investors do.

Keep in mind that mutual funds are designed for folks who want professional investment management at a moderate cost.  These are not short-term investments, but rather are for people with longer-term investment horizons.  Once you have cash reserves in the bank for short term needs like emergencies, you are ready to invest.

Should you invest in mutual funds?  If one or more of the following apply to you, you probably should.
If you want to accumulate a nest egg for retirement, give these investment packages consideration.  For example, if you have a typical 401k plan at work, most of the investment options available to you are mutual funds.

If you decide to open a traditional IRA or Roth IRA, consider going with a major mutual fund family.  This will give you a wide array of investment options, from safe and conservative to aggressive and growth oriented.

If you want to start slow and learn how to invest as you go, you should invest in mutual funds.  For example, you can set things up so that $100 a month automatically flows from your checking account to a couple of mutual funds within a fund family.

If you want to invest in stocks and/or bonds, but don’t know how to invest in them, join the crowd and do it the sensible and easy way with funds.

If you have a lump sum of money to invest from a retirement plan, a CD that matured or from an inheritance, look no further.  For example, if you leave your job where you had money in a 401k, you can move it and avoid taxes and penalties with a direct rollover to a mutual fund family.

If you are retired and want to earn a higher return with relative safety, try bond funds in addition to money market funds.  When you want to receive a monthly income, they will send you the amount you specify.

If you want an investment in real estate, oil & gas, or gold the easy way, invest in mutual funds and let them deal with the details.

It doesn’t matter if you are young or old, rich or of modest means, conservative or aggressive as an investor.  You need an investment portfolio that contains a variety of investment types.  Unless you really know how to invest and can manage your own stocks, bonds, and money market securities…you should invest in mutual funds.

Finally, if you don’t know much about investing…you’re probably a red-blooded American.  As a financial planner I worked with folks from all walks of life.  Few knew how to invest on their own, so I often recommended mutual funds.

Tags: investing in mutual funds, managing investments, professional investment management, short term investments, traditional ira