Question : Is it wise to invest in different mutual fund companies or just one?
Is it wise to invest in different mutual fund companies or just one company for maximum returns? My reason is that in case Company A fails, I still have a backup with other companies.What is your opinion on this, will it matter if I invest in different companies? What are the chances that a mutual fund company will actually fail/close?About diversification: isn't mutual funds already in itself diversification?
- asked by ratmforever
All Answers:
Answer #1
diversify! don't put all ur eggs in one basket
- answered by King James
Answer #2
Why don't you invest ALL of it into money marketaccounts of flexible CDs and the worst thing thatcould happen is that the interest you arerecieving might go down a little.I lost thousandson 9/11. It took until february of this year toget my money BACK. Felx CDs or money-markets mightnot get the amazing "millionare overnight" of thestock market, but they won't make you poor either.
- answered by Martin S
Answer #3
Did you know that 80% of mutual funds underperform the market? Just a thought.
- answered by Barney
Answer #4
Mutual funds are diversified to an extent. It isalways good to diversify even if it's betweendifferent fund managers. Also it's good to getdifferent investments working for you why not havesome CDs and bonds as well. It never hurts tohave a small amount of income investing to go withyour growth investing.
- answered by Greg S
Answer #5
Mutual Fund companies tend to not fold, but I canunderstand your concern. But generally whenpeople invest in funds they look at differenttypes of funds - like large cap domestic,international, small cap domestic, emergingmarkets, etc. It certainly can't hurt you to gowith different fund companies.I suggest you take alook at index funds - Vanguard and Fidelity havesome good ones. They invest in a variety ofmarkets and beat mutual funds over time. Theyalso have low expense ratios. So if you want tolook at seperate fund companies take a look atsome of Vanguard's index funds.
- answered by voluntarheel
Answer #6
The big companies are fairly secure, so failure isprobably not the issue.One thing to consider ishow much money youare investing. If you have itbetween two companies, both will charge amaintenance fee, and you won't qualify for"break-points", which is the level where you getreduced commissions. Also, within a fund family,you can generally exchange from one fund toanother without commissions. Just a few thoughts.
- answered by Justin T
Answer #7
Its a better idea to invest in more than 1 mutualfund. Yes MF is about diversification but you alsoneed to diversify across mutual funds and acrosstypes of funds as well.You may want to look atdifferent sectors based on their performance; youmay want to look at short term/long term funds,etc.Dont diversify too much or management andtracking will become too much to handle.
- answered by SM
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