Is it wise to invest in different mutual fund companies or just one?
ratmforever asked:
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.
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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?
April 1st, 2009 at 4:51 am
diversify! don’t put all ur eggs in one basket
April 2nd, 2009 at 9:56 pm
Why don’t you invest ALL of it into money market accounts of flexible CDs and the worst thing that could happen is that the interest you are recieving might go down a little.
I lost thousands on 9/11. It took until february of this year to get my money BACK. Felx CDs or money-markets might not get the amazing “millionare overnight” of the stock market, but they won’t make you poor either.
April 3rd, 2009 at 8:36 pm
Did you know that 80% of mutual funds under perform the market? Just a thought.
April 3rd, 2009 at 11:20 pm
Mutual funds are diversified to an extent. It is always good to diversify even if it’s between different fund managers. Also it’s good to get different investments working for you why not have some CDs and bonds as well. It never hurts to have a small amount of income investing to go with your growth investing.
April 6th, 2009 at 2:36 pm
Mutual Fund companies tend to not fold, but I can understand your concern. But generally when people invest in funds they look at different types of funds - like large cap domestic, international, small cap domestic, emerging markets, etc. It certainly can’t hurt you to go with different fund companies.
I suggest you take a look at index funds - Vanguard and Fidelity have some good ones. They invest in a variety of markets and beat mutual funds over time. They also have low expense ratios. So if you want to look at seperate fund companies take a look at some of Vanguard’s index funds.
April 8th, 2009 at 1:50 am
The big companies are fairly secure, so failure is probably not the issue.
One thing to consider is how much money youare investing. If you have it between two companies, both will charge a maintenance fee, and you won’t qualify for “break-points”, which is the level where you get reduced commissions. Also, within a fund family, you can generally exchange from one fund to another without commissions. Just a few thoughts.
April 9th, 2009 at 12:41 pm
Its a better idea to invest in more than 1 mutual fund. Yes MF is about diversification but you also need to diversify across mutual funds and across types of funds as well.
You may want to look at different sectors based on their performance; you may want to look at short term/long term funds, etc.
Dont diversify too much or management and tracking will become too much to handle.