An attractive feature of being in a mutual fund is once you’ve invested a certain amount into a fund you then have access to a diversified set of investment options. Done without a mutual fund you would have to buy each of the individual securities you wanted to invest in one at a time, which is not only a logistical pain it also makes you open to additional risk.
In addition to the reason stated above, many people appreciate mutual funds because they follow the age old adage of not putting all your eggs in one basket. If you have your investment money spread out across several different types of investments within your portfolio the amount of risk involved is minimized; if one stock should do poorly another might do well. Let’ s say you invest all you money into a company that declares bankruptcy all your money will be lost. However, should you invest in mutual funds, which means you’re invested in many different companies, chances are much greater that over time the value of your stock portfolio will increase. If nothing else if one of the companies in which you have stock should go bankrupt, you won’t lose everything you’ve invested.
Most people don’t have the time to dedicate to their investment portfolio needed to make it a success. It takes times to research stocks and then buy the individual ones you favor. Managers and analysts on the other hand do this as their day job. They get up each day and research and analyze the markets seeking out the best money making opportunities they can find for their holdings and funds.
There is also the great variety available with mutual funds. You are not stuck with just stocks but can diversify into bond funds, or money market funds or sector funds and balance funds. You generally have some control over how much of your investment you want into the type of accounts available and all this at a small cost and with little to no difficulty.