What are the advantages and disadvantages of investing in mutual funds verses your company's stock for retierment investing funds?© BrainMass Inc. brainmass.com October 25, 2018, 12:56 am ad1c9bdddf
The purpose of investing for retirement is to replace funds you would otherwise earn as a salary with investment returns. Mutual funds are investment pools; that is, the investments of many participants are pooled and invested in a variety of securities. Mutual funds may be actively managed, whereby the manager researches each potential investment and carefully monitors it for signs that the fund should increase, decrease, or eliminate its stake in the investment. Alternatively, the fund may replicate an established index, such as the S&P 500 or the Dow Jones Industrial Average. Funds may also invest in either one type of securities (such as stocks or bonds) or in multiple types, and in one sector of the market (e.g., large capitalization stocks, real estate investment trusts, or foreign ...
In this solution, I discuss the relative advantages and disadvantages to a retirement investor of investing in company stock versus a mutual fund.
Risk and return - investment advantage/disadvantages
There are two different funds listed below for you to choose to invest in.
Question: What are the advantages and disadvantages of choosing the Arias Large Company Stock Fund compared to the Arias S&P 500 Index Fund?
- Arias S&P 500 Index Fund - this mutual fund tracks the S&P 500. Stocks in the fund are weighted exactly the same as they are in the S&P 500, minus expenses. With an index fund, the manager is not required to research stocks and make investment decisions, so fund expenses are usually low. This fund charges expenses of 0.20 percent of assets per year.
- Arias Large-Company Stock Fund - this fund invests primarily in large capitalization stocks of companies based in the US. The fund is managed by Melissa Arias and has outperformed the market in six of the last eight years. The fund charges 1.50% in expenses.View Full Posting Details