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Advantages and Disadvantages of Company stock Versus Funds

What are the advantages and disadvantages of investing in mutual funds verses your company's stock for retierment investing funds?

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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 ...

Solution Summary

In this solution, I discuss the relative advantages and disadvantages to a retirement investor of investing in company stock versus a mutual fund.