Is it worth buying mutual funds and then investing the money made over time in the share market ?

Interesting question.

Why do people buy mutual funds to begin with rather than stocks in companies in the first place?

There might be several reasons. Do not know how to pick stocks. Need the diversity that mutual funds offer to reduce the specific risk. Acquire mutual funds that invest in certain market areas that would be difficult to invest in on ones own. Like the past performance of a particular mutual fund.

For a person that does not require any of those mutual fund services or perhaps I should say has a deminished requirement, then, yes, that would be an option to consider. Eliminate the expense ratio and invest the money yourself.

There are also a couple of advantages to doing so besides the elimintation of expenses. You will not get socked at year end with a large capital gains dividend on which you will have to pay taxes. You may be able to avoid some of the investment mistakes of the mutual fund manager. Many of them must make quite a few misakes because 70% under perform the market averages. You will not have to avoid buying Super Dupper Nano Thing a Mabob because the company only has 10,000,000 shares outstanding and for you to take even a small $2,000,000 position would require buying up 75% of the stock which you can not do.

for mutual funds you can reinvest the dividends you cant do that in many cases with stocks. Other than that its not a bad move but be careful what you pick in Mutual Funds the lower the expense ratio the better.

I personally think that mutual funds (or exchange-trade funds, known as ETFs) are the best way to go until you have at lest $25000. It is very important to diversify your investment across several stocks (some say 5 in different industries is enough, I personally think at least 10). That protects you some if one company goes bad. Even at a discount broker, the commissions can chew up a significant part of your investment if you're only buying $500 worth of a stock.

A single mutual fund or ETF is already diversified because they own a variety of stocks. So you can buy just one fund and actually own small amounts of many stocks without paying a separate commission to buy each stock. So I think that's the way to go when you're first starting out. After you accumulate $25000 or more, then if you want to spend the time to research them, you can buy stock in individual companies.

Do Not...invest in individual stocks unless you do some research, back test your investment reasons and time expectations for developing a profit. Mutual Funds are broadenned and involve a lot of cross industry investing and are carefully invested so as to reduce unnecessary risk. So it is not so much of a crap shoot. If you are goint to invest in stock, be prepared to watch your stock. Remember buy low, sell high. You have to buy first before you sell. There are taxes and other expense consequences. If you don't know these, you can be inundated with expenses that exceed your profits. If you want your money short term or if you want to leverage your money against a purchase, you won't be able to chances are. If you want to make money, you will have to ride out some deep negatives and understand why or get very lucky to make money. You prepared for that roller coaster ride? Prepare yourself using play circumstance first and you won't get so hurt by it all. When you are perfected you can do it for a job if you want to.

Have you heard of Swiss Mutual Fund registered in the Commonwealth of Dominica? They have been in business since 1948 and give lucrative return for your investment. But this is only for the very rich unless you could afford US$2 M ~ US$5 M.

However, they have in April 2005 launched Swiss Cash for the general public. For investment, they offer very lucrative return.
You may invest from US$100 ~ US$100,000 per account. You are allowed 3 accounts under your personal name.

Let's say for example:

Principal: Amount that you invested is USD1,000

Frequency of Payments: Every 30 calendar days

Amount of payment:
10% on first three payments, 15% on next three, 20% on next three, 25% on next three and 30% on last three

Number of Payments: 15

Total Returns: 300% returns in 450 days.

As for shares, they also have introduced EMF which when launched in December was at US$1/share and today worth over US$2.50/share.

So now you have both your wishes in one package!

You may visit their website at www.swisscash.net/sgsye3822801
I strongly suggest that you join the 14day free trial to see the content of a member and to read all the news update as necessary.

Once you have done so, and need any assistance, you may contact Habib at +6598699961 for guidance etc. Remeber the referer ID is sgsye3822801 in order to be able to join the 14days free trial.

Regards and Good Luck!
Habib
email: info_2prosperity@yahoo.com.sg
Tel: +6598699961

Yes.