What are demerits on investing mutual fund?

asked and answered befor:

A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund.

Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don't have to figure out which stocks or bonds to buy).

By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification.

Disadvantages: Mutual funds are like many other investments without a guaranteed return. There is always the possibility that the value of your mutual fund will depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds experience price fluctuations along with the stocks that make up the fund. When deciding on a particular fund to buy, you need to research the risks involved - just because a professional manager is looking after the fund, that doesn't mean the performance will be stellar.

Another important thing to know is that mutual funds are not guaranteed by the U.S. government, so in the case of dissolution, you won't get anything back. This is especially important for investors in money market funds. Unlike a bank deposit, a mutual fund will not be FDIC insured.

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There is firstly nothing like demerit when it comes to mutual funds but certain restrictions that may be branded as demerits. Mutual Funds are maneged by people called fund managers who invest your money in wide spectrum of comapnies or a particular group < there are certain funds> since funds handle money from a large number of people all care has to be taken to ensure returns as a result returns are usually low<as compared to return by directly investing in markets> one genuine demerit is that most mutual funds are never clear about taxable or not hence creates confusion. Again can be cleared at the time of opting. Mutual funds keep your money for some time so you may not be able to withdraw the money at your please.

1 - you have no control of the investing and trading decisions.
2 - you don't know where exactly they invest your money in.
3 - you have to pay their service charge, though they already took some profits from investing/trading using your money.

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if u need a good returns in mutual fund you have to keep your money for atleast 3yrs or if u are in need of money u can withdraw it but the appreciation of your money will break and to regain back you need again 3yrs of investment.

no DISMERITS at all if u choose ur Mutual Fund carfully and wisely. try www.moneycontrol.com to do some research on M Funds

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