Guaranteed returnsFixed interest ratesDiversificationHigh-risk potential

Question

QUESTION 1/4
John invests in a Mutual Fund, which pools money from multiple investors to purchase stocks, bonds, or other assets. What is the primary advantage of investing in a Mutual Fund?

Answer 1

The primary advantage of investing in a Mutual Fund is diversification. By pooling money from multiple investors, a Mutual Fund allows individuals to invest in a collection of various assets (such as stocks and bonds), which reduces the risk associated with investing in a single security. This diversification can help manage risk and potentially enhance returns over time.