Much has been written on the topic of mutual funds as an investment. Yet there are those who still doubt the validity of mutual funds as a good investment. People question the fees, returns and advice given about which funds to purchase. Much of this uncertainty can be traced to a poor understanding or lack of information.

Whether you are a sophisticated investor or just starting out, mutual funds could be one of the best investment options available. There are several advantages to be gained, whether your objective is for long-term retirement savings, medium-term education savings or short-term cash reserves.

Mutual funds provide managed money. The managers are professionals with the appropriate credentials, education and experience. These folks have the time to watch and effectively manage, research and investigate the securities placed into the fund. Unless you are retired or independently wealthy, chances are that you are busy with your full-time career and other family obligations and don’t have the time to be watching your investments on a daily basis.

By purchasing mutual funds you also receive instant diversification. For a minimal investment amount you can realize a level of diversification that would normally require hundreds of thousands of dollars to achieve. One mutual fund can offer you a balance of Canadian and foreign stocks, bonds and money market securities. You can also be very specific with your fund selection and have a focused fund that only invests in gold or high tech companies.

It’s important to get the help of an experienced advisor to dispel these myths. Your advisor will match your investments to your stated objectives. Look for an advisor who is willing to take the time to help you understand the investment process and associated mutual fund risks. Look for credentials and try not to rely on corporate marketing; bigger does not always mean better. A good financial advisor will communicate with you regularly and meet with you on a periodic basis to review your finances and ensure you are on track to meeting your goals.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.