Why would you choose a mutual fund over a stock?

When you invest in a stock, you are purchasing a share of one company. A mutual fund offers more diversification by bundling many company stocks into one investment.

Mutual funds pool money together from a group of investors and invest that capital into different securities such as stocks, bonds, money market account, and others. Funds have different investment objectives, to which their portfolios are tailored. Money managers are responsible for each fund. They generate income for investors by allocating assets within the fund.

Mutual funds can hold many different securities, which makes them very attractive investment options. Among the reasons why an individual may choose to buy mutual funds instead of individual stocks are diversification, convenience, and lower costs.

Ask any investment professional, and they'll likely tell you that one of the most important ways to reduce your risk is through diversification. It's a lesson most people learned after the financial crisis. The underlying theme here is that you shouldn't put all your eggs in one basket. So don't just invest in one industry or one type of investment vehicle.

That's where mutual funds come into play. Mutual funds offer investors a great way to diversify their holdings instantly. Unlike stocks, investors can put a small amount of money into one or more funds and access a diverse pool of investment options. So you can buy units in a mutual fund that invests in as many as 20 to 30 different securities. If you were looking for the same thing in the stock market, you'd have to invest much more capital to get the same results.Mutual funds also invest in a variety of different sectors. So a large cap fund may invest across different industries like financials, technology, health care, and materials.

The convenience of mutual funds is surely one of the main reasons investors choose them. Some investors find that buying a few shares of a mutual fund that meets their basic investment criteria easier than finding out what the companies the fund invests in actually do, and if they are good quality investments. They'd prefer to leave the research and decision-making up to someone else.

Determining a portfolio's asset allocation, researching individual stocks to find companies well-positioned for growth as well as keeping an eye on the markets is all very time-consuming. People devote entire careers to the stock market, and many still end up losing money on their investments. Although investing in a mutual fund is certainly no guarantee that your investments will increase in value over time, it's a good way to avoid some of the complicated decision-making involved in investing in stocks.

Whether stocks or mutual funds are better for your portfolio depends on your goals and risk tolerance. For many investors, it can make sense to use mutual funds for a long term retirement portfolio, where diversification and reduced risk might be more important. Carefully consider your goals and use investments to create a strategy designed to help you get there.

It's important to remember there are risk of mutual fund investment as well, so as with any decision, educating yourself and learning about the bulk of available options is the best way to proceed.

Your fund investment journey is within reach. Our Moomoo Trading platform offers easy access to our comprehensive range of fund investment services. Open an account online and start your 「fund」 experience now. There are comprehensive fund range for you to invest in.

Go to the [Fund] entry on the [Money Plus] page

Click [Open Account Now] to complete the fund account opening

Enter Money Plus, your one-stop access to 60+funds ranging from 20 asset managers.Choose from Equity, Bond, Dividend, or Balanced Funds to diversify your investment and leave the complex decision-making involved in investing in stocks to the pros!

Basic wealth management: Monetary funds.

Steady Income: Bond Fund

Chasing high-yield: Equity funds

No matter whether you are active in fixed income, seeking optimal income over time, or consider going across the spectrum of bonds & equity for a robust income portfolio, thereis always a fund that suits you.

Subscription: Select a fund to enter the details page and click [Buy] to complete the purchase!

With dollar cost averaging, you can be more relaxed from worrying about timing the market.

When you have built a habit of investing a fixed amount regularly, the advantage of dollar cost averaging means you are free from worrying about timing the market and to better manage the risk of 「buying high, selling low. Rather than trying to pick the exact right moment, why not stay invested regularly and consistently? In the long run, this not only better manage the impact from short-term price volalities, while helping to generate optimal potential returns to grow your wealth.