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126 Don’t Make Me Say I Told You So

monitoring and management frees the investor of the difficult – or
impossible – task of trying to time the market. Professional fund-

managers will also have more time, resources, and expertise to
research, choose, and monitor stocks than the average investor.

Diversification

When you invest in mutual funds, you have the benefit of

diversification over dozens, or even hundreds, of stocks.
By pooling your money with other investors, you gain the

purchasing power that allows you to buy a large number of
stocks with a relatively modest investment minimum.

Disadvantages

Just like every investment, there are both advantages and

disadvantages to investing in mutual funds. Let’s look at some

of the negatives associated with mutual fund investing.

Loss of Principal

Just like investments in individual stocks, bonds, or real

estate, there is the risk of a loss of principal when investing in

mutual funds. Even though mutual funds are professionally-
managed, this will not insulate you from a loss of principal.

Chapter 3: You Must Have Growth In Your Portfolio