Mutual funds may be the better choice for you. A question our clients often ask us is why mutual funds, such as the Harris Insight Funds, may be recommended for investment portfolios, rather than individual stocks and bonds. Mutual funds may seem like taking an investment short-cut. When mutual funds are recommended instead of individual securities, it is often because mutual funds offer investors a simple, and convenient method of investing in a variety of securities. In fact, most investors would find it difficult to assemble a portfolio of stocks and bonds as diversified as that held by a mutual fund.
Diversification increases the chance of investing in securities that perform well.
At the same time, diversification helps to offset the risk from investments that perform poorly. There are also certain securities, such as municipal bonds, that are only sold in very large denominations. The sheer cost of these individual securities could inhibit a portfolio's ability to diversify. For these types of securities it makes great sense to invest in mutual funds, which can invest in a number of different issues by pooling the investment dollars of many investors. When an investment manager decides to sell all or part of their investment shares, the current price is received for that investment.