As a financial product, mutual funds offer well-crafted solutions to many of the most pressing demands in today s investment marketplace. Investing before you have developed a financial plan, is a lot like trying to build a house without a blueprint. You may wind up with something so at odds with what you originally hoped for from your investments that you re forced back to the drawing board whether you like it or not. As a rule, it pays to plan ahead. However, in drawing the broad outlines for an effective strategy be sure that you ve left enough room to create a balance between risk and reward.
Many investors prove too cautious in their approach.
While it s natural to fear a loss of capital in the near-term, the more profound risk is one of failing to meet your objectives in the long run. In short, this means investing in the innovative business ideas that drive growth in the economy equity ownership. Only equities, as an asset class, have a track record of being able to grow your savings in a way that significantly outpaces the effects of inflation and taxation over time.