| For many, the idea of investing in "slow and | | | | the two or three winners that speculative |
| steady" mutual funds makes little if no sense at | | | | investors prefer over a full, diversified portfolio, |
| all. For this special type of investor, the very | | | | many of them actually use maximum leverage |
| same reasons why mutual funds exist are actually | | | | order to enhance gains. This involves margin or |
| their arguments against considering them serious | | | | the use of options. With mutual funds, the |
| investment vehicles. And of the people who are | | | | investor does not rely on leverage or margin. |
| not quite "sold" on the idea of investing in mutual | | | | Gains are more natural. However, investors can |
| funds, some are not quite sure whether these | | | | units rather than whole stocks. This allows for |
| investments will help them reach their goal of | | | | fractional ownership, providing marginally greater |
| striking it rich. | | | | gains over the course of years. In addition, |
| But mutual funds can make you rich. But not the | | | | investors can start investing with a lot less money |
| way people think. Let's take a closer look at how | | | | and can also invest on a regular basis. If buying |
| the very concepts that people argue against the | | | | whole stocks, investors would have to purchase |
| case for mutual funds can actually help investors | | | | whole units which becomes a costly proposition |
| get rich: | | | | even with the cheapest discount brokers. |
| 1. Diversification. Probably the biggest case people | | | | So what makes the most sense? A couple of |
| make against investing in funds is that they are | | | | highly speculative, high-flying and high-volatility |
| far too diversified. Why invest in so many stocks | | | | shares that most people cannot purchase without |
| when you can simply pick half a dozen winners | | | | the use of extensive leverage? Or a basket of |
| and leave the losers alone? Makes sense in | | | | securities that have been extensively analyzed for |
| theory, however picking the winners is so easily | | | | their long-term growth and profit potential, the |
| done. In fact, many people will pick just one or | | | | same kind of basket that can be purchased for |
| two winners, stocks that come with high volatility | | | | as little as $50 or $100 every month without |
| and have seen a good run up in price. The risk, of | | | | having to worry getting hit with a trading fee? |
| course, is that these investments are often over | | | | The answer is obvious. You can get rich with |
| bought, meaning once they correct, they will hurt | | | | mutual funds because you can invest in fractional |
| the investor's portfolio. What makes more sense | | | | units on a regular basis (known as Dollar Cost |
| is holding a basket of stocks, some big winners | | | | Averaging) and you will minimize your exposure to |
| and some more modest gainers. While it may be | | | | the higher risk equities that could be the winners |
| a slower and steadier increase, diversification is | | | | one day and the losers the next (known as |
| key to any long-term wealth building strategy. | | | | diversification). |
| 2. Whole lots and leverage. Along with investing in | | | | |