Buying mutual funds from brokers versus fund companies

We live in truly hectic economic times. People's tendency is to panic when they hear about the last big loss on the stock market. They know that they could loose thousands of dollars, their retirements, and any number of other valuable assets. Banks are not lending money to people, which means that companies are having a hard time paying their employees. People are being layed off and the future looks fairly dark. Sound pretty bad, doesn't it? While the financial crisis is a serious matter, it is not a something that we should panic about. If we panic we will tend to do irrational things and we will quickly loose all of our wealth. The truth is that while panic might not have started the financial crisis, it has helped to make it much, much worse. So what should you do in such a terrible economic situation. First, you need to learn some basic things about the economy. You need to know how the stock market works and why we are in the current mortgage crisis that we are in. You also need to know some things about basic investment options, such as the difference between buying mutual funds from brokers versus fund companies.

How can you purchase shares in mutual funds from a fund company itself? Don't you always buy mutual funds from a particular broker? Recently some of the discount broker houses have allowed clients to buy mutual funds from the house itself and not from a broker. This method could have some real advantages depending on what your needs are. One of the real advantages of doing this is that you probably won't be charged a fee, assuming that the particular fund does not require a stated fee or load. Some other advantages are that you can access the mutual funds through the phone or online. It is also very easy and quick to get your money or to change families. You get a single monthly statement and only one tax statement. Another advantage is that you can buy on margin, and finally the minimum investmetn is often less..

These are some real advantages, but there are some disadvantages as well. Consider that the discount broker, when selling directly to you probably has a limited range of mutual funds to sell. The funds they sell might not be particularly profitable, which should be a major concern. Be sure to research any funds you purchase in this way. It can also be difficult to exchange your funds past a certain time of the day (at 2:00 PM Eastern Standard Time). Oddly enough, the minimum required investment can also be higher for some of these investments.

You need to think carefully about purchasing directly from the investment brokerage. Take a look at the pluses and minuses of doing so and consider what you might gain from purchasing in the traditional way from a regular broker. There is no clear or easy answer to which is best. It depends entirely on what your needs are and what will be most convenient for you.

In a time of real economic challenge it is good to know that you have options. Education will be a big part of helping us make sure that such an economic crisis does not happen again. We need to become aware of the sorts of differences, such as that between different mutual fund purchasing methods, and we need to realize that the economy is really in our hands. Good luck with all of your investing!