The investment landscape has undergone a dramatic transformation over the past two decades, driven largely by technological innovations that have made trading more accessible than ever. From the comfort of their homes, individuals can now trade using computers or mobile devices, thanks to the proliferation of money apps. While this democratization of trading is a significant step forward, it has also created an overwhelming environment for those unsure where to start.
Since the onset of the COVID-19 pandemic, day trading has seen a surge in popularity. The percentage of stock market traders increased from 15% in 2019 to 25% in 2021, and retail investor sentiment hit an all-time high in early 2023, buoyed by opportunities in artificial intelligence. Despite this, picking winning stocks and timing the market can often be a losing game for many. Mutual funds offer a viable alternative, allowing investors to mitigate these challenges.
Mutual funds are investment products composed of a diversified basket of securities, meaning investors do not have to individually pick stocks or bonds. These funds pool capital from multiple investors and follow specific strategies to achieve defined goals. As of 2023, over 52.3% of American households owned mutual funds, primarily as a means to save for retirement. Mutual funds are lauded for their potential to generate wealth, provide financial security, and offer diversification across various sectors and jurisdictions.
Mutual funds are classified into two main categories: open-ended and closed-ended. Open-ended funds continuously issue new shares to replace those that are bought and sold, with prices reflecting the net asset value (NAV) of the fund's assets minus liabilities. These funds offer stability in pricing. Conversely, closed-ended funds operate more like stocks or ETFs, offering a fixed number of shares through an initial public offering (IPO). The prices of these funds can be more volatile, trading at either a premium or discount to their NAV.
For those looking to harness the benefits of mutual funds while retaining control over their investments, self-directed accounts like those offered by Axos Invest present an attractive option. Axos Invest, a subsidiary of Axos Bank, provides a platform for direct investing, allowing individuals to decide when and how much to invest without third-party interference. The platform offers commission-free trading and access to over 10,000 mutual funds, along with features such as low minimum balance requirements and tools for automatic contributions.
Axos Invest’s self-directed accounts offer a straightforward, user-friendly interface that consolidates all accounts in one place. This makes it easier for investors to manage their portfolios and conduct due diligence with readily available market data and research tools. By eliminating high fees and providing a range of investment options, Axos Invest empowers investors to take charge of their financial futures, making mutual fund investing as simple and efficient as possible.
As mutual funds continue to be a cornerstone of wealth building and financial security, platforms like Axos Invest ensure that individual investors can leverage these tools effectively. This synergistic approach between mutual funds and self-directed investing could well be the key to achieving long-term financial goals.
