You Have Convenient Access to Your Money

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What I find really terrific about dealing with the best mutual fund companies is that they’re set up for people who don’t like to waste time going to a local branch office and waiting in line. I don’t know about you, but I enjoy waiting in lines, especially in places like a bank, about as much as I enjoy having my dentist fill a cavity. With mutual funds, you can make your initial investment from the comfort of your living room by filling out and mailing a simple form and writing a check. Later, you can add to your investment by mailing in a check or by authorizing money transfers by phone or online from one mutual fund account to another. Selling shares of your mutual fund for cash is usually easy. enerally, all you need to do is call the fund company’s toll-free number or click your computer mouse at your investment firm’s Web site 24/7. Some companies even have representatives available by phone 24 hours a day, 365 days a year.

(Signature guarantees, although much less common, are still sometimes required by fund companies.) Many mutual fund companies also allow you to wire money back and forth from your local bank account, allowing you to access your money almost as quickly through a money market fund as through your local bank.

When dealing with a money market fund, in particular, the ease of access is even greater. Most money market funds also offer check-writing privileges. These accounts often carry a restriction, however, that your bank checking account doesn’t have: Money market checks must be greater than a specified minimum amount — typically $250. If you like to conduct some transactions in person, some of the larger fund companies, such as Fidelity, and certain discount brokers, such as Charles Schwab and TD Ameritrade, have branch offices in convenient locations.

 

Addressing the Drawbacks

 

Although I’m a fan of the best mutual funds, I’m also well aware of their drawbacks, and you need to know them, too. After all, no investment vehicle is perfect, and you need to understand mutual fund negatives before you take

the plunge. Still, the mutual fund drawbacks that I’m concerned about are different from the ones that some critics like to harp on. Here’s my take on which mutual fund drawbacks you shouldn’t worry about — and which ones you should

stop and think about a little more.

 

Don’t fret about the crooks

 

Folks who grew up only dealing with local banks often worry about others having easy access to the money you’ve invested in mutual funds. Even if someone were able to convince a fund company through the toll-free phone

line or on its Web site that he were you (say, by knowing your account number and Social Security number), the impostor, at worst, could only request a transaction to occur between accounts registered in your name. You’d find

out about the shenanigans when the confirmation arrived in the mail, at which time you could call the mutual fund company and undo the whole mess. (Just by listening to a tape of the phone call, which the fund company records, or

a record of the online transaction, the company could confirm that you didn’t place the trade.) No one can actually take money out of your account, either. Suppose that someone does know your personal and account information

and calls a fund company to ask that a check be sent from a redemption on the account. Even in such a scenario, the check would be sent to the address on the account and be made payable to you.

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