The Rise of Mutual Funds and Self-Directed Investing: A Powerful Combination for Financial Growth

The investment landscape has undergone a significant transformation over the past two decades, with technological advancements making it easier than ever for individual investors to participate in the financial markets. While the accessibility of day trading has increased, many investors are turning to mutual funds as a more stable and diversified approach to building wealth.

Mutual funds, which pool capital from multiple investors to invest in a basket of securities, have become a cornerstone of many Americans' investment strategies. According to the Investment Company Institute (ICI), 52.3% of American households owned mutual funds in 2023, primarily using them as a vehicle for retirement savings.

The popularity of mutual funds can be attributed to several key factors. First, they offer a proven track record of wealth building, having played a crucial role in generating financial prosperity for families over the past century. Second, mutual funds provide access to a wide range of investment options that individual investors might otherwise overlook, increasing the likelihood of achieving financial goals. Finally, these funds offer built-in diversification across various sectors, asset classes, and geographic regions, helping to mitigate risk.

Mutual funds come in two main varieties: open-ended and closed-ended. Open-ended funds, which make up the majority of mutual funds, continuously issue new shares to match investor demand. Their price is based on the net asset value (NAV) of the fund's holdings. Closed-ended funds, on the other hand, issue a fixed number of shares through an initial public offering (IPO) and trade more like stocks or exchange-traded funds (ETFs) on the open market.

While mutual funds offer numerous benefits, the rise of self-directed investing has provided investors with greater control over their financial futures. Platforms like Axos Invest are bridging the gap between professional fund management and individual investor empowerment. Axos Invest, the investment arm of digital banking pioneer Axos Bank, offers a self-directed account that allows investors to make their own decisions while still benefiting from the diversification and professional management of mutual funds.

The Axos Invest platform provides access to over 10,000 mutual funds, along with commission-free trading and low minimum balance requirements. This combination of features makes it possible for investors to start building a diversified portfolio with relatively small amounts of capital. Additionally, Axos offers tools like the Axos Scheduler, which enables automatic contributions to help investors take advantage of dollar-cost averaging and compound growth.

One of the key advantages of using a self-directed platform like Axos Invest is the ability to conduct research and make informed decisions without leaving the platform. Market data and research tools are readily available, allowing investors to perform due diligence on potential fund investments efficiently.

As the investment world continues to evolve, the combination of mutual funds and self-directed investing platforms offers a powerful solution for individuals seeking to build wealth and achieve their financial goals. By leveraging the professional management and diversification of mutual funds with the control and flexibility of self-directed accounts, investors can create a tailored approach that aligns with their unique financial objectives and risk tolerance.

The growing popularity of this combined approach underscores the importance of financial literacy and the increasing desire among individuals to take an active role in their investment decisions. As more investors recognize the benefits of mutual funds and self-directed platforms, the financial industry is likely to continue innovating to meet the needs of this empowered generation of investors.