What is one of the primary reasons for the increasing popularity of mutual funds?

"High short-term returns" "Guaranteed profits" "Diversification and risk distribution" "Low investment threshold"

According to the text, what should investors determine before selecting an investment portfolio?

"Current market trends" "Risk tolerance level" "Short-term and long-term goals" "Previous investment experience"

Why is it important to avoid setting unrealistic expectations for investment returns in mutual funds?

"Mutual funds are low-risk investments" "Market fluctuations are unpredictable" "Mutual fund returns are guaranteed" "Past performance guarantees future returns"

What is a crucial factor to consider when researching a mutual fund before investing?

"The fund manager's reputation" "The fund's marketing materials" "The fund's past performance guarantees" "The fund's risk-return profile"

Why is portfolio diversification important in mutual fund investing?

"To maximize short-term profits" "To eliminate investment risk" "To spread risk across different assets" "To guarantee high returns"

How should investors react to sudden market fluctuations when investing in mutual funds?

"Panic and sell all investments" "Ignore market trends completely" "Adjust portfolio based on short-term changes" "Maintain a long-term investment perspective"

What is a common mistake investors make regarding investment timeframes?

"Focusing on long-term growth" "Diversifying across different time horizons" "Switching between short-term and long-term strategies" "Prioritizing short-term gains over long-term goals"

Why is it essential to have an emergency fund separate from mutual fund investments?

"To avoid paying exit loads for unexpected expenses" "To maximize returns from mutual funds" "To time the market effectively" "To speculate on short-term market movements"

What factor should investors consider in addition to nominal returns?

"Market volatility" "Expense ratios of mutual funds" "The impact of inflation" "Tax implications of investments"