Investing trends may come and go, but one constant is that time spent in the market usually outperforms trying to time the market or piggyback onto the next hot stock run.

Following your FOMO is never an advisable investment strategy. For self-directed investors ready to graduate from chasing the latest trending stocks towards a more thoughtful and measured approach to investing, here are five tips for making mutual funds part of a well-rounded portfolio.

Diversification is your friend

Mutual funds make it easy to diversify your portfolio by giving you access to a wider range of holdings than most investors could afford individually. With a diversified portfolio, over the long-term you should experience less volatility as riskier holdings are offset by more historically stable holdings.

Invest for the long haul

The longer your time horizon, the more time mutual funds have to maximize the power of compounding. A much better long-term strategy to take advantage of this power of compounding (and much better than trying to time the market) is called “dollar-cost averaging.” This strategy involves investing a small, fixed amount at a time and at regular intervals. By investing regularly over months, years and decades, short-term slumps in the market should not negatively impact your overall performance in the long run.

Follow your values

Your values are important to you—shouldn’t they be important to your portfolio, too?

Fortunately, mutual funds can make investing according to your values easier by offering SRI (socially responsible investing) screens that consider the social and environmental impact of the companies that make up a given fund. Whether you’re passionate about the environment, human rights, consumer protection, or diversity, equity and inclusion, you’re likely to find an SRI screen that aligns with the values you hold dear.

An advisor can help

With actively managed mutual funds, you’re getting a dedicated fund manager who’s responsible for choosing specific sectors and stocks in an attempt to outperform a benchmark index. These professionals often have a team of investment analysts who perform research and help develop an overall strategy.

Interested in an even more hands-on approach? Consider consulting with a professional financial advisor. While you may currently enjoy the flexibility (and challenge!) that comes with self-directed investing, working with a professional can help you build a personalized long-term investment strategy tailored to your specific needs and goals. The value advisors bring can help create up to 2.3 times more wealth* for their clients—which can make a sizeable difference over the long haul.

Economies of scale can help bring costs down

Mutual funds deal with a lot of money and assets—and because of this, they can help bring transaction costs down for their investors.

Generally, DIY investors who buy individual stocks pay per transaction. And while these fees may not seem like a lot at first, they can add up over the years.

Due to their economy of scale, however, mutual funds give you exposure to many stocks at one transaction price that’s often lower than the combined transaction price of purchasing those stocks individually. That’s something worth considering, especially for those cost-conscious about individual transaction fees.

The rules around purchasing mutual funds are changing. Learn more about Fidelity Series F funds and how to invest.

*Source: More on the Value of Financial Advisors, by Claude Montmarquette and Alexandre Prud’Homme, CIRANO, 2020. The average household with a financial advisor for 15 years or more had asset values 2.3x higher than an average “comparable” household without a financial advisor.

Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated with investments in mutual funds and ETFs. Please read the mutual fund or ETF’s prospectus, which contains detailed investment information, before investing. Mutual funds and ETFs are not guaranteed. Their values change frequently, and investors may experience a gain or a loss. Past performance may not be repeated.

Investors who buy Series F pay investment management fees and expenses to Fidelity. Investors may also pay their dealer a fee for financial advice services in addition to the Series F fees charged by Fidelity.

The statements contained herein are based on information believed to be reliable and are provided for information purposes only. Where such information is based in whole or in part on information provided by third parties, we cannot guarantee that it is accurate, complete or current at all times. It does not provide investment, tax or legal advice, and is not an offer or solicitation to buy. Graphs and charts are used for illustrative purposes only and do not reflect future values or returns on investment of any fund or portfolio. Particular investment strategies should be evaluated according to an investor's investment objectives and tolerance for risk. Fidelity Investments Canada ULC and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered.

© 2022 Fidelity Investments Canada ULC. All rights reserved. Fidelity Investments is a registered trademark of Fidelity Investments Canada. The presenter is not registered with any securities commission and therefore cannot provide advice regarding securities.