Heike Moeller February 23, 2020 Mutual Fund
Mutual Fund returns are meeting the reasonable expectations of investors. In the greatest of bull markets, funds of all sizes seriously under performed the stock market. The inability of 85% of all fund managers even to match the performance of the market overall is the result of high fees (see above) short-term investment horizons and substantial transactions and tax costs.
The obvious advantage of mutual funds is that they allow you to pool your money with other investors and leave the decision making to someone else. You do not have to spend your days conducting in-depth analysis of stocks and other investments. You simply invest in a mutual fund and let the manager make the decision for you. That is the theory, but of course we all know we are going to have to do some research before we invest in a mutual fund. How much mutual fund analysis is appropriate before making an investment?
Mutual funds investors are always confronted with the decision about investing in managed funds or using an index fund. There are plenty of people who believe one is better than the other, so we will review the advantages and disadvantages of each and I will provide my own suggestion to help you out.
Mutual funds are no doubt the best way to invest. Just study the market and understand your options. If you do your research, you will be able to pick a fund that will benefit you in the long run. Investigate the company and know what you are getting into. Do not leap before you look first. You may end up getting less than what you bargained for it you do.
The recent explosion of an oil rig in the Gulf and the resulting chaos and environmental damage tells you that any company can all of a sudden be exposed to dramatic unforeseen risk. In this case it was BP. Mutual Funds can also possess much more risk than you thought you were encountering.
This essay is to enlighten investors on what they are getting into if they are relying on mutual funds as a way to provide for their financial freedom at the time of retirement. Due to the complexities of following stocks and finding competent money management, unless you are a multi-millionaire, many Americans have turned to the quick fix known as a Mutual Fund.