Should You Put Your Money in Mutual Funds?

You've got money to invest. Where should you put it? How about you put it in a mutual fund?

Well , how's that been working for mutual fund investors lately? They are paying out about 1% to 2% a year and have a return for the last ten years of zero. The only way that game could go on and on without some sort of investor revolt is that thousands of fund managers making $100 billion a year in fees and commissions are brainwashing their clients into thinking they can't do better on their own. In fact, without any education at all, you can learn to do this on your own.

You can replace mutual funds with 'no fee' Exchange Traded Funds (ETFs). There is a fee but its almost zero. You won't believe what just eliminating the fee does to a long term investment. Invest $1000 a year from age 20 to age 65 in a mutual fund with a 2% fee and an 8% average return and you'll have $200,000 to retire on. Make the exact same investment without the fee in a market indexed ETF (like SPY, for example) with an 8% return and you'll have $400,000.

So no mutual funds. But what about ETFs as a long term investment? Good call if you get a good mix. There is more to discuss in an economic environment that could include major inflation and dollar devaluation. We'll get to that in another future article here on this website. For now, though, think ETF, not a mutual fund.