Investing in Mutual Funds
A mutual fund is the same as trusting someone else to do the investing for you.
Quite simply, mutual funds were created to eliminate the research and time constraint that would be required if an individual had to do it all on their own.
As you are probably aware, mutual funds are not insured against losses like a certificate of deposit from a Federal Deposit Insurance Corporation bank.
The thought is that by professional management of your funds and through diversification of investments a mutual fund should be able to outperform the overall market.
This year a lot of funds did just that, they outperformed the market by losing more than the market did.
Not the kind of over performance we would be looking for as investors.
Today markets are so expansive and so overloaded with new investment vehicles that it is hard to keep track of with the limited time that we investors have.
I am under the guise that one should educate themselves on the simple things that have worked and stick with them and not worry about the next new investment vehicle, no matter how pretty all of the bells and whistles are on it.
I am not saying that mutual funds are not a good investment vehicle, I am merely suggesting that you give up some abilities and freedom by investing in a mutual fund.
Sure you get diversification, but in markets today the losses are not diversified, everyone got them.
How is that doing for your portfolio? I know of many people that are so peeved off because they have trusted that the mutual funds they have been in for so many years always performed well and now this year they are in complete shock at their losses.
Mutual funds do have a restriction on them that only allows them to buy stocks and then sell them.
Sure there are funds that have been created that can short sell and do this and do that but the general public doesn't know about that or it is not even offered in there 401K.
John Q Public has been taken to the cleaners and the diversification that mutual funds offer did not help.
Quite simply, mutual funds were created to eliminate the research and time constraint that would be required if an individual had to do it all on their own.
As you are probably aware, mutual funds are not insured against losses like a certificate of deposit from a Federal Deposit Insurance Corporation bank.
The thought is that by professional management of your funds and through diversification of investments a mutual fund should be able to outperform the overall market.
This year a lot of funds did just that, they outperformed the market by losing more than the market did.
Not the kind of over performance we would be looking for as investors.
Today markets are so expansive and so overloaded with new investment vehicles that it is hard to keep track of with the limited time that we investors have.
I am under the guise that one should educate themselves on the simple things that have worked and stick with them and not worry about the next new investment vehicle, no matter how pretty all of the bells and whistles are on it.
I am not saying that mutual funds are not a good investment vehicle, I am merely suggesting that you give up some abilities and freedom by investing in a mutual fund.
Sure you get diversification, but in markets today the losses are not diversified, everyone got them.
How is that doing for your portfolio? I know of many people that are so peeved off because they have trusted that the mutual funds they have been in for so many years always performed well and now this year they are in complete shock at their losses.
Mutual funds do have a restriction on them that only allows them to buy stocks and then sell them.
Sure there are funds that have been created that can short sell and do this and do that but the general public doesn't know about that or it is not even offered in there 401K.
John Q Public has been taken to the cleaners and the diversification that mutual funds offer did not help.
