if investing in a mutual fund is not the best way to invest my money, where else can i invest?

Answer 1

Like when your teenage daughter fails to come home on time, you worry because you don't have enough information to "know" what will happen. You go through all of the possible outcomes, but because of a lack of information and being uninformed, they are all left up in the air and equally unpalatable except for the one outcome you "wish" and "hope" for.

But with investing, just a little foreknowldge and information can make all of the possible outcomes known. It takes some hard work and learning, but better than being the anxious parent, hoping and praying and wishing for your daughter to come home.

If you do your work, evaluate the risk, identify entry and exit at support and resistance levels or use whatever signal generator you are comfortable using, and apply good money management techniques, then you've done all you can do, and no amount of worrying or "hope" or "wishing" will change the outcome. You know what yours risks are and how much you can lose, and your profit is open-ended.

This is why mutual funds (mf) and investment advisors managing your money doesn't make any sense to me. You are the anxious parent, waiting for an unknown outcome without any control over your own future. You can do the same thing a MF can do by buying Index ETF's. But you can also take profits off the table, add Protective Stops to limit your risk, and stay out when risk becomes unpalatable. You can also bet on the downside of the market (short), whereas a MF cannot. A MF is always "in" the market (long), exposing you to enormous risk and "worry."

You cannot avoid or escape risk. You can put your money under your mattress, and inflation will eat at it, or the rats will, or there might be a fire, or a robber may take it. But you can manage risk, if you invest it properly. This presuposes you have foreknowledge.

A MF is always "in" the market, so you are at the mercy of the ups and downs of the Dow. You are unable to manage your risk with a MF, so you can't put a Protective Stop on a MF, at say 10%, to lock in your profits when the market goes down. You don't have a clue what's going to happen. That is not my idea of investing.

Actually, if done properly, it is more work to investigate all of the MF's and their advisors and their traders and their fees and their methods, than it is to investigate all the similar applicable info about stocks. To me, it's more like a conscious choice to be ignorant, to simply and blindly turn your money over to a stranger because they are "listed," like you do at a bank. Stocks are "listed," as are commodities and ETF's and everything else. With a mutual fund, you've just added a whole new set of unknowns to the equation.

The best you can do in any investment is try to increase your odds of success and reduce your risk. You can do these things yourself, but not in a mutual fund.

MF's are so 20th Century. Relics of the past. Unneccessary. Buy an ETF. Or sell an ETF short and bet on the downside. There are two sides to every market, not just the upside.

Answer 2

Investing in mutual funds (or exchange traded funds) may actually be a very good option for you, especially if you are

1) young
2) won't need the money for a length period of time (say at least five years)

In general there is a relationship between risk and reward when investing money. You can be almost certain that you will recieve the interest you get on money in a bank account, but the overall return on that investment is tiny. On the other hand if you invest in (say) the stock of a small company it is possible to either gain an extremely large amount of money if the company performs well, or loose it all if the company should go bankrupt. Historically the stock market has outperformed other classes of investment, and mutual funds and etfs are a way to enjoy the superior returns of stocks without taking on too much risk. Specifically I would recommend a no load S&P 500 mutual fund or exchange traded fund (IVV and SPY are the ticker symbols for two of the better known S&P 500 ETFs). Especially if you are young (I assume that most of the people on Yahoo Answers are) and don't want to go through the trouble of choosing individual stocks this is probably the best investment you can make for the long haul. On the other hand if you are just looking to park some cash for a year or two until going to College/Grad School (or what have you) you might not want to take the risk of the stock market having a bad year. In that case you might consider CDs.

Answer 3

Who ever told you a mutual fund was a bad idea is out of their mind. It's a great way to invest. If you pick an index fund you are actually buying shares of stock in the whole stock market.

Answer 4

Mutual funds are an excellent investment, depending upon your goals and needs. You can invest in individual stocks, bonds, foreign currencies, commodities, antiques.... darn near anything.
What are your goals? When will you need the money from the investments? How much risk are you comfortable with? Insufficient information to provide you with a better answer.

Try this website for some ideas...

http://www.morningstar.com

Answer 5

Stocks are better, mutual funds cost money for as long as you hold them, you pay sales commission as long as you own the fund. That's why many brokers recommend them, the longer you own it, the more they make. With stocks, you pay for everything once, and you own it.

Index funds are better, they tracks all the stocks in the market or in a particular sector and have lower fees, but it's better to just find good individual companies and buy their stocks.

Answer 6

Well, investors have their respective investment objectives, investment time frame and risk profiles. You may have to set your own profiles. Here is another alternative where you can diversify your investment. It is very innovative and I share it with a lot of people inclusive of high calibre professionals and they find it is a good investment diversification. They are doing well now. Check it out for more info at :
http://www.MyFreeForex.com

Answer 7

Hi, i know what your question means. i also think stock market is a nice place for investing.

I found some useful tips in stock trading. It includes stock basics, how to protect your profit, find a potential increase share, control and manage stock risk, when to sell/buy stock and so on.

http://www.bernanke.cn/stock-trade/

Best Wishes && Good Luck!