are mutual funds as bad as people say they are?

Question

I started one a few years ago. I keep on reading that mutual funds don't do as good as some believe.

Answer 1

There are as many mutual fund types as there are people to say that they are bad or good. It is impossible to say that all mutual funds are good or bad. it depends on the fund and your goals.

Answer 2

Mutual funds aren't necessarily "bad", but it is true that investing in individual stocks COULD contribute to better returns. But, on the other hand, if you are just starting, I don't recommend individual stocks because your risk isn't spread out. I personally feel that mutual funds are good for beginners and people who want steady growth and lower risk. Be aware though, every mutual fund is different. There are many high-growth funds that top 10% returns year over year. These are generally much riskier and can be just as risky as individual stocks. For information about mutual funds and stocks you should talk to a good certified financial planner. They will match your goals with good investment options for a reasonable fee.
The only thing mutual funds are good for is spreading risk.

Answer 3

Mutual funds are perfectly fine for those individuals who do not have the time or patience to research individual stocks. Also, while it may be more profitable to invest in individual stocks many people would simply lose more money than they would earn because they would lack the basic knowledge needed.

However, an investor should at the very least research any mutual fund they intend to invest in instead of trusting others to make the decision for them. Too many people simply do not take the time to at least learn the basic risk/reward performance of mutual funds.

Answer 4

As with any contract arrangement you need to know who you are working with. In the case of a Mutual Fund, you should definitely research the past results of the specific fund you would be investing in and watch the other funds that the firm is managing. There are many types of funds based on a risk vs reward scale; more risky (a.k.a. growth) funds can give you big returns but also big losses. Other funds are more conservative. In then end the funds are investing in the sam stocks you can buy directly - except that the fund is managed by a full time financial manager watching the stock market and trying to earn money for him/herself. The profit motive usually results in you making money as well.
There are other details that you should learn as well which help you to keep the broker honest with your money. see the reference...

Answer 5

Mutual Funds are often graded against the SP 500 index. Now only 20% of the multual funds out there have beat the SP 500 index over the long term. That leaves either 80% of the mutual funds out there that either track the SP 500 index or can't match it.

Answer 6

Mutual funds are a great way to diversify or to focus on one sector and buy a basket of stocks instead of just one. I only buy no load funds with low management fees. By doing some research you have a good chance of buying a fund that will beat the average return of the indexes. I have had good luck with Fidelity and TRowe Price.

Answer 7

There are very good mutual funds out there.
Look for managers with above market average long-term track records, below average fees, and NO LOAD. Buy appropriate to your risk tolerance and sit down every few months and re-examine the funds you own.
It's more complicated than that, but they can make very good investments.
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Answer 8

If you do some research on funds you'll find some that lose money and some are up big this year, and every year. But if it was widely thought that funds are bad, there wouldn't be more funds than stocks.

Answer 9

>>mutual funds don't do as good as some believe.

And some believe they do better.

Answer 10

Worse.