Mutual funds are not an investment alternative to be compared to stocks, bonds, gold or real estate. They are an investment vehicle ... investment packages that are managed by professional money managers for individual investors as a group.
The simplest way for average investors to invest in stocks, bonds, gold, real estate and other investments is to just buy and hold the appropriate mutual fund(s).
In fact, that's why these funds were created in the first place, and that's why tens of millions of Americans invest in them. They were designed to be an easy way for every-day people to participate in the opportunities that used to be available to the rich and sophisticated only.
Misconceptions on the nature of mutual funds abound. These investment packages have been the BEST way for most people to invest since I started as a stock broker in 1972, and they still are!
What's sad is that some otherwise smart and educated people often don't quite get the big picture here, and what's worse is that they like to spread their inaccurate and misinformed views to all who will listen. No wonder most investors are confused.
Some of these folks are professionals in another field ... like accountants, doctors, or lawyers. Worse yet, some of them actually work in the financial field. And believe it or not, some of them call themselves financial planners.
Mutual funds should not be viewed as the best investment vehicle for "dummies" or uneducated people. In my opinion, they should be the investment of choice for about 98% of the American population. If you have money to invest, and are not wealthy and financially sophisticated, look no further than mutual funds.
Trust me on this one. I am retired from the investment business and no longer make a living by selling mutual funds or other investments.
As a side note, to my knowledge I have zero unhappy clients who invested in mutual funds through me while I was in the financial planning business.
I firmly believe that the best thing you could do for yourself financially is to learn about mutual funds. If you get confused, back off and study up on stocks and bonds first. After all, the majority of mutual funds are vehicles for investing in stocks and bonds.
You do your homework, and I intend to keep writing about my good old friend, the mutual fund.