Another Reason to Avoid Mutual Funds

by The Investment U Research Team

As if we needed another reason to dislike actively managed mutual funds, an article from MarketWatch caught our eyes this morning. It reminds us why investing in most mutual funds is a mistake – from fees to performance mutual funds have dismal track records.

What we found really interesting was the “lazy” portfolios that this article used in comparison and the theory behind it – modern portfolio theory. Its what our asset allocation strategy and our Perpetual Income Portfolio is based on.

Most investors choose the set it and forget it approach when it comes to their retirement accounts. And for good reason, the mutual fund industry has done a clever job of making investors think that’s what they should do – Rely on an expert.

Unfortunately, it’s not all true. And it hides the fact that these experts skim from your profits and your assets every year.

The only way to get them out of your pockets is to take an active roll in your finances and manage your money yourself. Choose index funds or ETFs over mutual funds or pick individual securities.

The mutual fund industry has “educated” us into believing that trained professionals should manage your money. The truth is that with a few simple steps, a proven investment strategy, and religious use of trailing stops, you can beat the markets year and year out.

And you don’t have to pay to do it.

• Dollar Cost Averaging
• Closed-End Funds: Two Closed-End Companies Primed For Profits Over Mutual Funds
• Using Exchange-Traded Funds: How to Put Your Index Mutual Fund on Steroids

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