I’ve written and spoken a lot to encourage long-term investors to participate in the value creation activities of our economy as opposed to frequently trading shares in hopes of out-smarting fellow investors.
Investing is not a zero-sum game where the “smart” take money from the “less-smart” by trading pieces of paper on a frequent basis. Thus, it should come as no surprise that I recommend against the purchase of stock (equity) mutual funds.
Here are 5 reasons that (equity) mutual funds are a bad idea.
The Case Against Mutual Funds Part 1
How 1% becomes 30%. Mutual funds make money by charging fees to unit holders. Good or bad, up or down, fees are deducted from unit
The Case Against Mutual Funds Part 2
How Money Managers Keep Their Jobs. Mutual funds make money by charging its unit holders a fixed percentage each year (typically between 1% to 3%)
The Case Against Mutual Funds Part 3
Comparing Their Top 10. So is there indication of “closet indexing” in the mutual funds you own? Most, if not all, mutual funds publish a
The Case Against Mutual Funds Part 4
Checking Historic Performance. As we’ve already discussed, the combination of short-term performance constraints and the fees charged makes it nearly impossible for all but the
The Case Against Mutual Funds Part 5
The Zero-Sum Game. Investing in a stock is participating in the profits of a company. It is possible for a group of shareholders to buy