The End of Mutual Funds

For the past 50 years many different types of investors who do not have much investing experience or just want to gain diversification in their portfolios have turned to choosing mutual funds. Although mutual funds are not a bad place to put your money, there are a few misconceptions that should be broken surrounding mutual funds. Many investors turn to mutual funds because of an experienced asset manager leading a fund or because they commonly advertise that they "will beat the market". If you look into these claims very seldom do even the best asset managers beat the market and over the long term, 10 years or more, index and stock averages do better than mutual funds. In addition to false advertising that mutual funds can actually "beat the market", they have high annual costs of up to 1-2% of assets held. So even before your money is working for you, the mutual fund manager must make up 1-2% gains just to be even with the market. So what does this add up to? The much better option to mutual funds are ETFs or exchange traded funds. Although they are not a very exciting investment, investing in an index that have historically outperformed mutual funds, and costs only 0.25-0.5% a year, ETFs are by far the more sounds choice. Be a smart investor, choose ETFs.