Many people believe that investing in mutual funds is the right way and the best way to get rich. I believe that investments in mutual funds are terrible. Here are eight reasons why you should not invest in mutual funds.

first fund did not outperform the market.

Mutual

72% of actively managed large-cap funds beat the stock market is not in the last five years. Try to beat the market is difficult, and it is best to invest their moneyIndex funds. Index Fund seeks to a particular index (eg S & P 500) levels. Index reflects the stock index that measures the quantity index in equal parts to buy. For example, a fund, the S & P 500 below, you can use one of 500 values ​​of this index in relation to the S & P buy 500 Consequently, as an index fund is the time (instead of trying to overcome), which is more effectiveThe average fund that tried (and sometimes not) to beat the market.

According to investment funds have high costs.

Investments in the individual indicators are not secret. This is a known quantity. The company, which manages an index fund does not have to pay analysts actions that take place in the background to select it. As a result of this process in terms of reduced fees for index funds. Thus, if an index fund and the fund is to send a yield of 10% next year, after deductingRelationship between the cost of the average actively managed funds with high market capitalization is 1.3% to 1.4% (% and can be as high as 2.5). However, the relationship between the cost of funds index can be as low as 0.15% for the index of large companies. Index funds have lower costs for the fund because they are less cost of financing for the implementation of an index. Expenditure (1.3% of mutual funds and 0.15% for index funds) for the cost of power at 8.7% for mutual funds and 9.85%Index funds. By the time (5 years, 10 years), the difference that translates into thousands of dollars in savings for the investor.

Investment Fund third high turnover.

Proceeds from the sale and purchase of fund shares. If you sell shares, you must pay a tax on capital gains. This was the purchase and sale of tax law, someone must pay. Mutual funds are not amortized. Instead, it goes for you, the investor. NUncle Sam to escape this behavior with the index funds with low turnover of contrast. As is well known stocks in the index are easy to identify. Index Fund does not buy or sell shares in the past, but has concerns over a longer period, reducing the costs of trade.

4. The more you invest, the more they have.

Period or 16 years according to a study by John Bogle popular (The Vanguard Group), more than 15Investor holds more than 47% of the total implementation of actively managed funds, on average, but gets 87% of revenues, the index fund. This is due to higher costs associated with investments in the fund. Therefore, if you invest $ 10,000 of the index fund, money is time to go $ 90,000 over this period. The mutual fund, but the rate is only $ 49,000. It is a defect in 40% of the investments of the fund. U.S. $ 41,000 U.S. dollars to finance losing, putting their money. Why do you think of the financial institutions investing in the long term? This means more money in your pocket, not yours.

Mutual funds-fifth of all the risks for the investor.

If the fund makes money, and the company to make money. But if the fund loses money, loses money and the investment fund partnership has more money. What?It's not fair! Remember, mutual fund company that has a bite from his speech to a load factor of 1.3%. But you have to bite or to earn money or lose money. Think. 0% of corporate funds to invest money on it, and 0% risk. You can put 100% of the money and take 100% of the risk. The company allows you to) money back guarantee (for a fee. You, the investor is not just taxesbut you can lose a lot of money. I need to pay investment firms for the loss of the loan. (Note that although the declaration at the time of the capital fund about half of the money from you.)

Sixth funds are unpredictable.

The fund's assets are not exactly the same as the stock market. If the market rises, you can create a lot of money, maybe not. If the market goes down (like now), it is possible that lose some 'money. or you can lose a lot. The Fund is in function of particular market index, the performance can be very unpredictable her. Index funds are more predictable, though, because the problem of the market. Therefore, if the market goes up or down, you know where the money goes and how much you win or lose. This transparency gives more peace instead of with bated breath for a mutual fund.

7.Articles> from sale of investment funds.

Why not all financial resources and magazines talk Index Fund? Why do not the covers of magazines such as index funds: Investment of the most obvious and reasonable is very simple, it is a boring game unless something interesting, would not have bought when tickled. enormous wealth of imagination? A magazine with this title is not selling as many copies of the magazine Our top 100 mutual funds in 2008!Remember, the sales of the magazine Magazines. You can not use the title of the holes on the cover index funds, even if the title is true. You need something to put on the cover to attract buyers. No wonder the list of investment funds, analysts are forecasting sales growth in the number of magazines.

8. Warren Buffett recommends no funding.

If these seven reasons not to invest in mutualis not convinced, why not listen to the wisdom of the richest investors in the world? In several letters to shareholders of Berkshire Hathaway, Buffett told the annual value of index funds. Here are some quotes from letters:

1997 List. Most investors, both institutional and individual, is the best way to own common shares through index funds, a nominal fee if this path with certainty what the net performance (afterThe fees and expenses) delivered by the majority of investment professionals.

2004 People in the U.S. economy has been easy to obtain excellent results for the return of the heavy investors. All I had to do is to corporate America in a diversified portfolio of index funds with low cost, who never played the song, but many investors have had experiences than the average for the transplant disastrous.

Bottom line: if you want to make moneyTo copy what the rich. So if Buffett will not fund, why not me? So, if not passive investors to invest the funds? The answer is now clear. Investing in index funds. Index funds have lower prices and keep their profits in the long run. They are also more predictable and gives you peace of mind.

8 reasons why the fund for the poor