Comments on: All about mutual funds http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds/ Personal finance blog for college students, recent graduates and everyone else -- including entrepreneurship -- for getting rich. Featured in the Wall Street Journal and New York Times. Sun, 8 Nov 2009 06:09:27 -0800 http://wordpress.org/?v=abc hourly 1 By: Lee Smith http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds/comment-page-1/#comment-103817 Lee Smith Tue, 21 Jul 2009 10:10:06 +0000 http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds#comment-103817 The reason people invest in regular mutual funds instead of index funds is because they just don't know the difference. There is no press about it or it's not on the front page of the newspaper. Also, most people have a 401k from their job and if it is not offered in there than they will never invest in one. It would be a disadvantage to mutual fund companies to include it in retirement accounts because they would make less money per year on it. The reason people invest in regular mutual funds instead of index funds is because they just don’t know the difference. There is no press about it or it’s not on the front page of the newspaper.

Also, most people have a 401k from their job and if it is not offered in there than they will never invest in one. It would be a disadvantage to mutual fund companies to include it in retirement accounts because they would make less money per year on it.

]]> By: jana http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds/comment-page-1/#comment-86677 jana Fri, 16 Jan 2009 20:18:15 +0000 http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds#comment-86677 index funds also, at least where i live, have much less marketing/advertising. the actively managed ones use often very clever tactits to persiade you to buy them. probably for a reason. index funds also, at least where i live, have much less marketing/advertising. the actively managed ones use often very clever tactits to persiade you to buy them. probably for a reason.

]]> By: typome http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds/comment-page-1/#comment-49330 typome Sun, 27 Jan 2008 04:00:24 +0000 http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds#comment-49330 Hello Ramit, I was wondering what your thoughts are on ING's IRA and how they invest in their mutual funds? I normally wouldn't invest in mutual funds, but I do want to have an IRA. It's just that ING's IRA invests in mutual funds and not index funds. Do you think that is okay? Thanks for reading! Hello Ramit, I was wondering what your thoughts are on ING’s IRA and how they invest in their mutual funds? I normally wouldn’t invest in mutual funds, but I do want to have an IRA. It’s just that ING’s IRA invests in mutual funds and not index funds. Do you think that is okay? Thanks for reading!

]]> By: Victoria http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds/comment-page-1/#comment-39884 Victoria Tue, 06 Nov 2007 21:46:33 +0000 http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds#comment-39884 Who is a good brick+mortar/online stock investment company if you are interested in investing in ETFs like the S&P 500 and QQQQ? Who is a good brick+mortar/online stock investment company if you are interested in investing in ETFs like the S&P 500 and QQQQ?

]]> By: rob http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds/comment-page-1/#comment-10523 rob Fri, 06 Apr 2007 16:46:10 +0000 http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds#comment-10523 Strangely the vast majority of people are financial illiterate, (basically a pet peeve, the reason our primary education system is so poor is that the worst enemy of a politician is an educated voter, few politicians desire an educated consumer) and trust without verification, and sadly do not want to spend even sixteen hours per year investigating the numbers and what they actually mean, and compare them to the alternatives. They just turn it over to there broker, and let him decide. That is the sole reason the bottom 85% of the mutual funds exist coupled with fads that one can talk about in social settings. Just like all investments, including Mutual Funds (MFs)– Each investment has to be audited periodically. I been quite successful with MFs, my main screen points are: 1) No loads, I always been able to find a equal to or better mutual fund with without a load (excluding 12b-1 fees, which I do try to minimize). This I believe has been widely documented one rarely gets anything for paying a load. 2) Small Mutual funds on total assets, basically it is easier to turn a row boat than a aircraft carrier, and typically the manager more hungry. 3) Low turn over rate. Basically if there is typical above average turnover, in the portfolio that tell me the manager did not do his homework. They are constantly chasing the next fad 4) Pick out the mutual fund families which close to new investors, more purchases of shares from existing investors when they have a superior year, and then everybody want to get into that specific fund. 4) Just like other investments, when it performance is below average for too long of a period for no valid reason – it is time to find a new investment, but find where you going to invest prior to selling. 6) I prefer small companies MF, and mid cap MF, and overseas MF. These investments are typically harder to investigate than large companies. If I invested in large company MF’s then I would consider buying stocks directly; but, probably would use mutual fund literature to select individual small and mid cap companies for both stock and to screen employment opportunities 5) I will probably never get out of MF unless something changes dramatically in that area., The better MF managers visit the plants, talk to the manager’s, talk to the competition, and go to the trade shows etc. That don’t just look at the written data provide by the news services. Strangely the vast majority of people are financial illiterate, (basically a pet peeve, the reason our primary education system is so poor is that the worst enemy of a politician is an educated voter, few politicians desire an educated consumer) and trust without verification, and sadly do not want to spend even sixteen hours per year investigating the numbers and what they actually mean, and compare them to the alternatives. They just turn it over to there broker, and let him decide. That is the sole reason the bottom 85% of the mutual funds exist coupled with fads that one can talk about in social settings. Just like all investments, including Mutual Funds (MFs)– Each investment has to be audited periodically. I been quite successful with MFs, my main screen points are: 1) No loads, I always been able to find a equal to or better mutual fund with without a load (excluding 12b-1 fees, which I do try to minimize). This I believe has been widely documented one rarely gets anything for paying a load. 2) Small Mutual funds on total assets, basically it is easier to turn a row boat than a aircraft carrier, and typically the manager more hungry. 3) Low turn over rate. Basically if there is typical above average turnover, in the portfolio that tell me the manager did not do his homework. They are constantly chasing the next fad 4) Pick out the mutual fund families which close to new investors, more purchases of shares from existing investors when they have a superior year, and then everybody want to get into that specific fund. 4) Just like other investments, when it performance is below average for too long of a period for no valid reason – it is time to find a new investment, but find where you going to invest prior to selling. 6) I prefer small companies MF, and mid cap MF, and overseas MF. These investments are typically harder to investigate than large companies. If I invested in large company MF’s then I would consider buying stocks directly; but, probably would use mutual fund literature to select individual small and mid cap companies for both stock and to screen employment opportunities 5) I will probably never get out of MF unless something changes dramatically in that area., The better MF managers visit the plants, talk to the manager’s, talk to the competition, and go to the trade shows etc. That don’t just look at the written data provide by the news services.

]]> By: marvin http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds/comment-page-1/#comment-10349 marvin Wed, 04 Apr 2007 13:33:47 +0000 http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds#comment-10349 the problem with index fund is you can't really mimic the index fund. Since all the index fund will try to buy in and buy out at the same time and that's probably several % right there lost to other mutual fund. Or they have to wait which means they are not true index fund. What's you take on this? Some financial planners suggested just opposite of what you said here. the problem with index fund is you can’t really mimic the index fund. Since all the index fund will try to buy in and buy out at the same time and that’s probably several % right there lost to other mutual fund. Or they have to wait which means they are not true index fund. What’s you take on this? Some financial planners suggested just opposite of what you said here.

]]> By: Reality Bytes http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds/comment-page-1/#comment-8504 Reality Bytes Tue, 20 Mar 2007 12:36:44 +0000 http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds#comment-8504 I am being actively sold on hedge funds. I imagine that index funds will do poorly if the market takes a downturn. So too will Mutuals? I wonder what Ramit's opinion is? I am being actively sold on hedge funds. I imagine that index funds will do poorly if the market takes a downturn. So too will Mutuals? I wonder what Ramit’s opinion is?

]]> By: Brian http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds/comment-page-1/#comment-73 Brian Wed, 27 Dec 2006 19:16:00 +0000 http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds#comment-73 While index funds are superior to actively managed funds, there is a strange paradox in that the more popular index funds become, the less likely they are to outperform actively managed funds. Index funds work on the premise that the value of all stocks is accurately reflected in their market prices - that there is no advantage to searching for mispriced stocks, something that goes on all the time with actively managed funds. As more money flows into index funds and out of active funds, the chance of finding mispriced stocks in the market increases. Eventually, the more mispricings a fund manager can capitalize on, the more likely he/she is to earn a return in excess of the market return. Bottom line is, index funds work best only when there is more money in actively managed funds. While index funds are superior to actively managed funds, there is a strange paradox in that the more popular index funds become, the less likely they are to outperform actively managed funds. Index funds work on the premise that the value of all stocks is accurately reflected in their market prices – that there is no advantage to searching for mispriced stocks, something that goes on all the time with actively managed funds. As more money flows into index funds and out of active funds, the chance of finding mispriced stocks in the market increases. Eventually, the more mispricings a fund manager can capitalize on, the more likely he/she is to earn a return in excess of the market return. Bottom line is, index funds work best only when there is more money in actively managed funds.

]]> By: blogginginvestor http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds/comment-page-1/#comment-72 blogginginvestor Wed, 27 Dec 2006 13:33:36 +0000 http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds#comment-72 Good article. I will now actually look at the performance of index funds in India after reading your article. I was under impression that actively managed mutual funds are the best bet. Good article. I will now actually look at the performance of index funds in India after reading your article. I was under impression that actively managed mutual funds are the best bet.

]]> By: Gabriel http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds/comment-page-1/#comment-71 Gabriel Thu, 21 Dec 2006 08:01:57 +0000 http://www.iwillteachyoutoberich.com/blog/all-about-mutual-funds#comment-71 I disagree with you, Funds are a great investment if have a moderate ammount of knowledge. I didn't see you talk about the risk of the funds (debt vs. stocks), if you study the funds you want to invest in and you know the risk you can tolerate, you can make a pretty good investment. For example I invested in a couple of funds three months ago and I have managed to get a 16% return, already having paid all the operational costs. I think it's a great way of saving money, if you¡re willing to leave your money in there for 3 to 5 years and spend some time studying the funds you are going to invest in I disagree with you, Funds are a great investment if have a moderate ammount of knowledge. I didn’t see you talk about the risk of the funds (debt vs. stocks), if you study the funds you want to invest in and you know the risk you can tolerate, you can make a pretty good investment. For example I invested in a couple of funds three months ago and I have managed to get a 16% return, already having paid all the operational costs. I think it’s a great way of saving money, if you¡re willing to leave your money in there for 3 to 5 years and spend some time studying the funds you are going to invest in

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