Who Should Invest in Mutual Funds?

It's a shame that most Americans have heard about mutual funds, but few really understand them. Tens of millions of investors have money in these managed pools of investors' money, yet few of them really understand the investment options inside their fund family or 401k plan.

At the same time, some people are invested in mutual funds in their 401k, and don't even know it! Unfortunately, many folks are confused about mutual funds and investing in general. Most want to do what is best for them financially, as long as they can make more money than they can at the bank without taking much risk.

Who should invest in mutual funds? Anyone who can relate to what they just read should!

What's the difference between speculative stocks, junk bonds, stock options, commodities futures contracts vs. mutual funds? The answer is that only investors with considerable investment knowledge and investing experience should play with the likes of speculative stocks and the rest of the lot.

The rest should invest in mutual funds. This includes about 98% of the investing public. Let me get a little more specific.

If you want a safe place to invest and earn competitive interest rates, invest in money market mutual funds. You can get your money back quickly and easily with no sales charges or fees for early withdrawal.

People who want to earn higher interest with moderate risk should invest in bond funds.

Anyone who wants to participate in the stock market without picking his or her own individual stocks to invest in should invest in stock mutual funds.

All those who want a balanced portfolio of stocks and bonds should consider traditional balanced funds.

Folks who would like to be invested in gold, oil, other natural resources, or real estate should consider specialty mutual funds.

If you want to keep your decision making to the absolute minimum, you should invest in LIFECYCLE or TARGET RETIREMENT mutual funds. Here you simply tell the fund company if you want to be conservative, moderate, or aggressive in your investing. Or, tell them when you plan to retire, or if you are already retired. They manage your money accordingly, usually at a moderate cost to you.

The odds are that you should invest in mutual funds. My job is to inform people. Yours is to do some learning, and then to invest in mutual funds.

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