I recently saw this video with Tony Robbins and Marie Forleo. In the interview Tony spoke about how mutual funds were not the wisest investment that you can make. He broke down some of the numbers and I was amazed. I was always skeptical of mutual funds, but now I really do not want one. Check out the video... what do you think about all this. Dave Ramsey keeps yaking about mutual funds, but I want a high ROI asap.
I still think mutual funds are still a viable option for me. I don't read too much into such hollow advice and promotional gimmicks. If you think your fixed deposits bring in way too less and shares are too risky, then mutual funds form, the middle ground. Yes, there is risk involved but are much better than high risk stock trading, foreign exchange trade and so on. Anything that promises the moon would invariably harbor some trap. So, do your research and take informed advice before taking the plunge.
At the end of the day it's all about the costs involved. Some are more obvious fees, like management fees, some are more hidden. This potentially combines to lead to a sizable hit to any positive returns you may have. What Tony Robbins has highlighted isn't necessarily new. That's why Vanguard with its low-cost products are doing quite well. As much as I've always liked his stuff and I've got his book on money, I don't think he's going to create any major revolution in the way the industry creates or sells products. I also don't think his "all-weather product" is the answer - there's no guarantee that it will work and the efficiency of the market will root out the good from the bad product over time. What I hope it will do is make people more aware and feel empowered to take control and choose more consciously what they want to be invested in.
Biggest cost involved in investing-TIME. Mutual funds make 2%-5% because they hire people to spend time to study the markets. Brokers make commission because they spend time facilitating trades between average Joe's like you can me and the traders/funds. Mutual funds are good if you have no time to learn about investing. The more time you can put to learning, the less services you need and the less money you will spend. So are mutual funds a waste? Well that answer depends on what you are looking for.
I think there are options that are way better than mutual funds, but there are way worse ones as well. It's probably more for people who don't like to risk too much and spend too much time worrying about their money, but at the same time don't want to have their funds staying stagnant on some bank account somewhere. In my opinion it's just a step above a savings account for the most part.
Personally, I wouldn't call any investment a waste. Indeed, there are some investments that are better than others, but each and every investment serves a purpose because one single investment cannot provide you with all that you need, save only if that investment is vastly diversified. So, I would say mutual funds are good, but if you see yourself as a bigger investor! go for it!
There is one type of investment that's a waste. I can't quite describe what I mean, but I'm talking about when people say they are "investing" their money into something that depreciates. A lot people say to "invest" in a new car. Remember when people "invested" in beanie baby's in the mid 90s?? Once heard a college student say he was going to "invest" in a large bottle of booze to save going to the liquor store as often... sigh... Anyways the point I want to make is you are right there really is no "waste" investment. Provided it's a real investment in the first place!
I don't think mutual funds are a waste. They're there for a reason. Besides, as in the case of most investments, there's no such thing as immediate return of investment. Unless you've managed to put out a really high capital then it's possible to receive high ROI in maybe a few months from the time you started investing. Still, that's a shot to the moon and your returns may not be as high as when you actually wait five years or more for the harvest. You have to be a patient investor or you'll end up with half-baked investments. Remember: the faster you rise, the harder you fall.
This depends on every person really. Let's say you have the money to invest on stocks but you can't become an active trader since you have a 9-5 job, your options are only to either invest your money on blue chip stocks, or invest them on mutual funds. However if you have a lot of time in your hands, you can try and become an active trader so that you'll have higher profits on your trades. Mutual funds are still a viable investment vehicle which is why I'm still planning on investing on more mutual funds that my banks are offering because of the diversity which lessens the risks on my money.
They are for 'lazy investors' so I guess they are not bad for people who can't be bothered to do their own research. It all boils down to weather how much work you put in – the more hands on you are investing your money then the more you will get back. I prefer investing my money into Micro Loans as I like the idea of helping people.
