Glad you other guys are beginning to chime in -- and your responses tell me that you've been good students -- more importantly - the responses show me you're all THINKING and understanding that there's no one particular answer. Once you get there... you've got the fire power to actually be independent! That's fantastic!
CapitanofIron...
Mutual funds are generally the "milk toast" of investing. They're the dumbed down version of one size fits all mentality. While I absolutely agree that they are the BEGINNING for many people - as they allow you to just put in 20 or 50 bucks a week... without thinking. SOME savings is better than NO savings... and if the company will match some percentage of yours -- then it's easy and painless... and done automatically.
Here's the ISSUE I have with Mutual Funds once you have enough to do any kind of investing on your own. As stated above -- when you look at what makes up a Mutual Fund... the top ten stocks are usually pulling the wagon - and then there's the other 100 that are the lamest of of the lame.. and they are what drag you down... AND when you add to that - the fund must earn something as they have management costs... then that further cuts into your return.
The entire point of this last 400+ pages is to teach people to think - and to be able to MIMIC a mutual fund on their own. Mutual Funds aren't the magic bullet -- they're the dumb bullet. The go up when the market is going up and they go down when the market goes down. Some of their investments pay a dividend - and most do not. So you own "everything" in their portfolio and when you look at the returns... most are super mediocre.
If you simply take your 20K and buy 10 good names or even 7 good names and have the dividends reinvested... You own your own mutual fund - but your performance will begin to really compound. You'll still go up with the market and down with the market. But as explained here many times. When the market is DOWN the dividends buy MORE shares at lower prices... THAT IS GOOD!! Every share you own pays you a dividend - the more shares you have the more dividends you collect and pretty soon you're on a roll.
Keep reading and keep posting.
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