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Is It Godsend To Use Extensive Common Funds For Your Retirement Account?


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Mutual funds have been around for an expanded time. They have probably been around for almost 100 years. Jesse Livermore would even talk about them in his book “Reminiscence Of A Stock Operator”. But they were referred to as groups back then. Almost 100 years later mutual funds still exist. But the environment is changing. Although mutual funds are good, are they still good for retirement investments?

Because the laws in the USA are very exact, mutual funds are have a hard time performing good. The mutual funds prospectus has certain guidelines that it has to follow. Such as being in equities 90% of the time and only having cash 10% of time. Having such strict criteria makes it tough to perform. Some guidelines even say what asset classes the fund can only invest in. Having these type of restrictions makes it very difficult for a mutual fund to perform year in and year out. Also, having restrictions is tough when the funds are such big size.

Bilateral funds now manage trillions and millions of dollars. There are so many retirement accounts nowadays that the funds are monsters with so much capital. This actually makes it very difficult for them to move when the environment needs them to move quickly. Having such large assets is very difficult to allocate two investments. Such big size takes sometimes weeks or even months to build positions in a particular stock or sector. Having such size really limits how a mutual fund performs.

Since mutual funds are eagerly managed they require fees. The fees are much higher than passive investment vehicles such as indexes. The fees in most mutual funds are sometimes 4 to 10 times more expensive than index funds. Mutual funds have lots of expenses such as marketing material, management fees, and trading. It’s very difficult to keep those fees low even though technology has dropped the fees lower.

Crowdista Fundistica posts about the monetary markets and 403b contribution limits . She also authors about some of the 403b plans gossip of the month. On her hrs off she runs on the oceanfront and does mind reading.

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