Myles of Investments

Read about my successes and failures. Learn from my experiences and gain insight without losing any cash!!!

Lesson: Catching a Falling Knife
Lesson: Currency Exchange
Lesson: Mutual Fund
Lesson: Paid to Wait
Lesson: Pricing in a Downturn

This is where you’ll find find my Blog. I will comment on the latest news relating to investing, real estate, and the financial markets.

Lesson: Mutual Fund

Here’s a lesson on mutual funds: I had saved several thousand dollars towards the down payment on my first house, and I wanted to make this money grow while I earned and saved the rest of the cash. I thought I was working smart, but I didn’t yet understand the objectives of the banks, and the risks of mutual funds.

I wanted to invest my money in an investment that was safe and that would guarantee my principal, because I needed to have it available when I put in an offer on our dream home. I invested my money in a mutual fund that the bank was recommending. It was a bank run mutual fund with a list a page long of different companies in it. I was told that it was low risk and that at the rate it was growing I wouldn’t have a problem.

The lesson I didn’t know at the time was that the mutual fund my banker was recommending, was offering a great commission to my banker. So, my banker got a great commission, the bank got my money in the form of an expense ratio, and I got a product that was to safely grow. When I went to take the money out, my banker called me and said the good news was that in a few days when the money was to come out, the fund was forecasted to regain some of its losses and almost give me back what I had put in! I was furious and felt betrayed by the people who were supposed to be the experts at managing money.

I let the bank make money on my money, while returning me less than I had put in. As a result I am very skeptical of the effectiveness of mutual funds. I’ve heard that when fees and commissions are factored in 55% of mutual funds can’t even beat the market. To me, those are losing odds, and it makes it worth the time and effort on your part to see if you can do any better. The lesson on mutual funds here is that you’re better to do your own research!