Risks of Mutual Fund Investing | Reasons not to invest in Mutual Funds

• Mutual funds can drop in value if market corrects itself. Also, if you’re investing in a load fund, you’re paying as high as 6% up front to acquire the shares that can even drop in value later. For example, let’s say you’re investing in American funds mutual funds. Most mutual funds offered by them have a load of 4-6%, so a $4,000 investment will result $3,760 in your account balance. Now this fund must return at least 6.4% in next year just to get back to your original investment of $4,000. If you’re in bear market, you could easily lose another 5%-10% of your initial investment, making it more difficult to make money on your investment. Continue to Read »