EVERYBODY FACES IT sooner or later.
Maybe you've gotten your first bonus, or inherited the beginnings of a nest egg. Maybe your savings are sitting in the bank earning less than 1% interest. You know what you should do — put your money to work. And you know how to do it — buy yourself some mutual funds. But opening the door on the issue is like peering into a nightmarish Turkish bazaar: thousands of choices and nobody speaks English.
Mutual funds seem to multiply like rabbits, drinking from the wide stream of baby-boomer retirement savings. Together, the nearly 8,200 mutual funds available comprise a staggering $7.2 trillion in assets — roughly three times the 2003 U.S. federal budget. But many of them aren't worthy of your time. Consider this chilling statistic: Over the past five years, nearly 55% of equity funds failed to beat the returns delivered by the benchmark S&P 500 index on a cumulative basis.
It's enough to make anyone with half a brain open up the mattress and stuff it full. But that, of course, would only be cheating yourself of a rich opportunity to see your money grow in the stock and bond markets. So we've designed this course to give you the background you need to take control of your mutual fund investing. Before you graduate to our Taking Action and Strategic Investing departments — where you'll set your goals and pick specific funds — you need to learn some basics: Why mutual funds make sense; how they work; what to look out for in terms of fees and expenses; and how to sort through the different types of funds. The fund bazaar can be daunting, but finding your way around isn't as hard as it looks.
