Discussion

When I learned that I was with a baby. I opened a mutual fund account with one of the banks that are being bailed-out today.

The guy who assisted in opening an account is now an employee for one of the big fast food restaurant and making a lot of money. A matter of fact, I opened the account on Friday and it was his last day at the bank.

Anyway, he told me "like driving a little faster, you want your money to grow than just staying in a savings account". Well, $250 every month going into the account. By the time I closed the account,there was no growth of the money I have put into that account.

It is funny though. I still hear about him from my tenants whom are paying me money and trying to get the guy who has a lot of influence with the fast food restaurant to let my tenants open one of his own in Co.

Every time, someone talked about Mutual Fund, I thought about him.

i feel not so much profitable if the joining fee in too high and the return of investment is to lower that the fee. If vice versa than still can consider. Thus choose the lower fee fund with highest return of investment.

Index fund seem to be very interesting too but i not so sure what fund is that, how to get such fund? What will be the return for index fund over a period of time?

Well, there is no one to blame. They charge these fees because they can. I don't see the point in getting mad. Rather make informed choices.
Last year we signed a contract with Child's educational fund. They use similar scheme as mutual funds.
It was very easy to sign up: a nice lady came to our place, explained "everything" and left with a cheque in the amount of the first deposit.
A few months ago I decided to cancel the contract but the fees were way too high (it is like 10 dollars to get in and 20 dollars to get out). I decided to reduce the points to the minimum and cancel the contract later when the fees are not that high. It took me two weeks (!) to get what I wanted. I had to call their office several times, they used every trick in the book to make the process complicated....
The conclusion: they are not liars, it is me being dumb.

Sounds like a good business for them! I am not financially intelligent about the stock market. I don't know what other options are available that are better, if there are any. They are good at SELLING, so even if it isn't great for the client they are still getting clients.

It is different than if they were just carefully picking stocks and charging you. These are mutual funds. They are not always (or often) going to perform over time, the hedge funds continue to wipe them out, and they are charging you. The fund shown already makes far less than the market averages.

It brings to mind what you are saying about job security. You pay for it sometimes. In fact, you are paying for someone else's job security. Something of a viscious circle, if you are not careful. The old rules keep it going, while affluence and education are severally used to justify it all.

What if everyone wins?

I had no idea that mutual funds underperformed as much as they do but I realized a while back that the returns I was earning weren't going to do me any good in the long run. It's demoralizing to realize employers are selling their employees these 401(k) plans that invest in mutual funds as benefits. But it's shocking to me that more people aren't disappointed with the returns they are getting.

Reaction? Financial illiteracy is very very expensive... talking about financial fairy tales, this is a good one.

I have never invested in one. In India many failed and closed during the contraction in the economy in the 1994-2000 period. However after that many more have sprouted. In the last year most of them reported declines of 50-65% in NAV that shocked investors again. Still its hard to convince people at large that they are at the losing end of the battle. In fact I was at a conference where one of the leading heads of an AMC stated that it was not his job to exit the market even if he thought it was going to go down because money was entrusted to him for long term investment. How do people let them keep getting away with logic like that?

To be more transparent, the fees ought to be charged and billed to the account holder annually. Charges they have to write a check for, not payable out of the mutual fund itself. Of course this won't happen, because keeping the fees hidden and complicated is the key for them.

To be blunt. I see it as one big investing scam run by the brokers because they don't know what they are doing so they get their money through the fees and don't care about you. Even if you have to use a broker, you very well will have to pay them handsomly to avoid them using you. Also you need to keep them in your scope of vision. Sure you can find some who are honest and are really interested in your well-being but they are far and few between.