June 2, 2013
What is the difference between an index mutual fund and a managed mutual fund? Why should you care?
What is the difference between an index mutual fund and a managed mutual fund? Why should you care?
The difference is that in an index fund you won’t pay commission for the computers doing the work. Whereas in a managed mutual fund you have a team of people “thinking” they can predict and beat the market, and you pay them commissions to think so. You should care because as those commissions add up it becomes money out of your pocket that could have easily been kept
An index mutual fund has very low fees, whereas a load mutual fund has commissions and high fees. When investing, you always want to go with the lowest fees possible, so an index mutual fund is a much wiser investment than a managed mutual fund.
Brayden was first with plenty of correct information. The index mutual fund provides the average person the opportunity to invest their money in a diversified way over many sectors throughout the world AT THE LOWEST PRICE. This is done just as Brayden stated, there are no team of smart people trying to pick the winners while avoiding the losers. Those “smart” people cost a lot of money and they are the ones running the managed mutual funds (that includes no-load and load managed mutual funds).
Brayden and Katherine are right. The more money out of your pocket goes into their pocket. They get richer at your expense. You take all the risk and they take a large chunk with no risk. Does that make sense? Stick with the index fund and let others place their money with the “smart” people. YOU don’t need them!