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Investing in Funds: Playin’ the Fools Game?

Looking for Returns in All the Wrong Places

I sold one of my blogs for a small fortune in January. After escrow wired the funds to my bank account, my friends and family wanted to know what I would do with the money. Their choices included a Mini Cooper, a face-lift, dental work and a down payment on a house — not necessarily in that order. When I replied that I wanted to save the funds for my daughter’s college education, I was surprised when they all wanted to know which mutual fund I was going to choose.

This caught me off-guard. I never had an interest in investing in mutual funds. Granted, I’m often attracted to hard-working moneymakers, and a mutual fund generally fits that description. They allow individual investors to pool resources and to benefit from the same scale of services, information, clout, expertise and economies as large institutions. Mutual funds also provide immediate diversification with little effort and waste of time on the investor’s behalf.
But there are so many mutual funds out there, I’m afraid I’ll make the wrong choice. Plus, I know I’m not receiving all those benefits for free. I’m paying for a mutual fund manager to trade securities according to the fund’s prescribed criteria. That’s the fund manager’s job, but he could care less about my overall financial health.
I’ve always had a problem with this lack of interest because I have issues with handing over control in the first place. You see, I’ve always driven my own car rather than hire a chauffeur.
But recently I started to see why a person might hire a driver. When I drive, I don’t have time to do anything else because I need to concentrate on the road. What a waste, especially when I could use this time to make more money. That’s when I began to weigh the cost of a driver against the value I’ve place on my time.
So I considered whether a mutual fund might prove a good choice for my money. But as I read more about them, I learned that many funds really don’t offer the diversity I need. So I began to look for alternatives. I realized at that point a personal money manager might care about my goals, time horizon and risk tolerance more than a mutual fund manager would. My financial success also will reflect on the financial manager’s ability.
So what’s the best choice for me? Do I want to go directly to a mutual fund? Or do I pay a money manager? I decided that if I can let go of some of my control issues, a financial manager would be the wisest choice.
Outside my rational discourse, I have another reason to choose a financial manager over a mutual fund manager. My friends and family think I need a face-lift and dental work. Plus, they want to put me into one of the smallest cars on the face of the earth and pin me down with a home in a volatile housing market. If you think I’m going to invest in mutual funds because they unanimously suggested them, you mistakenly think I care about what my friends and family think about my money choices.
But, if they’d only start listening to me. …

Linda Goin is a free-lance writer who focuses on personal finance and visual communications. She completed her college career this year with a graduate degree in American history at age 50.

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