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Many people think that investing in mutual funds is the way to go and the best method for getting rich. I think mutual funds are horrible investments. Here are 8 reasons why you should not invest in mutual funds.

1. Mutual funds don't beat the market.

72% of actively-managed large-cap mutual funds failed to beat the stock market over the past five years. Trying to beat the market is difficult, and you’re better off putting your money in an index fund. An index fund attempts to mirror a particular index (such as the S&P 500 index). It mirrors that index as closely as it can by buying each of that index’s stocks in amounts equal to the proportions within the index itself. For example, a fund that tracks the S&P 500 index buys each of the 500 stocks in that index in amounts proportional to the S&P 500 index. Thus, because an index fund matches the stock market (instead of trying to exceed it), it performs better than the average mutual fund that attempts (and often fails) to beat the market.

2. Mutual funds have high expenses.

The stocks in a particular index are not a mystery. They are a known quantity. A company that runs an index fund does not need to pay analysts to pick the stocks to be held in the fund. This process results in a lower expense ratio for index funds. Thus, if a mutual fund and an index fund both post a 10% return for the next year, once you deduct The expense ratio for the average large cap actively-managed mutual fund is 1.3% to 1.4% (and can be as high as 2.5%). By contrast, the expense ratio of an index fund can be as low as 0.15% for large company indexes. Index funds have smaller expenses than mutual funds because it costs less to run an index fund. expenses (1.3% for the mutual fund and 0.15% for the index fund), you are left with an after-expense return of 8.7% for the mutual fund and 9.85% for the index fund. Over a period of time (5 years, 10 years), that difference translates into thousands of dollars in savings for the investor.

3. Mutual funds have high turnover.

Turnover is a fund’s selling and buying of stocks. When you sell stocks, you have to pay a tax on capital gains. This constant buying and selling produces a tax bill that someone has to pay. Mutual funds don’t write off this cost. Instead, they pass it off to you, the investor. There is no escaping Uncle Sam. Contrast this problem with index funds, which have lower turnover. Because the stocks in a particular index are known, they are easy to identify. An index fund does not need to buy and sell different stocks constantly; rather, it holds its stocks for a longer period of time, which results in lower turnover costs.

4. The longer you invest, the richer they get.

According to a popular study by John Bogle (of The Vanguard Group), over a 15- or 16-year period, an investor gets to keep only 47% of a cumulative return from an average actively-managed mutual fund, but he or she gets to keep 87% of the returns in an index fund. This is due to the higher fees associated with a mutual fund. So, if you invest $10,000 in an index fund, that money would grow to $90,000 over that period of time. In an average mutual fund, however, that figure would only be $49,000. That is a 40% disadvantage by investing in a mutual fund. In dollars, that’s $41,000 you lose by putting your money in a mutual fund. Why do you think these financial institutions tell you to invest for the “long term”? It means more money in their pocket, not yours.

5. Mutual funds put all the risk on the investor.

If a mutual fund makes money, both you and the mutual fund company make money. But if a mutual fund loses money, you lose money and the mutual fund company still makes money. What?? That’s not fair!! Remember: the mutual fund company takes a bite out of your returns with that 1.3% expense ratio. But it takes that bite whether you make money or lose money. Think about that. The mutual fund company puts up 0% of the money to invest and assumes 0% of the risk. You put up 100% of the money and assume 100% of the risk. The mutual fund company makes a guaranteed return (from the fees it charges). You, the investor, not only are not guaranteed a return, but you can lose a lot of money. And you have to pay the mutual fund company for those losses. (Remember also that, even if you do make a return, over time the mutual fund company takes about half of that money from you.)

6. Mutual Funds are unpredictable.

The holdings of a mutual fund do not track the stock market exactly. If the market goes up, you might make a lot of money, or you might not. If the market goes down (the way it is now), you might lose a little bit of money . . . or you might lose A LOT. Because a mutual fund’s benchmark isn’t a particular market index, its performance can be rather unpredictable. Index funds, on the other hand, are more predictable because they TRACK the market. Thus, if the market goes up or down, you know where your money is going and how much you might make or lose. This transparency gives you more peace of mind instead of holding your breath with a mutual fund.

7. Mutual Funds are sales items.

Why don’t all these money and financial magazines tell you about index funds? Why don’t the covers of these magazines read “Index Funds: The Most Obvious And Rational Investment!” It’s simple. That’s a boring heading. Who would want to buy something that isn’t exciting or that doesn’t tickle one’s imagination of immense riches? A magazine with that headline won’t sell as many copies as a magazine that boasts “Our 100 Best Mutual Funds For 2008!” Remember: a magazine company is in the business of selling... magazines. It can’t put a boring headline about index funds on its front cover, even if that headline is true. They need to put something on the cover that will attract buyers. Not surprisingly, a list of mutual funds that analysts predict will skyrocket will sell loads of magazines.

8. Warren Buffett does not recommend mutual funds.

If the above seven reasons for not investing in mutual funds don’t convince you, then why not listen to the wisdom of the richest investor in the world? In several annual letters to the shareholders of Berkshire Hathaway, Warren Buffett has commented on the value of index funds. Here are a few quotes from those letters:

1997 Letter: “Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals.” 2004 Letter: “American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns: All they had to do was piggyback corporate America in a diversified, low-expense way. An index fund that they never touched would have done the job. Instead many investors have had experiences ranging from mediocre to disastrous.”

Bottom Line: If you want to make money, you need to copy what rich people do. So if Buffett doesn’t like mutual funds, why would you? So, if not mutual funds, what should passive investors invest in? The answer by now is clear. Invest in index funds. Index funds have lower fees, and you keep more of your returns in the long term. They are also more predictable, and they give you peace of mind.

By: Kelly Price

Trend following currencies can be a great way to make money - but seeing them on a forex chart in hindsight is easy - but trying to capture them in real time is a bit harder however it can be done - if you follow the simple tips enclosed. If you use these tips to catch currency trends, you will catch every big move and enjoy currency trading success so, let's look at them.

The first things you need to remember is to "forget buying low and selling high" and think "buy high and sell higher" - it's a fact that most big moves start from new market highs and NOT market lows. The other wisdom you must forget is predicting price movements - this is another word for hoping and guessing and that's not a way to make money in any venture let alone forex trading. The way to win is to act and execute trading signals on price breaks and use a breakout methodology.

Breakouts are used by all the world's top traders and you must learn to trade them to. So what is a breakout?

They are simply a break of resistance or support to make a new high or low respectively.

All breakouts are not the same and some are more valid than others. The way to find the ones which can yield big moves is to look for an area of support or resistance which has been tested several times and the more the better. Also look for several different time frames and the wider apart the better.

The more times a level has been tested the better - but look for at least 3 in two different time periods. When the level breaks, you execute your trading signal in the direction of the break. You should check that the velocity of price is accelerating in the direction of the break and for this you need to use some momentum indicators to confirm your trading signal. We don't have time to discuss them here, simply look them up in our other articles.

Once the breakout has occurred simply place your stop below the breakout point.

Sounds simple? It is - but most traders can't do it.

They want to hold on and wait for a better price to buy at but wait in vain as strong breakouts don't retrace and the trader not in watches the price sail over the horizon and he thinks of what might have been. If you do it you will be in on every major break and while it is simple the best forex trading strategies are but that doesn't mean there not profitable.

If you trade selectively and go with the valid breaks you will be in on every big move and be able to follow the big trends which yield the big moves. Keep in mind you don't get paid for effort or how often you trade in forex but for being right and that's it.

So learn to trade breakouts and you will have simple timeless strategy for big profits.

NEW! FREE FOREX BREAKOUT TRADING SYSTEM PDF For free 2 x trading Pdf's, with 50 of essential info and more on Breakout Forex Trading Systems visit our website at: http://www.learncurrencytradingonline.com

by: Shaun Rosenberg

Technical Analysis VS Fundamental Analysis, which one is better. These are two different theories about how the market works and how to make money in them. Hard core Fundamentalist will tell you Technical Traders can not possible make money in the market. Hard core Technical traders will tell you Fundamental Analysis isn't worth the effort.

So, who is right? Let us take a look at both of these theories.

We will start with fundamental analysis. This involves looking at individual companies. You must look at a company's financial statement. You must also be aware of any news that comes from the company.

The whole theory behind this is if you find high quality companies and buy their stock it will eventually go up. After all if a company is a great company its stock should go up.

The problem with Fundamental Analysis is that it favors the large investors. Think about it, if you are investing billions of dollars in a company you can afford to spend millions to find information about that company. You can also talk directly to the CEO's of the companies that they are thinking about investing in. This gives large investors an unfair advantage.

Technical analysis however does not give anyone an advantage. It is all about chart patterns. The more you learn about chart patterns the better an investor you will become. And because it deals with chart patterns everyone who has a computer is on an equal playing field.

Now you may think chart patterns might not be able to help you, but you would be wrong. They have helped millions make money in the market. They also make sense.

If you see a stock bounce between $45 and $60 continuously and it is at $45 you would assume that it is going to go up. Why? Because it has always bounced off of $45 in the recent past. In fact every time it gets to $45 most people consider the stock undervalued and buy it. Also where do you think the stock will most likely go? $60,right?Why? Because it always has in its recent past.

There are hundreds of chart patterns out there that have been tested numerous times by numerous people to be true.

Most technical traders do not concern themselves with a company's fundamentals. This is because they don't really need to. Most of their trades could only last 1 or 2 months. Remember Fundamental Analysis can find strong stocks that may eventually go up in the long term. If you are only in a trade for 1 month it may not be worth looking into.

For more information about how to trade the stock market visit http://www.stocks-simplified.com