Mutual fund fees
In theory mutual funds are a pretty good investment for the average investor. You get an experienced mutual fund manager to take care of your money, the investment is easy to make and totally hands off… However mutual fund fees get in the way of mutual funds being a good investment in my opinion.
Fees range between 1 and 4 percent but the average fee will be around 2% yearly, this does not even take into account a possible front or back end load.
2% might not sound like much yearly, but it can make a tremendous effect on your portfolio. Returning 8% instead of 10% does not make a big difference after one or two years but after 10, 20, and 40 years losing 2% each year will kill your returns. Compound interest is very powerful and you want to make sure that you put your portfolio in a position to take advantage of it to its highest extent.
If you are dead set on investing all or part of your portfolio in one or more mutual fund make sure that they charge fees less than 2% yearly and that they do not have front or back end loads, they will kill your chances of beating the market which is the ultimate objective.