The Setup:

Mutual funds have been a popular investment option for many years, but is the landscape changing? Let’s take a look at the pros and cons of using mutual funds as part of your retirement plan and help you decide whether it needs to be a part of your strategy.

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The Combination and Key Points: 

Mutual have long been considered a practical and sensible option for investing money towards your retirement. Where else could you diversify your portfolio for a small amount of money as you begin building your savings?

Well the landscape seems to be changing as more and more investment options become available and it has people rethinking the value of mutual funds. Last episode we explained the basics of mutual funds and now we’re turning our focus towards the pros and cons of this investment option.

Nearly all the clients we work with either own mutual funds currently or have at some point in their life. And when we work with them to customize a plan, we might even suggest using them moving forward. The key, however, is to really examine the fund and make sure that it fits your needs exactly. There is value in the funds, especially for newer investors, but there are also a lot of challenges that need to be considered.

3:29 – How often are we talking with clients about mutual funds?

4:31 – Why are mutual funds so popular for investors?

Today we’ll run through each side of the debate and help you understand what makes mutual funds the correct or incorrect decision for your personal retirement goals. As we mentioned, diversification is the main benefit, but are there additional pros?

5:31 – What pros are there for using mutual funds?

7:13 – Mutual funds do allow for customization and smart money managers.

Speaking of diversification, one of the cons is owning multiple mutual funds might actually shrink the amount of diversification you actually have in your portfolio. We explain how that happens and how we take a deep dive into a client’s account to see how much overlap there is from fund to fund.

7:53 – On the other side of that, what are some of the cons for investing in mutual funds?

9:57 – Another big negative is it’s difficult to know exactly what you own and you end up carrying many of the same things.

11:20 – Are there any other tax considerations with mutual funds?

So what might the future of mutual funds look like? Is there still a place for these in your portfolio? And if Ben could change one thing about mutual funds, what would it be?

12:18 – What is the future of mutual funds? Do they still have a place in our retirement plans?

Thanks for listening to another episode of Unlocking Your Financial Future. We’ll talk to you again next week!


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Understanding the Basics of Mutual Funds

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