Although I have a preference for dividend growth and indexing investment strategies, I think it’s reasonable to have some exposure to actively managed funds. Different management strategies may perform better at different times.

It will answer all your questions on the where, what, and how of mutual fund investing. If that isnt enough there is a boglehead wiki site that goes into the basics of mutual fund investing and more detailed strategies.

http://www.amazon.com/Common-Sense-Mutual-Funds-Anniversary/dp/0470138130

It is statistically unlikely that one can beat the market year by year for 30 odd years. At some point there will be a reversion to the mean (under performing). And then you have expenses on top of that (Actively managed funds will incur higher expenses as a result of increased transaction and managerial fees).

The reality is that the expense ratio is the most effective way of determining success of a fund over the long term (due to compounding). A passively managed index fund with no-loads (both front and back end) or 12b-1 fees will reduce expenses to an absolute minimum and provide maximum yields with the minimum risk.

Your goal should be to TIE the market because it is both easier and less risky to do so.

The easiest way for most people to go about this is to buy into Total Stock Market Fund and a Total Bond fund in proportions based on your risk tolerance.

I would suggest that anyone who has a retirement plan read “Common Sense on Mutual Funds – 10th Anniversary Edition” by John Bogle. It is the most valuable investment I have ever made. I would also suggest reading the boglehead wiki site.

By the way…you have her eyes. Booohahaha.

This was a great article, especially principles 4 and 5. Maybe we sometimes treat investments like they’re savings accts and cd’s and don’t check them as often as we should? I’ve been guilty of this. Life gets busy and complicated, and I forget about my investment until it really takes a dive.

Thanks for the reminder.