MUTUAL FUNDS VS STOCK MARKET
The stock market drop-off has been especially worrisome for parents whose children are nearing college age. They are suddenly faced with the prospect of having to cash out an education fund at one of the market's low points.
Parents across the nation have suffered significant losses and are now scrambling to find ways to pay their children's tuition. Demand for financial aid has risen, with the Education Department reporting a 10 percent increase in applications over the previous year. And some colleges are reporting an increase in calls and letters from parents whose ability to pay tuition has been abruptly compromised.
The families who have fared the worst are those who kept their money in stocks even as their children entered high school. This was poor planning. Traditional investment advisors say parents should invest more aggressively when the child is young and gradually move to more conservative holdings such as government bonds when the student is within a few years of needing to tap into college funds.
Some people are suggesting that there has really been no better time to invest in the stock market than right now, when it is at bargain levels. Many financial advisors suggest that you should not put your money under your mattress.
Is Mutual Fund Investing appropriate for you?
Mutual Fund investing is a much more conservative form of investing than investing in the stock market. Mutual Fund Investing simplifies your investment experience freeing up your time for more enjoyable pursuits. By using a professional money manager, you may also feel more at ease with investing for child's education using the investment vehicle of your choosing.
Investing in the stock market is much more riskier than most other forms of investing. To effectively trade in the stock market you need to understand market and company fundamentals and requires a lot of research. Even if you do know what you are doing you can not compete against the large money mangers that have either gotten into or out of a stock before the average person gets any news about that company.
There are a lot of mutual funds out there to choose from. You could do the research yourself or consult a financial advisor to select one for you. Fortunately, there are financial advisors that will do this for you for free. For more information see the Mind Your Money Section.
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