For my kin: a final word on mutual funds

As you may have gathered from the tone and direction of my comments in the previous posts, I am not a big fan of mutual funds. I believe mutual funds are overpriced and under-performing. That said, some folk need hand-holding and a good mix of mutual funds will do that while putting some money in your pocket.

So, if you insist on investing in one or more mutual funds, watch the following:

• Pay as little MER as possible
• Do BUY no-load funds
• Do NOT buy front-end loaded funds
• Do NOT buy back-end loaded funds
• Do NOT buy a fund based on its name
• Do check a fund's past performance
• Do BUY a mix of funds: Canadian, U.S., International equities plus bonds

Check how the TD Dividend Growth fund has performed compared to the TD U.S. Equity Portfolio fund (TDB3092). Canadian Dividend is green line and U.S. Equity Portfolio is purple.

Having some exposure to U.S. equities is highly recommended, as is some international exposure as well.

An expert on investing, whom I have admired for years, writes a blog called: The Canadian Couch Potato. Click the previous link and read what he has to say about creating a couch potato portfolio using TD e-series mutual funds. To see a suggested portfolio mix click this link: Model Portfolio using TD e-series funds. The Couch Potato portfolio is an excellent guide to creating your own well balanced portfolio. One will not go far wrong just following the advice found on the Couch Potato site verbatim.

Still, I shy away from mutual funds. In my experience ETFs are a better bet than mutual funds. In my next post we will look at ETFs.