Do you invest in mutual funds?

They are a great way to diversify your money across a spectrum of companies and industries.

But what kind of funds should you be investing in?

There are actively managed funds and passively managed funds.

Which one is better?

The bottom line is this:

Which type of fund will earn you a greater return on your investment?

Let’s take a look…

Active Vs. Passive

An actively managed fund is compiled of stocks picked by a fund manager.

Simple enough?

So, what’s a passively managed fund?

It’s simply a fund that mirrors a certain market index. An index fund.

When you invest in an index fund, you are investing a little bit of your money into every company in that index. So if you were to own an S&P 500 index fund, you would own a small part of 500 different companies.

Now for the final question: Which is better?

Take a look at this infographic from BusinessProfiles.com and make the choice for yourself:

The Myth of the Successful Money Manager [infographic]

Final Thoughts

I personally prefer index funds. You can probably see why now.

I think they are the best source for the bulk of your retirement investing.

Be sure to check out the specific index funds I recommend based on your age.

If you want to keep growing your retirement investments, you may want to consider these 3 rock solid investments for your retirement portfolio.

Spoiler alert! Index funds are one of the three.

What do you invest in?

Do you prefer actively or passively managed funds?

Share in the comments!

Photo Credit: Hartwig HKD
Infographic: BusinessProfiles.com

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