I agree that very few of them beat the averages ... how could they? They have offices to run, computers, phones, postage and staff ... and buy and sell a lot of stocks, and though their fees are low, many of them pretty well turn over their whole portfolio annually. Those that do that ... have a lot of capital gain to report to you (you hope!) annually ... of which the income tax people want their, in that case, ongoing, share.

And they have that management expense fee (often higher than the income tax cost) that reduces their effective rate - and they get their guaranteed rate, whether they produce or not!

Also - when it comes time to sell those units, you'd better have kept records of not just your original cost ... but also of all of those declared payouts that were reivested, in order to calculate your capital gain. Many mutual funds keep track of your average cost per unit ... that works O.K. ... until they get bought out/merged, etc. and usually the new system just starts from when they took over.

Have you checked Morningstar, the agency that rates them?

What about learning how money works and buying individual stocks yourself?

I bought shares in one of Canada's half dozen or so nationwide banks over 40 years ago for about $4.20 per share, that was paying about a dime or a bit more as annual dividend. A year ago May each of those shares was "worth" (i.e. "could be sold for") $107.00 ... but they were heavily involved with the U.S. stinky problem mortgage situation, so their price slipped down through the 90s, 80s, 70s, 60s into the 50s ... and have recovered a bit to low 60s. Some here recently said that, of course, I sold ... no, I hadn't. Partly, at the time of the high price, didn't have any idea that it would slide so far ... plus, it went from 4.5 doubles in 41 years to about 4 doubles in those years ... which, apart from the increased income via dividends over those 40 years, is a pretty good rate of growth. But if I were about to buy more bank shares, it'd be a different one, as this is not their first goof in recent years.

Recently dividend rate grew from $2.80 to $3.08 to $3.48, which earlier in Canada were tax-advantaged, and recently that advantage increased substantially: so that a person with solely that kind of income went from tax-free $28,000. - 30,000. tax-free, to $46,345. tax-free, an increase of over 60% in one year.

Further ... I've subscribed to what I consider Canada's best personal money management magazine for quite a number of years, that carries no ads, is pretty well all text - and the writers respond to subscribers' questions.

Local subscribers meet regularly in about 40 places across Canada and I've met with about 20 others monthly here for about 8 years or so: many perspectives and I've learned a lot, there. Cost? Gas to get there, wear and tear on the car - plus, time ... a couple of hours a month, and another at the coffee house after, with a few of the guys and gals.

If I'd put that $4.20 into the average even equity-based mutual fund 41 years ago, would the size of that asset have doubled that well? Rather doubtful, I think. A couple of mine have - several haven't. But I don't want to dump 'em this year, due to forced sale of a major holding - Canada's largest telco going private (damn it!).

And that's with the income reinvested - and my shares paid me dividends quarterly, with frequent increases, for 41 years.

However - the big proviso - the average growth rate has not been that good. I've avoided some taxes as I went along, but that piper will have to be paid, one of these days. Whether while I'm alive ... or for my executor to take care of, before dispersal of my estate to my kids and charities.

Had I put that $4.20 into a bank account, GIC, bond, etc. where the number of dollars of principal has been guaranteed, would I have developed any such result?

No way!

Apart altogether from the tax advantages in the equity-based game (whether of the mutual fund or individual investment variety)!

Did I say earlier ... that I prefer to run my own show?

Further ... though it was 60 years ago, I grew up on a farm, and farmers are used to irregular income, with loss of some potential income when a cow dies, or reduced yields due to drought or flood (but the price of diesel fuel, fertilizer had to be paid, regardless). And seasonal income, for many. How many town folks could handle getting paid once or twice a year?

Plus, they manipulate not only capital, but labour - to repair the tractor, or trade it on a bigger one? Which would require getting bigger tillage equipment, as well. Put a new roof on the barn, this year ... or build it larger?

Farmers were much more used to uncertainty than city folks. Or, rather, than city folks used to be.

Now, with pensions shrinking and disappearing like fog in the morning sun ... and, in many areas, the values of one's equity in one's owned home (well, "partly-owned", considering the mortgage), and with employment being uncertain, with full-time work scarcer, there have been major changes in the economic picture for city folks, as well.

Back up and look at the far horizon ... occasionally, at least.

Good wishes for increasingly more effective use of not only your income, but of your assets, as well.

ole joyful

I'd suggest you find a low-cost discount brokerage and select a suitable diverse allocation between at least 5 market sectors. Plan to re-allocate every 2 years, and STICK TO IT. This means you may be cashing out profits in one sector before it falls, but better early than too late.

Tim Middleton, columnist on the MSN Money & Investing website, did two columns, one on Fidelity and one on Vanguard. They have very different philosophies but both are good, well-established brokerages. Do a search for the title "The best funds for your 401(k)" and it should pull up both columns. Make sure you read them so you feel comfortable with your choice. Another good brokerage is T. Rowe Price.

More than anything else, amateurs are tripped up by their own instincts. They get panicked by sensationalist media stories and listen to their friends (who seldom know much about long-term investing either), resulting in doing the exact opposite of what you should do - dollar cost average, buy low and sell high. Instead the vast majority trades too often, chasing "hot" sectors that are already peaking and soon to decline, or looking for "safe" investments that end up barely staying ahead of inflation.

So diversify your portfolio, and don't tinker overmuch (if at all) in-between re-allocation activity. A diversified portfolio reduces risk. You aren't aiming for "hitting the moon" with every single investment dollar - you should be aiming for a reasonable gain OVER THE LONG TERM. You may lose some of your portfolio during bad times, but you will gain enough during good ones to overcome this.

Make it clear to your broker what your risk tolerance is IÂd even put it into writing, in an email or letter, in case of any dispute. You want a moderate risk, diversified portfolio for long-term gains (long-term being defined as at least 10 yrs, and preferably 20 yrs). Remember, even after you retire, your portfolio continues on  often for 20-30 years past your retirement date.

As you get closer to retirement, the allocation becomes more complex, e.g., more individual. Due to SEC rulings, most brokerages are encouraging their brokers to become licensed CFPs. Find one that has been a CFP for at least 3-5 years - even longer is much, much better - and talk to them regarding your entire financial situation and goals. This is good to do in your early 50's, when you have time to make some corrections towards retirement while you're still working.

Educate yourself. No investment manager in the world will care about your portfolio as much as you do. Read a "Dummies" book so you understand the basics of investing, how to deal with brokerages and what your rights are (and arenÂt).

And take care of your legal and other financial matters, too! Your heirs will thank you for not leaving a mess. Good luck to you going forward.

Whew! So many questions! Dear friend, take some breath. Well, there many websites available online that gives information to its subscribers about the very best mutual funds and the savvy stock pickers who run them. I am a subscriber of fundmojo.com. It provides me services, tools and newsletters to discover best mutual funds and fund managers suitable for me. Hope fundmojo would be helpful for you too. Best of Luck!

I recommend THE SMARTEST INVESTMENT BOOK YOU'LL EVEN READ by Daniel R. Solin. It is short and simply written, and puts forth a strong case for broadly diversified index funds. Anyone who tries to "beat the market" is misguided. Over the long term, investors would do best with the right mix of bonds and stocks in index funds, and periodically rebalance their holdings to keep with the asset allocation they are comfortable with. And that depends on your time horizon, for example, how close to retirement or how close to paying big college tuition bill, etc.

There are exceptions, of course. For example, if you are intimately acquainted with a particular industry and know enough about how to read balance sheets and how to keep up with the latest news about the companies you are familiar with -- I like to call that "baby-sitting" the stock holdings -- then maybe you can make a killing if your positive projections about the new terrific product pan out. But there is a lot of risk involved. For instance, if a promising new drug turns out at the last minute to be toxic or to be not effective -- there have been several dramatic examples of this recently -- you could lose. There is nothing wrong about taking risks, IF YOU KNOW THEM. But it's a real shame if you invest in something without fully understanding the downside risk. Once you understand the risk, you will probably take just a modest position in a non-diversified investment. But that's no get rich quick scheme.