Mutual Funds or Indexes?

I've read so many articles pressing index funds over mutual funds, it was a nice break to come across Motley Fool's recently commentary on what a mutual fund with a good manager can do for your money. True, most mutual funds fall short of the returns you can get off an index, but there's a few outstanding ones that could be a good investment tool if you're not up for investigating individual stocks.

Of particular interest to me was the difference a couple percentage points can make over the years. For instance, if you invest $10,000 for 30 years with an index earning 10.2% (which was the avg return for VFINX over the past 10 years) you'd have $184,267. If you'd invested the same money with a fund with an avg annualized return of 12.2% (such as VWNFX), you'd end up with 316,072. If you up the rate to 14.8% (TAVFX), you'd be sitting with a nice $623,522.

Unfortunately, it's just as impossible to predict the future results of mutual funds (and their managers!) as stocks or even indexes. So if you're like me and lack the time, interest or ability to research funds on your own, I strongly recommend Austin Pryor's newsletter, Sound Mind Investing. I checked them out after hearing Larry Burkett recommend his site numerous times; there's a number of articles on finances, investing and stewardship from a Biblical perspective available for free.