Bill Gates probably doesn’t invest in mutual funds (funds), maybe because most of his money is tied up in Microsoft stock. Warren Buffet made his billions by managing investments, so he does not need their help, either. But, if you have money to invest and don’t really know how to invest and manage an investment portfolio, you should consider investing in mutual funds. Millions of average investors do.Keep in mind that mutual funds are designed for folks who want professional investment management at a moderate cost. These are not short-term investments, but rather are for people with longer-term investment horizons. Once you have cash reserves in the bank for short term needs like emergencies, you are ready to invest.Should you invest in mutual funds? If one or more of the following apply to you, you probably should.If you want to accumulate a nest egg for retirement, give these investment packages consideration. For example, if you have a typical 401k plan at work, most of the investment options available to you are mutual funds.If you decide to open a traditional IRA or Roth IRA, consider going with a major mutual fund family. This will give you a wide array of investment options, from safe and conservative to aggressive and growth oriented.
 
If you want to start slow and learn how to invest as you go, you should invest in mutual funds. For example, you can set things up so that $100 a month automatically flows from your checking account to a couple of mutual funds within a fund family.
 
If you want to invest in stocks and/or bonds, but don’t know how to invest in them, join the crowd and do it the sensible and easy way with funds.
 
If you have a lump sum of money to invest from a retirement plan, a CD that matured or from an inheritance, look no further. For example, if you leave your job where you had money in a 401k, you can move it and avoid taxes and penalties with a direct rollover to a mutual fund family.
 
If you are retired and want to earn a higher return with relative safety, try bond funds in addition to money market funds. When you want to receive a monthly income, they will send you the amount you specify.
 
If you want an investment in real estate, oil & gas, or gold the easy way, invest in mutual funds and let them deal with the details.
 
It doesn’t matter if you are young or old, rich or of modest means, conservative or aggressive as an investor. You need an investment portfolio that contains a variety of investment types. Unless you really know how to invest and can manage your own stocks, bonds, and money market securities…you should invest in mutual funds.
 
Finally, if you don’t know much about investing…you’re probably a red-blooded American. As a financial planner I worked with folks from all walks of life. Few knew how to invest on their own, so I often recommended mutual funds.

Captain Jack Sparrow in the movie “Pirates of the Caribbean” has been forced ashore by a mutinous crew. We see him stranded on an island drinking rum with his lovely companion beside a fire. They are discussing his ship. “It’s not just a keel, a hull, and a deck and sails. That’s what a ship needs. But what a ship is, what the Black Pearl really is … is freedom.”As an idealistic young investor in the ’80s I felt the same way about the investment of my retirement savings. Those investments represented financial freedom. With the passage of time life gets more complicated; deciphering financial statements and reviewing all the investment options available can leave us bewildered. We may have a sense the ship has run aground. We feel disconnected from the original meaning or purpose of our investments. We aren’t sure if our money is working for us and if it is working in a way that matters to us. How can we get back to basics and recover our sense of direction? What does investing really mean to us personally?When we invest in stocks or bonds we are essentially investing in business. Let us consider an example of investment in a small local business. A sausage maker is trying to raise half a million dollars to start his business. You may know the chef personally or know of his reputation. You’ve enjoyed his product and respect his passion for and commitment to making a wonderful sausage using the best organic ingredients. A number of people come together to invest in this business. They might lend to the business (becoming bond holders) or provide equity (becoming stockholders.) The investors provide the capital that allows the business to be born.Think about the importance of these collective investments and the value they bring. Providing all the capital himself could be a huge personal risk for the sausage maker. So the risk is shared among the investors, none of whom assumes a risk that he or she cannot afford. In fact each investor may benefit financially while serving the needs of the community in a delicious way. The act of investing serves an important and critical function in our economy.On a personal level, you the investor have put your hard-earned money into this project for a variety of reasons, some of which may be pride in being involved with such a high quality product, a belief that people will love the sausage and the expectation that you will receive a good return on your investment. You appreciate the man’s commitment to sustainable practices. You believe in his ability to be a good manager and careful steward of the capital you have placed in his hands.As with any investment there are risks, but you feel you can understand them. The business may fail after a few years or you might not get the return you had hoped for. You have invested with the sausage maker based on your priorities and values, some of which you share with him. You care about his success not only because you want a good return on your money but also because you love his products. Your life seems richer for having experienced them. The relationship between the business and you as an investor is very tangible and personal.Investing for our retirement years now seems so far removed from this paradigm. How can investing in a 401k, an IRA or a mutual fund have that kind of meaning? Making choices here is not like investing with the sausage maker. You own stocks and mutual funds. Are the managers of these companies or funds people whom you know and trust? Do you have the same faith in them as you do in the sausage maker? Do you believe that they are making decisions that reflect your priorities and values?Certainly we care about our investments and realize they are important. They may mean the difference between subsistence and being able to afford to do some of those things we’ve always dreamt about. However, this type of investing is not the same as putting our money with the local guy, whose success we are rooting for.Investing can start to become more personal by checking in with yourself. Remind yourself why you are investing. What do your investments really mean to you? They may represent financial freedom. Perhaps they are your security or the potential to live your dreams. They may give your children the head start that you never had. Just as you would expect the sausage maker to be a careful steward of the investment you’ve entrusted to him, your first responsibility in investing is to yourself. Your investments are important assets in your life. By making investments more personal you will derive greater satisfaction from them and increase your chances of feeling successful in the process.How do you create a sense of purpose and meaning in relation to your investments? The very act of investing demonstrates a belief in our country and in our way of life. Your capital is precious and important. How you invest it matters. Investing in promising medical research or a daycare center in a blighted urban area allows you to get a financial return on your money while reinforcing your belief in businesses you feel deserve support. Naturally, you need to balance these two objectives in order to protect and grow your nest egg. Examine each investment by asking, “Is this working for me, and in a way that supports my priorities and vision for the future?”Investing can be as personal and meaningful as you choose to make it. You are the captain of your ship.