Why Mutual Funds Are Lousy Long-Term Investments

This past Christmas, I was at a party, and a man who's about 10 years older than I am asked me what mutual funds I invested in. My reply was "None. I rarely invest in mutual funds because of the lack of transparency. I don't know their fees. And I know there are hidden expenses they don't need to disclose to investors."

Hearing that, he nearly choked on his spiked eggnog. "What do you mean there's no transparency? My mutual-fund companies send me a report every year." Getting into an argument over mutual funds at a holiday party is not a way to enjoy the season. Rather than offer my information where it wasn't wanted, I thought it better to explain further to readers why I don't invest for the long term in mutual funds....