Ep 19: The Ins and Outs of Mutual Funds

The Concept:

Sometimes people say they don’t want to retire and they really mean it. But other times it’s just a defense mechanism to mask the opinion that they don’t feel like they can retire. Let’s look at the common excuses people make and explore the possible meanings behind why you don’t want to retire

Click the timestamps below to skip around to specific topics in the episode.

The Reality of the Matter:

When it comes to investing, there’s a vast array of options to choose from but it seems like mutual funds is always at or near the top of our list. You can point to a number of reasons for this, but nearly all of our clients own mutual funds when they first come in and meet with us.

On this episode of the Retirement Reality Podcast, Mike Kojonen helps explain the ins and outs of mutual funds. Understanding the basic terminology is the first thing you need to do before deciding whether or not you want to invest. Once you determine that, the next step is figuring out if mutual funds make sense for your retirement plan.

That’s what we do on today’s show.

Should You Buy Mutual Funds?

That’s a question you’ve likely asked yourself or your financial advisor. Mutual funds are one of the first investments that many people make on the road to retirement because they’re fairly simple to understand and allow you to diversify without having a lot of money to begin.

The vast majority of investors that we work with have owned mutual funds at some point and that’s not always a bad thing. The key is understanding exactly what you’re investing in. Do you know exactly what the fund consists of? What about the expense ratio? And do you know the difference between the three classes of mutual funds?

We want to guide you through each of those questions and then discuss where mutual funds fit into the strategies we use with our clients. Kasey Byrd, an investment advisor representative for our team, joins the show to provide insight on this process. His expertise in portfolio management makes him a great asset for our team and for this podcast and we appreciate him for helping us out.

[1:12] – Welcoming on a guest today, Kasey Byrd.

[2:57] – What percentage of our clients own mutual funds when they come to see us?

[5:02] – Understanding expense rations and the three classes of mutual funds.  

[8:14] – Explain what the term ‘loaded’ means?

[9:07] – Even though they’re actively managed, mutual funds still don’t have much flexibility when downturns occur.

[10:14] – What tax considerations do we need to make with mutual funds?

[12:04] – So what’s the future of mutual funds? Do they have a purpose?

Mailbag Questions

We finish out today’s show by taking a couple mailbag questions from listeners. Call, email, or connect with us on Facebook to ask us about finance, investing, retirement or whatever else is on your mind.

Today’s show takes a question from a couple that have a military pension but their elections will keep it from transferring to the spouse upon death. So let’s discuss ways to make up for this problem while the couple has time to make adjustments.

The second question is about financial advisors and whether it’s a good idea to work with one that typically helps clients with greater wealth. It seems like a great opportunity but there are some things to keep in mind before you commit to this new relationship. Mike explains that on the show.

[15:25] – Mailbag Question: My husband’s military pension is a nice benefit but I won’t get any of it when he dies. That was a mistake in retrospect but how can we address this problem moving forward?

[18:08] – Mailbag Question: Because of a mutual friend, I have the opportunity to work with an advisor who works primarily with people who have $5 million or more. Do you agree that this is a great opportunity for me?

Thanks for checking out this episode of the Retirement Reality Podcast. We’ll talk to you again next week.



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