Re: Alternatives to Mutual Funds

The one thing a mutual fund, if it is noload, does, is you can put
small amounts of money in each month, and there is no transaction fee.

If you have a lump sum there are many options. The most obvious is
Exchange Traded Funds.

You can create your own "stock fund" or pay a broker to put you in a
stock basket. The DOW 30, has 30 stocks and they change components at
less than one stock per year (average). So for an initial fee of (30 x
$20/trade) of $600 you could create this Personal Dow Mutual Fund and
annual fees would be $40. If you had $60,000, this would be an annual
expense ratio of less than 0.1% (one tenth of a percent per year).
Over 10 years, if you ammortize the initial broker fees, it would be
approximately 0.2% per year. The DOW has done about the same as the
SP500 or Total Stock Market over the years (a remarkable achievement).
You would have to be savy enough to somehow notice or get notified of
component changes in the DOW, so the thing is not as trouble free as a
Mutual Fund. Also, you are going to have dividend distributions, and
there is no "automatic reinvestment" of those with stock baskets (that
I know of anyway).

Personally I like Mutual Funds, but only no load ones, and even then
only the low cost no loads. If you are going to bother with stocks,
you might as well really get into it and learn how to buy and sell to
manage your tax losses, as this will benefit you some.