When is the best time to invest is a more interesting question. It is surely not “after they have taken a good dip” (never grab the falling knife! and there are other reasons for avoiding that in mutual funds). It is also probably not “NOW” or it may be exactly “NOW”.

One of the big issues with mutual funds is that a mutual fund that has survived and is any good is carrying lots of appreciated securities. When you buy the mutual fund you buy these appreciated securities that when sold have a tax obligation distributed to current investors as “capital gains distributions” at the end of each calendar year. This means that buying a mutual fund means you are buying someone else’s tax problem.

You don’t care about that if you are holding it in an IRA or other tax-deferred account. You do care about it if you are taxable. To find out when the mutual fund is distributing gains, you call them on the phone and say “When is the distribution date?” If they say last week, you can buy. If they say next week, you probably don’t want to buy as “buying a distribution” is no fun at all.

ETF’s get around this problem and are much more tax efficient. Frankly, I think that ETF’s are a better structure for anyone who deosn’t need the level of hand-holding provided by mutual funds. You probably can’t set up a brokerage account that transfers $ 3000/month of a certain ETF into your checking account and gives you nice tax statements at the end of the year (actually, you probably can but it costs more than I would pay).

Edit: Mutual funds also invest in many, many asset classes besides stocks, which a few of the posters here some unaware of. You should make sure you understand the asset class and universe of securities that you are buying because most of the performance of the mutual fund will be because of the performance of that universe (and the mutual fund’s fees), not the skill of the manager. Index funds don’t have any level of manager skill and routinely outperform most of the managers in their sector. See http://www.vanguard.com for the complete pillorying of actively managed mutual funds.

Basically a mutual fund is a pool of money from many different investors. When you invest in a fund it gets thrown into the pile and used to invest in securities, such as stocks, bonds, treasury notes, etc.
The investments are managed by an investment professional and any gains or losses are paid out to their shareholders in the form of dividends or capital appreciation. When you receive a dividend you may choose to reinvest the money into the fund to spend it.

It is important to remember that all investors receive the same percentage return regardless of how much they invested. Someone who invest $ 1,000 will receive the same percentage gain or loss as someone who invest $ 1,000,000.

The mutual fund is managed by a professional investment manager who buys and sells securities for the most effective growth of the fund. As a mutual fund investor, you become a “shareholder” of the mutual fund company. When there are profits you will earn dividends. When there are losses, your shares will decrease in value.

­Mutual funds are, by definition, diversified, meaning they are made up a lot of different investments. That tends to lower your risk (avoiding the old “all of your eggs in one basket” problem).

Because someone else manages them, you don’t have to worry about diversifying individual investments yourself or doing your own record keeping. That makes it easier to just buy them and forget about them. That’s not always the best strategy, however — your money is in someone else’s hands, after all.

Since the fund manager’s compensation is based on how well the fund performs, you can be assured they will work diligently to make sure the fund performs well. Managing their fund is their full-time job!

The best time to invest in mutual funds is NOW. These investment packages do not go in and out of favor like stocks or gold or other investments do. They have been the investment of choice for everyday investors for a good 40 years, because they offer investors a wide array of opportunities…in good times and bad.

Mutual funds are not an investment type or class like stocks and bonds, they are a way to invest in stocks and bonds. In fact, they are the simplest and best way for most folks to do so. When you invest in mutual funds, professional money managers manage a portfolio of stocks and/or bonds and/or money market securities for you. You simply own shares in a large collection of investments.

The best time to invest is when market crashes or is at a really low point. e.g 1987, March 2009, flash crash 2010

The Swindle™

(…soon followed by Amazon’s Crook™)

Look down the left-hand column until you see the “holdings” link and click it

Profit

Give me the best answer award – LOL