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Mutual funds may not look sexy, but for most people, they're the best way to achieve financial goals. That's because mutual funds are professionally managed and offer diversification, which you don't get when you buy individual stocks.

First, let's consider why professional management matters. When you buy a fund, the fund takes your money and pools it with others' money into one big pile. The fund manager's job is to decide which stocks to buy, sell, and hold--while you're busy at work and raising children. Each manager uses a methodology or discipline to select stocks or bonds. Every day, fund managers and their team of analysts examine the companies they own to see if they still fit their criteria for securities selection.

[See Make the Most Out of Mid-Life Financial Planning.]

Fund managers spend a lot of time visiting the companies in which they invest. Sure, they can read a research report about a company. By meeting company executives face-to-face, fund managers can get a much better sense of how the company operates and what advantages it has over competitors. Fund managers also visit with a company's competitors. Plus, managers do what's known as "channel checks," which means they visit the company's stores or customers. For example, if a fund manager owns shares of Best Buy (BBY), he'll visit a store to see how many customers are there and what people are buying.

The other advantage of owning a mutual fund over an individual stock is diversification, which you don't get if you invest small amounts of money in a few securities. For example, if you have $10,000 to invest, you can buy maybe 100 shares of five stocks. When you buy a mutual fund, it might own 50 to 100 stocks, so if one stock blows up, the entire fund won't go down in flames. The manager makes sure that the fund is not too heavily exposed to any one stock or sector.

That means fund managers have to do their own housekeeping. They analyze the weightings of companies the fund owns and watch as the stocks become more or less valuable. They will sell some shares of one holding if something else looks more attractive.

Most individual investors don't have the skills and time to monitor and examine each holding the way a professional fund manager does every day. Fund managers are trained to stick to their discipline and be decisive, and are not emotionally attached to your money. Professionals, whether they're in sports or management or investing, usually know the ropes much better than amateurs.

There's another advantage of mutual funds: Investors tend not to trade funds as often as stocks, which helps their returns over time.

Certainly, mutual funds don't have the pizzazz of the hot stocks of the moment. If you're looking for entertainment, go gambling in Las Vegas. But if you want to accumulate real money for your retirement and other goals, mutual funds are the safer bet.

[For tips on how to find the best mutual funds, see 5 Ways to Find the Best Mutual Funds.]

Adam Bold is the founder of The Mutual Fund Store, which provides fee-only investment advice with locations coast-to-coast. He's also host of The Mutual Fund Show, a call-in radio program broadcast across the country. Bold is author of the book The Bold Truth about Investing (April, 2009). Bold is Chief Investment Officer of The Mutual Fund Research Center, an SEC registered investment adviser which provides mutual fund and asset allocation recommendations and research to stores in The Mutual Fund Store system.

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Many people believe that they can reach their investment goals by simply buying mutual funds. After all, investing in a group of funds that hold different kinds of stocks, bonds, and commodities is supposed to provide diversification, which can give some protection when the markets are down and better returns when prices rise. That's not necessarily true. All funds aren't created equal; some are better than others. Investors have to pay attention to all of the funds in their portfolio regularly, because even good funds can go bad.

It's not easy to distinguish the good funds from the bad ones. The main things to consider are the fund manager and performance. You've heard the disclaimer that's on every investment product: "Past performance does not guarantee future results." Don't listen to that. In my view, past performance--that is, the fund manager's past performance--is the most important factor when deciding to buy a fund. Reviewing a fund manager's performance over different time periods gives an idea how that fund behaves in various market environments.

[See How and When to Start Saving For Retirement.]

It's a lot like baseball. The New York Yankees, which has many of the top players in the league, won the World Series in 2009. This year, the team won enough to make it to the American League Championship Series, but didn't beat the Texas Rangers to advance to the World Series. Similarly, if a fund manager can navigate the trends in the market over different time periods and holds the right securities, there's a good shot that it will be a superior performer. Check a fund's performance over one-, three-, five- and 10-year time frames. If a fund manager has been in the top 20 percent of all funds in those periods, she or he is a consistent winner.

However, some star fund managers can't keep up with changing markets. For example, Bill Miller at Legg Mason Capital Management Value fund (LMVTX) has struggled after beating the S&P 500 index for 15 years from 1991 to 2005. There's no reason to hang on to a fund that has lost its luster. You're not married to that fund manager. There are plenty of other funds that may provide better returns.

To avoid hanging on to losing funds too long, check the funds you own every quarter. You should sell a fund if the reasons you bought it have changed, such as the manager has left, or you have simply found a better fund.

[See 7 Money Tips for Twentysomethings.]

Some people won't sell a fund because they don't want to pay taxes. That's not a reason to stick with a fund. Let's say you invested $10,000 in a large-cap value fund in April, and the market struggles over the next several months, so by November your investment hasn't budged. The fund company's website says it expects a 15 percent capital gains distribution (usually paid in December). If you don't sell the fund before the "shareholder-of-record" date for distributions, you'll receive a 1099 form from the fund company obligating you to pay taxes on that $1,500 distribution, even though you didn't enjoy any gains. You're better off selling the fund at a loss before the record date of distribution in early December to avoid the tax hit. Then, move the investment to another fund that won't have a large distribution. (If you need more help with tax-efficient investing strategies, ask a financial adviser or accountant.)

Another reason some investors put off dumping a fund is that some funds have back-end loads (deferred sales charges). If your fund has risen 5 percent while another fund with similar risk has gone up 10 percent, you're losing the opportunity to make more money. If you do have an underperformer, it can make good sense to sell it and pay the back-end load so that you can move on to better funds. When you forget your funds, you risk missing better investments and the potential for more money.

Adam Bold is the founder of The Mutual Fund Store, which provides fee-only investment advice with locations coast-to-coast. He's also host of The Mutual Fund Show, a call-in radio program broadcast across the country. Bold is author of the book The Bold Truth about Investing (April, 2009). He is Chief Investment Officer of The Mutual Fund Research Center, an SEC registered investment adviser which provides mutual fund and asset allocation recommendations and research to stores in The Mutual Fund Store system.

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Former Chief Executive mutual tried a new approach to sponsorship of Nedbank Golf Challenge ditches South Africa. He had struck an agreement of. 58bn ￡ 4 sell promoter himself HSBC - or 52pc game at least Old Mutual in Nedbank.

It seemed a fairly decent stroke. But now the ball is boomeranged return. And, worse still, another potential buyer for issue - Standard Chartered - disappeared off the coast of greenery.Standard can have a further ￡ 3 United in its mad check trousers pockets after cash call this semaine.Mais can barely lift to improve the balance of the Bank and then embark on an adventure in South Africa.

Technically, Nedbank is the recently ousted CEO of the HSBC Michael Geoghegan.Mais Roberts would be wrong to blame the collapse of its sale to a change of Captain of the team.Looted books of the Nedbank through HSBC has just concluded the would pay more for.

Roberts was not his next shot easier by telling shareholders that - to cut the debt of the insurer and to focus on asset management - strategy relied on the sale of the holding of Nedbank.Il is surprising shares fell just 4.75pc.Il may have to reduce its prix.Car there is only one word to where it is now: severed.

Alistair.Osborne@Telegraph.co.UK

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