Professional Money Managers Have Other Priorities. However, You Need Time To Manage Your Own Money

Being real about it, one of the reasons why it's possible to beat professional money managers is that their priority is not making you money. First they want to make themselves money, secondly they don't want to do anything that would be seen as outlandish (therefore they need to remain within the bounds of traditional thinking), and thirdly they are handcuffed by rules and regulations.

Of course, in order to actually beat these guys you need to have at least $1500 to invest, a lot of patience, and enough time to spend learning the ropes, gaining an understanding of what causes what and what's going on, and staying aware of what's changing. If you can do this, or if you can get someone else to help, in my opinion you can do much better for yourself. For example, I've been doing this for almost five years now, and I've averaged 20% per year in Canadian Dollars (almost 30% in US Dollar terms because of the fall in value of that currency). Of course, the market has been going up (and that's the best time to learn the ropes- when your mistakes can be hidden by a rising tide), but compared to your average mutual fund... I'm doing three times as well. In fact, the most widely held funds have single digit returns in the last five years (as I recall).

According to the table below, the returns are slightly better. However, this makes things look better than they are because the most widely held funds now are usually the most widely held funds because of recent performance (they are invested in after the good returns came, not prior).

Large funds: These funds have the most assets under management in all categories *

Company	Net Assets	1-year	3-year	5-year
American Funds Grth Fund of Amer A	83.87 Bil	11.02	12.84	10.84
American Funds Invmt Co of Amer A	73.62 Bil	15.06	12.03	9.38
Vanguard 500 Index	70.35 Bil	16.05	11.39	8.60
Fidelity Contrafund	68.71 Bil	10.66	14.44	12.19
American Funds Washington Mutual A	67.82 Bil	17.81	11.54	8.61
Dodge & Cox Stock	67.56 Bil	16.59	15.85	13.74
American Funds Capital Inc Bldr A	65.66 Bil	20.25	16.17	13.11
American Funds Capital World G/I A	64.47 Bil	18.98	20.28	17.16
American Funds Inc Fund of Amer A	61.81 Bil	19.25	13.50	11.36
American Funds EuroPacific Gr A	56.23 Bil	16.04	21.22	16.65

* Performance numbers for periods greater than one year are annualized. Excludes mutual funds closed to new investors.

http://moneycentral.msn.com/investor/partsub/funds/topfundresults.asp?View=Large&Category=All&Symbol=$LRGF