Why Mutual Funds Are Not a Good Investment

Taxes take a large bite out of taxable mutual funds. Recent tax-break laws will end in 2010 and it would be smart for taxable mutual fund investors to keep an eye on one of the main drags on their performance: taxes. One key reason why mutual funds paid out such hefty taxable distributions in recent years is because they can no longer carry forward the steep losses incurred during the 2000-2002 bear market, which had been used to offset gains in recent years.

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