# Do Mutual Funds Actually Make Money?

Thinking about dumping your cash into mutual funds? Here's the real talk.

Mutual funds are basically portfolios managed by pros at big firms like Fidelity and Vanguard. The idea sounds solid — you invest, they handle it, you earn returns. But here's where it gets messy.

**The brutal truth:** About 79% of mutual funds underperformed the S&P 500 in 2021. Over the past decade? That number jumped to 86%. The S&P 500 itself averaged 10.70% historically, but most managed funds can't beat it.

So what *do* the good ones return? Top performers hit around 17% over 10 years (though that was during a bull market run). Over 20 years, the best large-cap stock funds averaged 12.86% — actually better than the S&P 500's 8.13% during the same period.

**What you need to know:**
- You pay fees (called expense ratios) — money gone before you even see returns
- Returns vary wildly depending on sector exposure and fund strategy
- No guarantees; you could lose part or all of your investment
- You don't get voting rights on the stocks the fund holds

**Better alternatives?** ETFs trade like stocks (lower fees, more liquid). Hedge funds? Only for accredited investors, way riskier.

**Bottom line:** Mutual funds work if you want hands-off investing and find one that beats its benchmark — but that's rarer than you'd think. Know your fees, risk tolerance, and time horizon before jumping in.