Double Your Money With Funds

Finding solid, growing companies isn't rocket science. Many terrific companies are all around you, and every now and then, they'll trade at reasonably attractive prices.

Some stocks, as you probably know, can perform phenomenally well, even in unexciting industries such as retail or beverages. Consider Chico's FAS, for example, which has grown at an average annual rate of about 48% over the past decade. Drink maker Hansen Natural (NASDAQ:HANS) gained an average of 68% each year in that same period. These are, admittedly, extreme examples, and few people were aware of these firms a decade ago.

You don't have to find small, esoteric companies in order to do well. General Electric (NYSE:GE), for example, has grown at a respectable average annual clip of 11% over the past 10 years. Cisco Systems (NASDAQ:CSCO), despite the Great Internet Bubble, has advanced an average of 12% annually in the same period.

But if you're not confident of your stock-picking abilities, you don't have to go beyond your comfort zone to find great investments.

Consider funds
Yes, there are more than 7,000 mutual funds out there, and yes, many of them stink.

But there are plenty of top-notch funds -- excellent ones with smart managers, reasonable fees, and solid track records. Don't think of opting for mutual funds as any kind of capitulation. I myself have recently been moving big chunks of my nest egg into mutual funds, and it's not because I'm throwing in the towel on my hopes for high returns. It's more a matter of my realizing that there are people out there who can make my money grow faster than I can on my own.

Consider the 10-year average annual return of these mutual funds:

See? There are funds out there that trump the returns of well-regarded stocks such as Wal-Mart, Cisco, and General Electric over the same time period. And all it takes is an average annual return of around 14% over five years to double your money.

So should you snap up shares of the above funds? Please don't. For one thing, some are closed to new investors. You need to do some research into any fund before investing. Check to see how steep its fees are. Read up on the managers, and make sure they've been in place for at least a few years. Ideally, they should have a significant stake in the fund themselves. Beware of sector funds with great records -- an energy-oriented fund may do well in one decade, but may stagnate in another.

Choose carefully
If you'd like to jump-start your research, let us help you. We'd love to introduce you to some market-beating funds with great managers, low fees, and outstanding track records via our Motley Fool Champion Funds newsletter. Try it for free and see which funds our analyst Shannon Zimmerman recommends -- and why. Together, his picks have more than doubled their benchmark's returns, gaining an average of 17.5% vs. 6.8% in the same time period. Shannon will introduce you to many great investing minds who can invest your money for you via their funds. He even maintains three model portfolios, listing appropriate funds for conservative, moderate, and aggressive investors. Balanced funds, small-cap funds, foreign funds, bond funds, value funds . you name it, and he's got some for you. Click here for more information.

Learn much more in these articles:

• 7,000 Funds, So Little Time
• You Can Beat the Market With Funds
• 3 Reasons to Buy Funds

Longtime Fool contributor Selena Maranjian owns shares of Wal-Mart. Wal-Mart is an Inside Value pick.AllianceBernstein and Newell Rubbermaid are Income Investor recommendations.For more about Selena, viewher bioandher profile.The Motley Fool isFools writing for Fools.