How to Invest When You're Busy

In the course of a 24-hour day, Americans spend 32% of their time asleep, 34% at work, and 13% eating, doing household chores, and caring for family, according to U.S. Department of Labor Statistics. We squeeze in exercising and entertainment during the remaining part of the day.

Work, email, children, bills
So ... when's an employed adult with a family supposed to find time to dabble in the stock market? There's nary a moment to research potential 10-bagger stocks -- much less find them, value them, or keep tabs on them. And despite any desire to invest more, 10-Ks and balance sheets simmer on the back burner while more pressing matters take precedence.

Fortunately, there's a perfect investment opportunity for busy people.

Fund your future
I'm referring to the mutual fund -- the finest investment vehicle ever designed, according to Vanguard founder Jack Bogle.

Funds can be an easy, low-hassle means to grow your nest egg, but not all are created equal.

According to The Journal of Financial Planning, only 18 out of the 171 mutual funds in existence (10.5%) from 1983 to 2003 outperformed the S&P-tracking Vanguard 500 Index Fund (VFINX). This index fund -- which is weighted toward the market's largest companies, like ExxonMobil (NYSE: XOM), General Electric (NYSE: GE), and AT&T (NYSE: T) -- comes with a low expense ratio of just 0.18%. For context, the average stock mutual fund charges around 1.5%.

Given its cheap price and relative outperformance, the Vanguard 500 Index Fund proves that you could be paying more for less.

Cherry-picking the best
But hold on a sec -- don't give up on actively managed funds just yet. Even though most mutual funds are junk, there are more than a few diamonds in the rough that will bring consistent growth over the long term.

How to find them with a busy schedule? By keeping it simple. Here are two things to scrutinize while searching for grade-A funds:

1. Expense ratio.
2. Management team.

Paying for performance
Expense ratios are the fees a fund company takes from your invested money every year in payment for their services.

As mentioned above, the average stock mutual fund charges about 1.5% annually. The average index fund, on the other hand, charges less than 0.5%, so it's important to make certain your actively managed fund isn't really an index-tracker in disguise.

When it comes to expenses, you often get what you don't pay for. Funds with higher-than-average expenses underperform time and time again. So focus on funds with below-average expenses; again, it's important that you don't pay more in fees for less in performance.

Behind every winning fund, there's a strong manager
When analyzing a management team, we want to be confident that the leader is competent, so we require that a manager has been in charge for at least five years and that he or she has performed well over that period.

Five years is typically long enough to smooth out any short-lived bull-market anomalies, and it gives a view of a fund manager's philosophy during good cycles and bad. After all, returns are easy to come by in a bull market, but we want to see that our money will grow even in lean times.

We also like to see that the mutual fund managers' interests are aligned with ours -- that is, when a manager has a bulk of his own money invested in the fund. One company that recently made a big step forward in this regard is Legg Mason's Royce & Associates, which now requires its senior managers to have at least $1 million invested in each fund they manage.

A particularly strong Royce offering is the small-cap-focused Royce Heritage Fund (RGFAX). This is a superb fund, and it's not difficult to see why:

Managerial Tenure:	12 years
Expense Ratio:	1.32%
Front Load:	None
Recent Top Holdings:	Acacia Research (Nasdaq: ACTG) AllianceBernstein (NYSE: AB) Dolby Laboratories (NYSE: DLB) Owens Corning (NYSE: OC)
10-Year Annualized Return:	16.23%

Morningstar data through Oct. 31.

Those 10-year returns beat the S&P 500 by more than 9 percentage points!

Even though you're busy ...
This simple analysis can be performed by anyone, no matter how busy everyday life can be. Because the bulk of your money is likely invested in mutual funds (via 401(k) and IRA accounts), it's important to know how much you're paying and whether those in charge are worth it.

If you'd like a glimpse of our favorite mutual funds or our in-depth fund research, check out Motley Fool Champion Funds. Give the service a try completely free for the next 30 days, with absolutely no obligation to subscribe, by clicking here.

Fool analyst Adam J. Wiederman owns no shares of any company mentioned above and is never too busy to analyze mutual funds. AllianceBernstein is an Income Investor recommendation. Dolby Laboratories is a Stock Advisor recommendation. Legg Mason is an Inside Value pick. The Fool's disclosure policy is busy watching Fools write.