Mutual Funds: Your Money, Your Choice... Take Control Now and Build Wealth Wisely

Chapter 2. Direct versus Indirect Investing

Basically, households have three choices with regard to savings options:

1. Hold the liabilities of traditional intermediaries, such as banks, thrifts, and insurance companies. This means holding savings accounts, money market deposit accounts (MMDAs), and so forth.

2. Hold securities directly, such as stocks and bonds purchased directly through brokers and other intermediaries.

3. Hold securities indirectly, through mutual funds and pension funds.

Investors always have direct investing as an option, making their own buy and sell decisions, typically through a brokerage account. If you have enough money to invest, you could duplicate the last known portfolio holdings of any financial intermediary, such as a mutual ...