Personal finance and investing is just that: it's personal. From the day the first shares are purchased, for the individual who assumes he is undertaking, the decisions made today will have eternal impacts not only on the distant future of the investor but also on the family of the investor. investor for generations to come. Combine this with the current uncertainty in the stock markets, real estate markets and the economy and you have effectively driven a wedge between the investor, their income and their family as a whole. Statistics abound on the mismanagement of the majority of American finances and this is not surprising given the abundance of securities available in today's markets. Mutual funds and index funds have triumphed as the go-to investment vehicles for personal retirement savings. and wealth creation. In today's markets, these securities are still very common, and overall the performance and valuation of actively managed index funds and mutual funds have come under increased scrutiny. By delving deeper into the inner workings of these two securities in an effort to gather additional financial information for the average investor, a comparison and contrast between the two securities can be made. Therefore, the following will be disclosed, dissected and detailed: the returns of actively managed mutual funds and index funds are historically similar in nature, the myriad of funds on the market offer varying degrees of risk and return and, even whether managed funds generally have higher returns. fees and then index funds, each has proven its individual abilities to achieve respectable gains and profitability over time. Index funds and actively managed mutual funds have many similarities so for purposes of clarification, definitions...... middle of paper ......don't plant a tree a long time ago." References Fankhauser, D. (2010). Recession has no impact on comparative performance of indexes versus actively managed mutual funds Medill Reports Chicago, 1. Accessed April 4, 2010. , from http://news. .medill.northwestern.edu/chicago/news.aspx?id=154991Invest Wisely: Mutual Funds (2008, US Securities and Exchange Commission. Retrieved April 3, 2010 from http://www.sec.gov/investor/pubs). /inwsmf.htmThe Ohio State Extension (2000). Start with mutual funds. The Ohio State University - All AboutMoney, 01. Accessed April 4, 2010 from http://www.ohioline.osu.edu/mm- fact/pdf/0001.pdfStanford University Student Enterprises, Capital Group. Mutual Fund and Index Fund Basics. Retrieved April 4, 2010 from http://capitalgroup.stanford.edu