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A bad economy spells OPPORTUNITY if you know how to invest in mutual funds. If you don’t it likely means loss of income and investment losses in your 401k and anyplace else you have money invested.

In any investment environment, even in recession and financial crisis, there are mutual funds that are good investments. Most folks don’t know this. Most mutual fund investors hold stock funds and pay little attention to them. Then, when bad economic times roll around, they complain because they are losing money.

Stock funds in general are losers in a recession, because the stock market takes a dive. If you know how to invest, you don’t rely on the stock market delivering good returns year in and year out. You invest in a variety of investments. The easiest way to do this is with mutual funds.

Specialty stock funds are non-diversified. They do not invest in a wide variety of stocks like the ever-popular diversified stock funds do. If you have money invested in the right ones at the right time, you can make money when other less-informed folks are losing theirs.

Let’s look at funds that can be winners when stocks and/or bonds in general are losers. You may be surprised to learn that you have so many investment options by simply investing in mutual funds. Welcome to the small investor’s world of alternative investments.

In times of high and/or rising inflation stocks and bonds in general are vulnerable to big losses. But not all stocks. Oil stocks and the basic materials sector (aluminum, copper, other natural resources) can soar. NATURAL RESOURCES funds go along for the ride.

In times of great uncertainty and political unrest gold and other precious metals can explode in price. Gold stocks and GOLD FUNDS are the easiest way to jump on this bandwagon.

Foreign investments can sometimes be unaffected by domestic problems in the USA. Stock funds are available that invest in emerging markets like China, Mexico, and India. Others invest in well-established markets like Europe and Japan.

Real estate, at times, has prospered when the stock market in general was in the doldrums. Specialty stock funds that invest in the real estate sector are offered by some of the major mutual fund companies.

When interest rates soar, bonds and bond funds take a beating and most stocks and stock funds as well. Where’s the best place to ride out the storm? MONEY MARKET FUNDS are safe and do not fluctuate in value. As interest rates go up they pay higher interest in the form of dividends.

As a mutual fund investor you should be a long-term investor, not a speculator. In other word, you don’t ever sell all of your stock funds and bond funds and move your money to gold funds, or natural resources, or real estate. Instead you should maintain a balanced position that includes all of the above.

Then, as circumstances dictate, you make adjustments in your asset allocation. Once you learn how to invest, you can avoid heavy losses in a bad economy. Once you’re really up to speed you can make the best of a bad situation and prosper even in the worst of times.