A certain amount of flak has been received for a comment I made some weeks ago about relatively new investors putting $10,000 into a mutual fund. "I am surprised to read that you would consign investors to that snake-pit," one reader wrote.

Mutual funds are pools of money that belong jointly to groups of investors, each of whom owns a small part of the each fund. A well-managed fund earns respectable income, or accumulates respectable growth, or both, for its investors. The costs of managing the fund are spread across all the participants, making expert advice available to less well-heeled investors who could not afford their own fund advisor. Mutual funds perform as well as the expertise of the manager permits.

A young person with $10,000 to invest might do worse than to put it into a mutual fund, under three critical assumptions:

that the investor selects a fund intended to achieve the investor's goals over the time frame selected by the investor. That means research, looking for which of the financial markets you expect will perform well over the period of your investment;

that the fund chosen for the investment is among those that perform as well as, or which outperform, the markets from which their investments are drawn; and

that the fund manager is scrupulously honest. The first yardstick, performance, is hard to find. The second, dishonesty, is rarer still, especially in Bermuda, but it's worth mentioning.

Investing in mutual funds is a bit like hard work, all of which is focused on fund selection. Pick the right fund, and you will be a happy camper, most of the time. Pick the wrong one, and you will see your hard-earned money eroding away. You have to do the work to identify the right fund. There is no shortcut.

Having said that, the information that will enable your research is relatively easily available, and what you want to know is pretty straightforward. You would look for a fund, or fund manager, that has been performing well in the past. Future performance can never be guaranteed, no matter how well a manager has performed in the past. But common sense dictates that the managers who have done the best for the longest would be the ones to choose from.

The information you need to make the comparison is at such places as www.morningstar.com. The financial pages of good newspapers, such as this one, carry latest prices.

First, you must decide what kind of fund you should be in. You can invest in funds that hold shares, bonds, gold, or any number of other investments. These funds will make investments on your behalf in whichever area, and whichever way, you think best. Beginners would generally do best with whatever lets them sleep at night.

If you want to skip that part of caring about how your money works, a fund owning shares in the best public companies, known as "blue chips", is as good a place as any to start. In a nutshell, risk increases the further away you get from that basic model, as does the potential reward ? and the volatility of your returns.

Mutual fund investments are rarely for the short-term. Broadly, the longer you stay in, the better you are likelier to do, all things being equal.

In my relatively short experience as an investor, I have invested in three mutual funds, all operated from Bermuda.

The first, in which I remain an investor after close to 30 years, is a money market mutual fund operated by a local bank. Money market funds invest in money. They pool very small amounts, owned by investors like me, so that between us, we can buy fancy money instruments that are denominated in amounts such as $1 million. The risk in such funds is minimal ? the money is in money, which rarely goes wrong ? so the return approximates the bank rate. The return lags when interest rates are climbing and drags slightly when they are falling, so that what you lose on the swings, you gain on the roundabouts.

To be honest, I bought into this fund because my bank operates it, but I'm pleased to report that the fund routinely wins prizes for its performance, which is second to none.

My second foray was less successful. A friend stopped by my workplace to sell mutual funds for a local money manager that she had joined. It seemed like a good idea, so I made a small investment. Some months later, when I began to despair of the fund's unspectacular performance in a rising market, I sold.

On a phone call with the broker, I was told that he had miscalculated my final payout, and that I was owed a further $1,800, which would have taken me into a tiny profit instead of a loss. I never received the money, and the man stopped taking my calls. I can't prove what happened in Court, so that's that, but I can tell you that this was a few years ago, and the BMA has tightened its controls since then, so with any luck, you won't have to face that kind of petty thieving, which is a disgrace to Bermuda. But ask around before you choose.

Then I did my research, and found that one of the best fund management companies in the world in the past few years is also on the Island. I even knew a couple of the people who worked there. That investment has gone swimmingly, and if I had any more money, I'd sink it in there.

I can't recommend investments, but I can recommend that you do the research. If you do, you'll find out most of the names of the companies I have mentioned. My good fortune with them is no guarantee that you will do well, but doing the research (did I mention that yet?) will tell you all you need to know.