NEW YORK (CNNfn) - In an age where instant gratification could almost be a synonym for investing, Joe McLaughlin is playing the market in a much different way -- and the payoff will take nearly 20 years.
McLaughlin has squirreled away money every month in mutual funds for 16 years, and he expects to become a millionaire in about three years.
"It's been boring, really," said McLaughlin, 45, a retired U.S. Army major from North Carolina. "We don't do junk bonds, pork bellies, Internet funds. It's just dollar-cost averaging."
About 5.2 million people are trading stocks online, while thousands of other investors quit their jobs for the high-risk world of daytrading. CNNfn.com wanted to know if people are still getting rich the old-fashioned way through mutual funds. We asked mutual-fund millionaires to e-mail us with their stories.
A couple from Texas said their portfolio topped $1 million this year through steady investments in about 11 mutual funds.
"We have watched with interest all the publicity about day trading, playing the 'bull market,' etc.," the husband wrote. "We have done nothing but look at our mutual funds every now and then."
But those stories were exceptions. The 20 responses we got seem to show that mutual funds are the Rodney Dangerfield of the investing world -- they get no respect.
Funds vs. stocks
"I think investors are able to now make very rational decisions and stock purchases with the help of the Internet," one man wrote. "My thinking about the future of mutual funds as we now know them is not good."
Indeed, investors are selling their funds at the highest rate in about 12 years, according to the Investment Company Institute, a Washington trade group. In the last five trading sessions as of Wednesday, stock funds had outflows of $4.1 billion, according to Trim Tabs.com, a California research group that tracks fund flows.
"Mutual funds? Forget it!" one e-mailer wrote.
Two other people said they were disappointed with low returns in their funds as the market continues to soar.
"My mutual funds have dropped and dropped," a woman wrote. "No money made there."
Two people said they are happy with both stocks and funds. One person said he has shares from fund groups such as T. Rowe Price, Invesco, and Janus. He said he started investing in stocks about two years ago.
"Generally speaking, the individual stocks portfolio are (sic) much more exciting and lucrative than the mutual fund portfolios," the man wrote. "But mutual fund portfolios do not have to be the "ho-hum/watchin' grass grow" dynamic
I find both portfolio types to be adventuresome and challenging."
A new trend?
Some industry watchers think investors may be taking some profits after a huge run-up in their funds in recent years to buy second homes and put their kids through college. Other people may be disillusioned with fund fees.
But Russ Kinnel, a top analyst at Chicago fund-tracker Morningstar, doesn't think investors are giving up on mutual funds. It's just hard for people in a roaring bull market to appreciate funds.
"When you have this tremendous bull market, funds do seem boring," Kinnel said. "A lot of people have discovered Internet trading, and mutual funds don't give you the thrill of seeing your stock go up 50 percent."
Fund assets continue to grow, and have already outpaced assets in banks, Kinnel said.
The biggest advantage of mutual funds is they'll help you reach long-term investing goals, Kinnel said.
"Mutual funds can make you rich very slowly," Kinnel said. "They're not going to make you get rich quick. The way to get rich fast is to take enormous risks."
Kinnel pointed out that it took billionaire investor Warren Buffett a little time to get rich fast.
"For every Warren Buffett who turned $100,000 into $1 million, there are probably 10,000 people who turned $100,000 into zero," Kinnel said.
But Kinnel said the fund industry could do a better job of keeping costs down.
"Over the last 10 or 15 years, commission costs on stock trading have come down a lot more than the costs of funds," Kinnel said.
McLaughlin, the investor from North Carolina, said he started building his portfolio 16 years ago when he retired from the army.
He started by putting away $210 a month in Fidelity's Destiny I and II Funds. He and his wife each contributed $166 a month to IRAs. Around 1987, they doubled their monthly contributions to the Destiny funds to $420.
"I've averaged about 19 percent a year, including fees and costs," McLaughlin said. "That's not bad. Every 3.7 years the principal doubles. By the time I'm 50, my investment account will be seven figures."