Many analysts are worried that the stock market is going to decline in the next few months or even years. Naturally investors wonder whether it makes sense to pour money into mutual funds if they are only going to lose money.

The answer is absolutely yes, mutual funds still make sense in a declining stock market. Analysts could be wrong and even if they aren't there are still plenty of funds for a down market: bond funds, balanced funds and even bear market funds, which bet against the stock market.

My neighbor told me that he was swearing off mutual funds because of the market decline. He said he was just going to put his money in an IRA, instead. I tried to explain to him that they're both just types of baskets that hold other investments. An IRA can hold stocks, bonds, funds, even gold; it's just an abstraction, an invention for handling taxes for retirement. A mutual fund is just a collection of other assets, too. They can hold stocks, bonds and sometimes more exotic financial instruments, too. The stock market prognosticators could be wrong. If anyone knew for sure what would happen in the market, they would bet on it and not tell anyone else. The analysts, whether they are using economic data, looking at company fundamentals or using momentum charts, are often wrong.