Mutual Funds, Financial Advice and Planning

Should You Invest In Mutual Funds Or Stocks?

2010-08-08T01:46:00.000-07:00

With so many options out there for the individual investor, it is sometimes difficult to determine that investments are right for you. The key to having a long-term, stable and profitable portfolio is to diversify your investments. For many investors the process of diversification includes investing in both mutual funds and stocks. The best course is to learn all you can about both types of investments and find your ideal balance between the two.

Mutual funds are open-end funds that are not listed for trading on a stock exchange. They are created by companies who use their capital to invest in other companies. Mutual funds will sell their own new shares to investors. Capitalization is not fixed and normally shares are issued as people want them.

1. Mutual funds have great characteristics for investors

Mutual funds are professionally managed. The mutual funds employ professional managers to operate all investing. These professional managers bring with them many years of experience. They are experts in selecting and evaluating investments for the fund. The managers make all of the buying decisions and selling decisions that relieves the individual investors from that responsibility.

2. Mutual Funds Are Diversified

Another advantage of mutual funds is that most of their portfolios are highly diversified. This means that the mutual fund is invested in a wide variety of stocks. The advantage of diversification is that if a few stocks drop in price the entire fund won

How to Buy Mutual Funds

2010-08-07T17:48:00.000-07:00

Millions of Americans buy mutual funds by simply choosing them as an investment option in their 401k plan. How do people go about investing in mutual funds outside of their retirement plan at work?

There are at least three popular ways average people buy mutual funds, each with its advantages and disadvantages. Where to invest depends to a large extent on how involved you are willing to get in the process. Some people want to learn how to invest, and others want to rely on someone else to handle their investments.

Let’s look at three popular ways to buy mutual funds, starting with how to invest if you want to rely on someone else.

If you want to buy mutual funds with a minimum of time and effort on your part, contact an investment professional. Even though these folks usually call and solicit you, you can call them. Look in the phone book under financial planners, stock brokers, or investment services. Some life insurance agents sell mutual funds as well. Perhaps your local bank or credit union has a representative on board who sells mutual funds.

The advantage of this approach is that someone helps you make financial decisions, and deals with the details, including the paper work. The disadvantage is that you will pay sales charges (loads) and/or other fees that you can otherwise avoid. Rather than choosing a professional at random, I suggest you ask investors you know who they deal with, and how they feel about them. Needless to say, some professionals in the investing business are better than others at their job.

A second popular way to buy mutual funds is the

7 Best Mutual Funds for 2009

2010-08-07T09:50:00.000-07:00

As our economic outlook continues to be poor and as the stock market is in turmoil, stock investing has become increasingly difficult. Maintaining a solid investment portfolio can be hard work. One alternative to the difficult work of stock selection is to invest in mutual funds. With thousands of mutual funds to choose from, how can you tell which ones are the best? That’s why I have compiled a list of the . After researching the performance, stability, and income of hundreds of top-rated funds, I found the best mutual funds to invest in for 2009 and beyond. Income-Dividends One part of my selection process was to find mutual funds with cash flow, either through dividends or bond interest payments (in the form of dividends for mutual funds). This factor is becoming ever more important during a time when stocks continue to decline. Through dividends you can know that you will have an income of the yield percentage.Future Trends Another selection criteria was to find mutual funds that are going to perform well for years to come. As you will see, I have included a mutual fund that invests in stocks of alternative energy or “green” companies. The whole environmentally-friendly, green movement is just getting started and will be a boon to the economy for the next 10-20 years. One aspect that is somewhat more of a near-term strategy is the gold focused fund because of the predicted rise in the price of gold over the next year or two. Long-Term Performance The last and most important selection criteria was the long-term performance of the mutual fund. Any one stock or mutual fund can perform well over one or two years by luck, but it takes true skill to manage a portfolio that has good returns over a ten year period. A major failure of many investors that buy mutual funds is that they chase the fund that is currently performing the best or just recently had its best year. If the mutual fund is having an unbelievably great year, then either stay away from it because it’s too late or sell it if you own it.

The :

1. American Century High-Yield Fund (AHYVX) – With the current state of the economy, your best bet for making money is finding an investment with a stated income (i.e. dividends, bond interest payments). American Century’s High Yield Fund has a dividend yield of 9.38%, which is much larger than most high yielding mutual funds or stocks.2. The New Alternatives Fund (NALFX) – this is the perfect mutual fund for times when people and companies are looking for environmentally-friendly ways of doing things. This mutual fund invests in companies that focus on renewable energy sources, as well as companies that are concerned with energy conservation and environmental protection. Over the next decade green and alternative energy stocks will most likely sky-rocket with gaining popularity and necessity.3. Franklin Utilities Fund (FKUTX) – A utilities fund is also a great way to get a flow of decent income during a time of poor stock performance. This mutual fund has a dividend yield of 4% and a 10-year annualized return of 5.17%, which is very impressive. Utility companies are a solid investment for having a stream of dividend income.4. ING Corporate Leaders Trust Fund (LEXCX) – Although its 10-year annualized return has been hurt by the recent stock market downturn putting it at 3.67% (which is better than all but two main value strategy mutual funds), ING’s fund has performed 10% better than the S&P 500 over the past year. It also has a dividend yield of 2.46%.5. Franklin Gold and Precious Metals (FKRCX) – This mutual fund has been a top performer over the past decade with a 10-year annualized return of 14.42% and a current dividend yield of 8.34%. This mutual fund has performed amazingly, and it will continue to perform with gold becoming more of a flight-to-safety investment for investors. 6. Vanguard Energy Fund (VGENX) – although the commodities boom of earlier this year has faded, oil prices will come back. It is only a matter of time. Vanguard’s Energy Fund has had a 10-year annualized return of 14.81%, which is better than most mutual funds of any kind. It is positioned to perform well over the next few years.7. Municipal Bond Fund (of your choice) – municipal bond rates have gone up in recent months and continue to be a great source of extra income. For example, some bonds in Florida are paying 6% a year in interest. Remember with municipal bonds that interest payments are tax-exempt; just make sure you pick a bond that is within your state (otherwise interest payments become taxable). How does a tax-free income of 5% or 6% on your investment sound for 2009- with the U.S. still in recession?

All About Mutual Fund Investments

2010-08-07T01:52:00.000-07:00

Definition

One definition of Mutual fund states that they are mutually admitted assets invested in different securities. Shareholders are issued bonds as grounds of their control and benefit proportionately in the earnings of the fund.

Various mutual fund options

One of the vital factors that an individual must study when looking at various mutual fund options is that if their money should be an actively managed fund or an indexed fund. All assets include individual stocks, but an actively managed fund will modify these stocks on a regular basis in an endeavor to acquire as much profit as possible. Indexed assets are intermeshed around specific index containing a good cross section of the stocks within this index. The shares are rarely traded and the performance is usually indicates the sole performance of the index. While it is wise to consider the gains form certain sectors, you also should be cautious about sectors that can be adversely affected by a single factor.

Some of the benefits of mutual fund

As in any other investment opinions differ, some suggest that mutual funds do not have a diverse investment potential, whereas other argue that there are a number of advantages in mutual funds.

Mutual funds adapt a strategy to invest funds in various investments, which is the key to high profits. As mutual funds do not compel clients to invest big money, the low investment capital encourages even the small investor to utilize the opportunity to earn high profits. Purchasing mutual funds certificates or selling them is very easy, which makes it convenient for every type of investor. As mutual funds are managed by professionals with good experience in investments, the chances of high profit is greater than in other investments made by an individual.

Safety concerns

As far as mutual funds are concerned safety of the investments are not guaranteed. Moreover the performance of the mutual fund highly depends on the expertise of the managing professionals. With no assurance of guaranteed profits and possibilities of losing money in case of major change in economy, mutual funds only become a secondary or tertiary option for long term investors. However, most short term investors have gained much by investing in the mutual funds only at their own risk.

Securities and Exchange Commission which regulates the mutual funds ensures that all mutual funds are set up and run according to the rules of the government. The commission also sees to that there is a certain degree of transparency between the mutual funds and the investors. It also ensures that other costs and fees of the mutual funds are properly documented so that it gives the investor a crystal clear picture of their investments.

Top Mutual Funds in India

2010-08-06T17:54:00.000-07:00

Deciding or searching for the top mutual funds generally requires lot of things to be taken into consideration. It is here that the role of the fund manager creeps in. The fund manager determines the performance of the fund for that particular period, so it is a compulsion that he is consulted prior to making the investment. Another important segment that should be taken care of is the proper selection of Assets. Asset Allocation is the art of bifurcating your finances into a mixture of Assets (stocks, bonds, etc). It is imperative that some amount of research is done prior to choosing a fund for investment. The performance of a mutual fund over the last few years does give an insight to it’s value. The Mutual fund performance can be known by Mutual Fund NAV i.e. Net Asset Value. It is disclosed on daily basis in case of open-ended schemes and on weekly basis in case of close-ended schemes. It is necessary for all to put their NAV’s on the web site of Association of Mutual Funds in India (AMFI) thus the investors can access NAVs of all mutual funds at one place.

.According to latest researches and data available with Association of Mutual Funds in India (body that governs the Mutual Fund houses in India) , it can be described that, since the last 6 months, the entire asset under management or AUM, along with thirty one mutual funds covered at Rs 5,18,123 Crore or Rs 5,181.23 billion. All of the top five mutual funds of India made record in the development of total AUM. They have increased the AUM rate of the Indian mutual fund industry. Being the top mutual fund organization of India, the Reliance Mutual Fund rose the AUM to Rs.80,780 crore from Rs.77,765 crore. On the other hand, the ICICI Prudential Mutual Fund and UTI Mutual Fund rose to Rs.56,854 crore from Rs.52,180 crore. So going through the snapshot you do have an idea as to which Mutual Fund should be invested upon and the factors you would need to take into consideration.

What Is The Difference Between Domestic And Offshore Mutual Funds?

2010-08-06T09:56:00.000-07:00

In understanding the difference between domestic and offshore mutual funds, it is important to know what these funds are. It is true that there are a number of different mutual funds that are available to investors, but the basic construction of a mutual fund is that it is created by a firm that takes the money of many investors and invests that money into stocks, short-term money markets, bonds, and other types of securities. It is then that the manager of the portfolio manages that money by investing and trading the underlying securities of that fund. What happens is that capital gains or losses are realized and those gains and losses are then passed to each individual investor.
The United States and Canada have mutual funds that operate in a similar manner. These funds are open-end funds, closed-end funds, and unit investment trusts. Those investing in offshore mutual funds may find that the term is used more broadly. It is used to refer to any type of collective investment. The names that the investor may see these referred by include open-ended investment companies, unit trusts, undertakings for collective investments in transferable securities, and unitized insurance funds. That may seem like a lot to swallow, but many investors find that their offshore mutual fund investment opportunities are not as restricted because there are more types of mutual funds to invest in.
The offshore mutual fund
There are tax advantages to the offshore mutual fund that individuals will not find with their domestic mutual funds. Unless one of the rare loopholes is found, United States residents will still be fully taxed on their offshore mutual fund. This is usually referred to as “foreign arising income” on IRS tax forms. Nevertheless, individuals have found that investor-friendly countries allow savings on investments through tax incentives. Some offshore locations, such as the Virgin Islands, do not require tax to be paid. This allows the portion of the gain that would normally go to tax to be reinvested.
There are certain organizations that argue that allowing no tax to be paid or reducing the amount of tax is a form of legalized tax evasion. However, tax incentives are a way for individuals to invest into that economy, making that economy even stronger.
But what one will find is that there is a high degree of regulation when it comes to offshore mutual funds. One may find that there may be a minimum investment of $100,000 and that an individual is required to identify him or herself as a “professional investor.” In the U.S., Canada, and various other countries around the world, a person does not have to be a professional investor to invest in mutual funds. They have brokers who can take care of that for them and guide them through the process or simply take care of 100% of the account transactions.
There may also be instances in which the number of investors is limited because of stipulations set forth in constitutional documents. It is these types of regulations that can limit the number of foreign investors in mutual funds, but they can prove to be quite profitable.
The differences
So as you can see, there are differences between domestic mutual funds and offshore mutual funds. Offshore mutual funds can be a fantastic investment for the investor once the hurdles are cleared. Domestic mutual funds may be easier to invest in, but an individual may find that the return on their investment is not as high. However, many prefer their domestic mutual funds over the confusion that surrounds offshore mutual funds. Nevertheless, many find that the confusion is worth it and that the process becomes easier for them over time.

Seeing What the Top Mutual Funds Have in the Way of Stock Options

2010-08-06T01:58:00.000-07:00

When people want to invest their money they generally look to the different mutual funds. These many groups have lots of different stock options for you to look into. With all of these mutual funds groups have one thing in common though. This commonality is the potential risk that its clients face by investing. To save yourself grief you can see what the top mutual funds have in the way of stock options.

These top mutual funds are the ones that have provided their customers with a superior service. They have given consistent performance for the past number of years. Additionally there are various options for diversifying your portfolio. These top mutual funds are also ones that are reliable and yet they have their terms published clearly for the public to see.

You can find these many top mutual funds in the Morningstar reports and also in other financial news items. A few of these top mutual funds are ones that we are familiar with. We have either heard about these companies or we know someone who has invested some of their money with these top mutual funds.

These companies can be ones like Mutual of America, Vanguard Group, Hartford Mutual and Fidelity Mutual. You will also find that index mutual funds are also regarded as a being in the top positions with the top mutual funds. While all of these mutual funds are regarded as being great companies you should still look into the services of each one.

The main item to remember about mutual funds even the top mutual funds is that there always times when stock prices will drop very low. These price fluctuations will not help investors gain the full price for what they have paid. There are also a number of items that you will need to look into when you are thinking about investing.

These items also pertain to the top mutual funds. The first item that you should check out is whether the company is financially stable. This means seeing what their performance factor has been for the past 5 to 10 years. While this is not always accurate it will help you to develop a good picture of the mutual funds company’s capabilities.

The next item you will have to look for is the various expenses that you may be expected to help with paying. Remember that these expenses will not always be clearly stated, even with the top mutual funds. For this reason before you think about investing in any mutual funds group

How to Do Mutual Funds Research to Avoid Making Costly Mistakes

2010-08-05T18:00:00.000-07:00

In general research means that you are looking into a subject matter. This research can be found in all areas of interest. One area that many people are interested in is that of the stock market. With all of the stocks and bonds that are available there are times when you may not be sure which mutual funds companies are good to invest with. This is where mutual funds research can come in handy.

When you first start your mutual funds research you will need to have clear idea of your end goal. This is important as there are many factors that might have to be investigated. You may decide that the best place to start your mutual funds research is with a back knowledge of what mutual funds are. While this information is something that is needed by the average investor it is also an item that gets overlooked.

For this reason you should first look at the definition that is available for mutual funds. The next item in your mutual funds research is applying the knowledge that you have gained to the actual mutual funds. At this point select about 2 to 4 different mutual funds companies. Look to see what types of stocks and bonds they are offering.

As each of these mutual funds represents various industries, countries and companies you will find a diverse selection awaiting you. You should choose to look at a few different stock options. See in your mutual funds research how these items have preformed over a past 5 year period. You will gain an idea as to the way the market regards these items.

Next your mutual funds research should involve seeing the differences that are applicable to the fees. Since the area of mutual funds investment is very competitive there are various mutual funds companies that will have fees which are detrimental to your portfolios asset value.

These fees are mainly hidden in the type of load that is offered with the mutual fund. You will notice in your mutual funds prospectus (which you should have for each mutual fund) the type of load which has been designated for that fund. These loads are level loads, front-end loads and deferred loads. Of these many loads the best one to look for is that of a no-load fund.

In a no-load mutual fund you as the investor have no worries regarding the fees for buying and selling stocks and bonds. Your mutual funds research will reveal to that in many instances no-load mutual funds go hand in hand with index mutual funds. These funds are set to closely match the markets current prices.

By looking at all of these factors and the Morningstar reviews you can choose the mutual funds portfolio that most catches your eye. With the help of mutual funds research you now have the means at your fingertips to avoid making costly mistakes.

How to Know Which are the Best Mutual Funds to Invest With

2010-08-05T10:02:00.000-07:00

There are different ways that you can use the money that you have earned. Investing in a mutual fund is one such way. The many different mutual funds you will find have many excellent options for you to try out. You will however need to look at the best mutual funds in order to find out which one or ones are more suited for you.

At the moment you will discover that Janus, Fidelity funds, Vanguard Group and others are among the best mutual funds that are available. In each of these mutual funds you will need to see how the funds compare with each other. There are many reviews that will provide you with information for choosing the best mutual funds

Before you invest with a mutual fund you will need to understand what a mutual fund is and how it will be of help to you. Basically a mutual fund is an investment company. This corporation pools the money of its investors together. With this money the investment company is able to buy diverse types of stocks and bonds.

The investors then share out the various stock and bonds that are in the pool. By investing these stocks the professional managers of the corporation is able to keep the clients’ portfolio in good shape. While this is a simple way to put the functions of mutual funds it helps to understand how a mutual funds group works. You can find out more information from the internet or from a trusted financial advisor.

The best way to look for the right mutual fund is to take your time. With the numerous mutual funds out there it is a bit difficult to know which ones are the best mutual funds to invest with. You can look at the Morningstar reviews to see which of the mutual funds are performing well. This preliminary research will help you to see the direction in which mutual funds are heading.

Once you have selected a few of the best mutual funds to investigate you should see what types of funds are being offered. As some of these funds have hidden charges it pays to understand what these funds are really. You will find this information in the internet or you can ask someone to clarify the details for you.

Even though all of these mutual funds are great investment possibilities there are always risks that potential clients face. For this matter you should give the matter of investing your money in a mutual funds group some serious thought. The bottom line is that no matter how good these many best mutual funds are performing right now tomorrow is another story, so take your time and invest wisely.

Mutual Funds - An Introduction and Brief History

2010-08-05T02:04:00.000-07:00

Each one of us does not have the expertise or the time to build and manage an investment portfolio. There is an excellent alternative available – mutual funds.

A mutual fund is an investment intermediary by which people can pool their money and invest it according to a predetermined objective.

Each investor of the mutual fund gets a share of the pool proportionate to the initial investment that he makes. The capital of the mutual fund is divided into shares or units and investors get a number of units proportionate to their investment.

The investment objective of the mutual fund is always decided beforehand. Mutual funds invest in bonds, stocks, money-market instruments, real estate, commodities or other investments or many times a combination of any of these.

The details regarding the funds’ policies, objectives, charges, services etc are all available in the fund’s prospectus and every investor should go through the prospectus before investing in a mutual fund.

The investment decisions for the pool capital are made by a fund manager (or managers). The fund manager decides what securities are to be bought and in what quantity.

The value of units changes with change in aggregate value of the investments made by the mutual fund.

The value of each share or unit of the mutual fund is called NAV (Net Asset Value).

Different funds have different risk – reward profile. A mutual fund that invests in stocks is a greater risk investment than a mutual fund that invests in government bonds. The value of stocks can go down resulting in a loss for the investor, but money invested in bonds is safe (unless the Government defaults – which is rare.) At the same time the greater risk in stocks also presents an opportunity for higher returns. Stocks can go up to any limit, but returns from government bonds are limited to the interest rate offered by the government.

History of Mutual Funds:

The first “pooling of money” for investments was done in 1774. After the 1772-1773 financial crisis, a Dutch merchant Adriaan van Ketwich invited investors to come together to form an investment trust. The goal of the trust was to lower risks involved in investing by providing diversification to the small investors. The funds invested in various European countries such as Austria, Denmark and Spain. The investments were mainly in bonds and equity formed a small portion. The trust was names Eendragt Maakt Magt, which meant “Unity Creates Strength”.

The fund had many features that attracted investors:

However a war with England led to many bonds defaulting. Due to the decrease in investment income, share redemption was suspended in 1782 and later the interest payments were lowered too. The fund was no longer attractive for investors and faded away.

After evolving in Europe for a few years, the idea of mutual funds reached the US at the end if nineteenth century. In the year 1893, the first closed-end fund was formed. It was named the “The Boston Personal Property Trust.”

The Alexander Fund in Philadelphia was the first step towards open-end funds. It was established in 1907 and had new issues every six months. Investors were allowed to make redemptions.

The first true open-end fund was the Massachusetts Investors’ Trust of Boston. Formed in the year 1924, it went public in 1928. 1928 also saw the emergence of first balanced fund – The Wellington Fund that invested in both stocks and bonds.

The concept of Index based funds was given by William Fouse and John McQuown of the Wells Fargo Bank in 1971. Based on their concept, John Bogle launched the first retail Index Fund in 1976. It was called the First Index Investment Trust. It is now known as the Vanguard 500 Index Fund. It crossed 100 billion dollars in assets in November 2000 and became the World’s largest fund.

Today mutual funds have come a long way. Nearly one in two households in the US invests in mutual funds. The popularity of mutual funds is also soaring in developing economies like India. They have become the preferred investment route for many investors, who value the unique combination of diversification, low costs and simplicity provided by the funds.

Mutual Funds and Their Risks

2010-08-04T18:06:00.000-07:00

Investing in mutual funds is a relatively safe way of growing your net worth, but such investments are not entirely free of risks. Before you pick on any particular mutual fund for investment you should watch out for a few things.

Performance

The first thing you should look for is whether the mutual fund you are planning to invest in is outperforming or under-performing with respect to the market. Good and safe mutual funds are those that consistently outperform the market. Changes in the net asset values (NAVs) of such mutual funds are consistently one step ahead of the market. For example, if the index that measures market movements goes up, the NAV of most good and safe mutual funds will also move up at least as much as the market or even more than the market. On the other hand, when the market moves southwards, the NAV of most good and safe mutual funds will move down but such depreciation will be less than or at the most equal to the market’s downward movement. Unsafe or risky mutual funds are those where the opposite occurs – when the market moves up, the NAV of risky or unsafe mutual funds may move up less than the market and may even move down despite a bull run in the market. Such under-performing mutual funds should always be eschewed when taking an investment decision.

Churn and earn

The next thing to watch out for is whether the mutual fund is undergoing too much “churn and earn”. This means you have to check whether too many transactions by the mutual fund are resulting in higher fees or costs to the investor. In this context, the worst offenders are those mutual funds that have a lot of spurious churn. Every time a mutual fund buys or sells stocks, the broker or brokers it employs make a neat pile from the commissions. So, these brokers try to encourage a lot of churn or buying and selling of stocks by giving a kickback to the mutual fund manager. Although direct bribery is illegal, payment of soft money through a sponsored trip to Hawaii or letting the mutual fund manager have a swanky Wall Street office for $1 a month is not. The only loser in all this spurious churn is the investor, especially in cases where the small print says that the investor will have to pay the brokers’ fees as well.

Lack of clarity

Mutual Funds that have prospectus, annual reports or statements of additional information written in such a way that they are difficult to understand should also be avoided. The lack of clarity in their documents is almost a sure sign of lack of honesty in their dealings or a lack of competency in managing funds – both of which are strong reasons for avoiding them for investment purposes.

Risky and unsafe mutual funds are also characterised by having too many restrictions on how and when investors can sell or redeem their mutual fund shares. Mutual funds that have too long lock-in periods or those which slap a hefty exit load at the time of redemption should be eyed with suspicion and are likely to prove to be unsafe and risky.

Beware of scams

Finally, there are mutual funds that are outright scams. There have been reports of fund mangers selling stocks at prices other than what has been reported to the investor. For example, the fund manager may have sold stock at prices that prevailed before closing of the day’s trade although the investor is told that the transaction took place at closing prices which were lower. The manager then pockets the difference and with most such transactions involving large volumes, even a fractional price difference can lead to substantial gains for the manger. Again the only loser in all this is the investor who gets short-changed by the mutual fund operator!

3 Basic Things Needs for Mutual Fund

2010-08-04T10:08:00.000-07:00

In past one decade the financial market feel major changes. Investor is now use mutual fund as major investment choice.

The reason behind investment in the mutual fund is to get the security than the stock market as well as better return on the investment. Investors are now considering the investment in mutual fund for their financial goal as well as save for their retirement. The investment in the mutual fund is very safe. Mutual funds also have some risk because it gives return on NAV and that is based on capital market trends and other investments. Although majority of the mutual funds are invested in the capital market.

You can get handsome return on investing in the best rated mutual fund rather than other conventional tools. It is essential to select the proper Mutual funds so, which have good track records. You must have to study the mutual funds and the risk associated with the mutual funds. Apart from NAV there are other factors like company investments, past returns and future prospects need to be considered before investing into the mutual funds.

There are some basic things need to remember before investing in the mutual fund.

1. Investment in the mutual fund involves risk. However it is not more risky than the capital market.

2. The past NAV and other financial results are the supportive documents to take the decision but there is not guaranteeing to the investments.

3. Sometime mutual funds NAV get lower than what you have invested. It is better you can choose the proper mutual funds to get the better investment.

Mutual fund is the beneficiary for the investor. It is essential to study the investment according to the market trends.

Doing a Mutual Fund Comparison to Decide Which Mutual Fund to Invest in

2010-08-04T02:10:00.000-07:00

There are many different mutual funds companies for you to invest with. Since each of these has many different options you may want to look in to doing a mutual fund comparison. The comparison of various mutual funds and the many stocks and bonds that can be found in a mutual fund will show you which ones are suited for investment. One of the best ways to accomplish this is to select about 2 to 3 different mutual funds companies.

Look to see what types of funds they are offering and how these funds are distributed. While this may take some time it is best to know the differences that can be found. You can then check in the financial news how these same stocks and bonds have been performing over a certain set period of time. There is one item that you should keep in mind when you are doing a mutual fund comparison.

As the stock market has a tendency to fluctuate, the values of stocks and bonds in your portfolio may rise and fall according to what is happening in the market. You will have to be prepared to take this risk if you are doing any investing in mutual funds. One of the best ways to prepare for this is to see what the expenses are that can be affected by a fall in the stock market.

In a mutual fund comparison you will find most of these expenses are ones that we seldom think about. For instance you will find that your stock gets affected by the fees and expenses which are generated to the investors. A high fee charge will over time pay less money to you. Whereas a low fee charge will provide you with a higher return. You can use a mutual fund cost calculator to see what you will have paid in return to you.

The size of the fund and the age will also need to be examined in a mutual fund comparison. Most new mutual funds have really great performance records due to their short term operating.

This picture can get changed as time passes and the fund increases. To remedy this shortcoming you can check how a mutual fund has performed over a long period of time. You will also need to make sure that you have taken into account the ups and down periods that a fund will go through.

There are other factors which will need to be investigated in a mutual fund comparison. A few of these include ones like the volatility of the fund, the recent changes which have occurred to the fund, how the diversification will affect your mutual fund portfolio.

By looking at all of these factors and others which you may consider important it will be easy to decide what type of mutual fund you want to invest in. A mutual fund comparison is one of the better ways that a client can decide which mutual fund to invest in.

What are mutual fund loads?

2010-08-03T18:12:00.000-07:00

Loads are the most talked about fees that mutual funds charge. A “load” on a mutual fund is just another way of saying that the fund charges a sales commission for purchase, sale, or both. There are funds that charge loads and there are funds that do not charge loads (known as “load funds” and “no load funds” respectively).

Front-end loads are sales commissions that are paid up front at the time of your purchase. So, if you give a fund a $10,000 investment and it charges a front-end load of 5%, then the fund will take 5% of your investment (that’s $500) and pocket it right away. Only what is left over after the load has been deducted will be invested into the fund (in this example, only $9,500 is invested in the fund from your initial $10,000 investment)

Back-end loads charge their sales commissions when you sell (or “redeem”) your shares. So, when you go to redeem your shares in a fund with a back-end load you will end up receiving whatever money the shares are worth minus the sales commission.

Mutual funds charge management fees in order to pay for the management services used to run the fund. In other words, these fees are used to pay the salaries of the fund’s managers and analysts. Management fees usually do not amount to more than one percent of the fund’s assets, and they are significantly lower for passively-managed funds, such as index funds, than for actively-managed ones. You should remember that a high management fee in no way guarantees a more skilful management team.

Front loads can be reduced if you are investing or planning to invest a certain amount of money. The load reduction schedules are called “break-points.” For example, with most fund companies if you are investing over $100,000 or plan to within the next 13 months, you will get a 1% reduction on the front load. The more you invest, the greater the reduction in the load. For some fund companies the break-point reduction begins at $50,000 over 13 months, and with many funds, if you invest over $2 million there is no front load.

If you do not have $50,000 or $100,000 to invest over the next 13 months, you can still earn a reduction on the front load, through “rights of accumulation.” Under accumulation rules you will receive fee reductions on the front load when your total investments with one fund family have grown past the break points. Therefore, if you only have $20,000 to invest today, that’s OK, someday soon it will grow past the $50,000 or $100,000 initial break-point and you will be eligible for the load discount on your further investments.

The turnover ratio for a mutual fund can provide you with useful information about how expensive a fund is and how it is managed. Turnover ratios measure the amount of trading activity in the fund’s portfolio. They are calculated by taking all of the fund’s sales for a specified period of time (usually one year) and dividing by the fund’s total assets. This number tells you how much the fund’s portfolio has changed.

You probably will want to exercise caution when investing in a fund with a high turnover ratio. High turnover means that the fund’s manager is buying and selling very often, and, since every sale and every purchase involves a commission, this means that funds with high turnover ratios often have high expenses. Some experts recommend focusing on funds whose turnover ratio is less than 50%.

Choosing the Mutual Funds, the Company and the Type of Portfolio you Want

2010-08-03T10:14:00.000-07:00

There are many different ways that people can earn money. The various mutual funds that you will find have this capability for both the investors and the company alike. In the mutual funds company that you choose you will find that there is a large amount of stocks and bonds. With these items you can find your stock portfolio is kept diversified.

The various stocks and bonds that can be found in different mutual funds will be based on research that is carried out for mutual funds. As these are chosen with an eye to increasing the client’s portfolio you should expect that there will be a wide choice of stocks and bonds. You as the client however will not be allowed to choose which of these stocks or bonds that you would like to use.

The company’s professional managers will look after your interests when you become a member of a mutual funds group. You can look for a good mutual fund in which to invest your money by looking at how the mutual funds company is considered in the stock market. The Morningstar financial review is a good way to see if the mutual funds group which you have invested in is performing well.

Before you start choosing any mutual funds group or company with which you can invest you should do some homework. This homework is mainly to understand the various term and information that you will be coming across in investing. These terms will include words like deferred load, no-load funds, front-end mutual funds, and level loads.

You will find some of the expenses which you must pay to a mutual funds company are placed in the type of load you have signed up for. In addition to these possible expenses are ones that the mutual funds company itself charges for buying and selling stock on your behalf. As all of these expenses are part of investing it is always wise to have more information about the company that you are considering investing with.

One of the most sensible options for finding this information is to do a mutual funds comparison. This comparison will allow you to see the many differences which are in a few different companies. You can then choose the type of fund that you want based on the results of this mutual funds comparison.

While investing your money into a mutual funds company is a good idea there are many items that you will need to see about first. Once you have found all of the information which will be able to help you then you will have an easier time choosing the mutual funds, the company and the type of portfolio that you want.

A Few Ways to Find Out the Mutual Fund Performance

2010-08-03T02:16:00.000-07:00

Mutual funds allow people to invest their money in a way that will provide them with future benefits. When you are looking at a mutual fund in which you can invest in you may wish to look at several different ones. The mutual fund performance will help you to see what stocks and bonds work well in the market as compared to others. You can also find more help with this answer in various financial news articles.

One such article or guide that you may find to be useful is that of the Morningstar review. The review will have the latest market news which will indicate how a mutual fund performance has gone. You will also need to look at various other factors before you make any type of commitment about a mutual fund that you have seen.

These factors are the price you need to pay to buy and sell your stocks and bonds. The type of load that you are signing up for and also the other administrative expenses you will be expected to help out with. In looking at the mutual fund performance you should consider how your tax bill will be affected.

The tax bill is likely to be affected by a capital gains distribution. You can use various online mutual funds calculators to find what these tax costs are likely to be. The other item that should be investigated in a mutual fund performance evaluation is that of the volatility. When you are thinking of investing in mutual funds you want the stocks that you have chosen to be relatively stable.

The choice of a volatile mutual fund will only spell higher risks for you. The best way to know if any given mutual funds have a tendency to volatility is by reading the funds annual reports and prospectuses. You should also compare the yearly performance figures. All of this information will inform you if various companies that you are looking into have the ability to weather the stock market with ease or if there are drastic ups and down periods of investment.

Another way to find out the mutual fund performance is to ask about any changes which may have occurred. These changes will include a change of personnel or the investment advisor that you were working with is no longer available. All of these minor changes have the ability of affecting the outlook of your mutual fund.

Therefore before you choose to invest with any mutual funds group it is always best to see what the mutual fund performance of this company is like. This knowledge is vital to getting the best deal on mutual funds that you can.

Stock Versus Mutual Funds - Safe or Sorry?

2010-08-02T18:18:00.000-07:00

It seems a little odd to compare stocks to mutual funds. Actually, mutual funds are largely composed of stocks. It is important to make the distinction between the two as there are some very real advantages to using mutual funds.

It is fun to invest in individual stocks because each company has its own story to tell. However, you want to focus on making money! Investing is not a game and should not be taken lightly.

When you invest in mutual funds, you are able to diversify and reduce your risk of losing money. Do you think that those wealthy investors out there just put their money in a couple of stocks? No! Either they are investing in mutual funds or are buying large numbers of stocks.

When you purchase mutual funds, you are hiring a professional manager at a relatively inexpensive price. It would be a little off the wall to think that you have more knowledge than a mutual fund manager! Most managers have been around the track a number of times and have the academic credentials to back up their knowledge.

Mutual fund companies have the advantage of capitalizing on economies of scale because they pool investors’ monies together. Since these companies have large amounts of money to invest, they usually have personal contacts at many brokerage firms and often trade commission-free.

Mutual funds are easy to take care of. The bookkeeper is much more challenged when there are hundreds of stocks to keep track of!

Mutual funds are very liquid. Put in your order for money in the morning if you are short on cash, and by the time the market closes you may have a check waiting for you. Stocks, on the other hand, are much more difficult. It all depends upon what you have invested in. CDs are not at all liquid and bonds are difficult as well.

If you are new to investing then mutual funds may be the way to go. You can invest small increments of money at regular intervals and not have to pay a trading cost. If you invest in stocks, you will find that they carry high transaction fees. This makes it quite difficult for the small investor to realize a profit.

If you are a wealthy stock investor, then you have it made because you get preferential treatment from the brokers. Wealthy bank account holders usually get the red carpet treatment from the banks. However, mutual funds do not discriminate. Whether you only have a paltry $50 or a huge sum of $500,000, you all get the same manager, the same investment and the same account access.

Generally speaking, mutual funds have a much lower risk than stocks. This is largely to diversification which was mentioned earlier.

With stocks, there is always the worry that the company you are investing in will go belly up! With mutual funds, that is next to impossible.

As you can see, there are many advantages in investing in mutual funds over stocks. It is not to be said that you should never invest in stocks, but if you are just getting your feet wet with investing it would be best to go with mutual funds!

Enjoy Professional Asset Management: Invest In A Mutual Fund

2010-08-02T10:20:00.000-07:00

Haven’t you become a member of the large family of mutual fund investors yet? If you keep waiting you may never be able to feel the positive effects mutual funds have on your account. However, you are not the only one who has not managed to overcome some of the basic mental barriers that come in your way toward mutual fund investing.
First of all you may think that you don’t have enough money to invest in a mutual fund. However, as little as $100 can get you started in your trip to a rich mutual fund account, which will provide you with financially secure retirement. No trading costs exist when you invest in the majority of mutual funds, which allows you to invest small amounts of money. As compared to stock investing, the latter eats up a big portion of your money in terms of broker commissions and you end up with less money for investing.
On the other hand, you may be reluctant to invest in a mutual fund, because you find it non-guaranteed or non-insured. However, you should not be worried about the security of a mutual fund because it cannot go bankrupt. A mutual fund usually holds shares of a large number of companies and in order to go bankrupt all of these companies should altogether become insolvent. On the other hand, the insurance companies or bank accounts that are generally viewed as safer can easily go bankrupt and you will end up losing your hard-earned money. What is more, inflation tends to eat up the money you accumulate in your savings account, whereas your mutual fund account enjoys compounding interest.
You may also prefer not to invest in a mutual fund, because you believe you are better at selecting individual stocks. We don’t want to undervalue you stock picking skills, but by purchasing shares of a mutual fund, you immediately enjoy the professional management of your assets by experts that have been in this field for many years. You may really have success at times, but it is equal to your chances of winning in the lottery.
Additionally, many investors make the mistake to invest in the company they work for. This is totally wrong tactic, unless you include in your portfolio other stocks to diversify it. Mutual funds include stocks and bonds of many different companies, which is extremely beneficial in restful economic times.
Finally, most investors don’t want to invest in a mutual fund, because they are worried they don’t understand how it functions. The first step is to browse through our website and get all the information you need to get you started. We have made it easy to use and full of different articles on the subject so that we turn you into an educated and successful mutual fund investor.

Mutual Fund Traps

2010-08-02T02:22:00.000-07:00

There are thousands of mutual funds available to investors. While some are good and can outperform the market, many consistently underperform the market. Generally, this is because the mutual fund is too large and the manager can not efficiently invest all of the money, the fees are too high, or the mutual fund manager is not talented enough to beat the market. Here are some key warning signs to look out for when investing in mutual funds.Loads and 12-b1 fees: : These are extra “marketing” charges a mutual fund lays on investors. Never invest in mutual funds that have these fees. These fees represent kickbacks and marketing expenses for the mutual fund to expand its investor base. Not only does this represent an extra expense to you, funds that are actively attempting to expand will perform worse in the long term due to having too many assets under management.Taking advice from a banker: Are you blindly taking the advice about what mutual funds to invest in from your local banker? Chances are, he’s trying to get you to invest in a mutual fund with a load, so he can get a kickback. There’s nothing wrong with talking to someone from your local bank about investing, but always do your own research and never agree to anything then and there.Investing in the hottest mutual funds: : Just because a mutual fund is succeeding now does not mean it will succeed in the future. It may have just gotten lucky by being focused on a particular sector type that had a good year. Furthermore, mutual funds that perform well tend to get a fload of assets invested in them, which then makes the mutual fund too bloated.
Roger is a writer for Research Mutual Funds, a site that can help you find mutual funds with top performance.

Mutual Fund as your Alternative Investment Portfolio

2010-08-01T18:24:00.000-07:00

People always say that investment is a money game with the playing rule of “high risk with high return and low risk with low risk”. You may want to invest in an investment portfolio that is able to give a good return and stock market is always the best choice in term of high return. But you aware that investment in the stock market will cause you to lose all your money as well, because the game rule said “high risk is high return and low risk comes with low return”. Hence, stock game might not suit your risk profile; you may want to look for an alternative that can give comparatively good reward but with much lower risk than stock. If you are categorized in this group, then mutual fund can be your game.

Mutual Fund Is A Risk Sharing Game

A mutual fund is simply a financial medium that allow a group of investors to pool their money together with a predetermined investment objective. The pooled money will manage by a fund manager. The fund manager is a person who is widely expert in stock and bond markets. He/she is responsible to invest the pooled money into specific securities, usually stocks and bonds. When you are buying shares of mutual fund, you will become one of the fund’s shareholders. All the gains and losses will be shared among the fund’s shareholders. Hence, mutual fund is a risk sharing game.

Compare to stocks and bonds, mutual funds are one of the cost effective and an easy playing game. You do not need to really expert in stock and bond market because the fund manager will take care of it; and you do not need to crack your head to figure out which stocks or bonds to buy, because you have the expert, the fund manager to make the decision for you.

You do not need a lot of money to get your start the game; you decide the amount of money you plan to invest into the mutual fund. Some mutual funds may even let you start with just $100. The best part is the cost effectiveness. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading cost. The biggest advantage of mutual funds as compare to stocks or bonds is “diversification”.

Diversification Will Lower The Risk

Investment experts always advise that if you want to invest you money, “Don’t put all your eggs into the same basket; else if the basket fall, all you eggs will break”, some will happen on your money, if you invest in one stock, if the stock perform negative, you loss all you money. Diversify your investment to spread out your money into many different types of investments. When one investment is down, another might perform in up trend.

Hence, with the diversification of your investment, you will reduce your risk tremendously.

You can diversify your investment by purchasing different kinds of stocks and bonds instead of one. But it may take weeks to buy all these investments. In contrary, you can get these done by purchasing a few mutual funds and mutual funds automatically diversify your investment across many stocks and bonds.

In Summary

Mutual fund is a risk sharing investment portfolio, it’s provides you a medium of investing your money into a high earning stock & bond market while automatically diversify your investment to reduce your risk. Hence mutual fund can be your alternative of investment portfolio that will give you higher reward and lower risk.

More Light is Shed on Mutual Funds

2010-08-01T10:26:00.000-07:00

A prospectus for a mutual fund describing that fund’s objectives, financial statements, and history probably doesn’t sound like a fun read to most people. But a prospectus is an important document that adds detail and helps potential investors become more informed when making investment decisions.

The added information has made a wealth of knowledge available on many mutual funds. This knowledge can potentially add to the confidence of an investor, should one take the time to get to know their mutual fund.

Even Congress has jumped into the mix. In 2005, Sen. Daniel Akaka from Hawaii proposed the Mutual Fund Transparency Act, which would call for increased disclosure of mutual fund fees, as well as taking a more critical look at mutual fund advertising. While the bill was referred to committee, it signaled an increasingly watchful eye being focused on mutual funds by Washington.

So what are some of the latest areas of mutual fund disclosure to be affected?

1) Holdings: In 2004, the Securities and Exchange Commission (SEC) ruled that mutual fund companies must post their portfolio holdings every quarter through the SEC’s Electronic Data Gathering, Analysis, and Retrieval System, known as EDGAR. This allows mutual fund investors to find out if, and how, the fund is following its stated investment objectives.

2) Fund Manager Compensation and Holdings: Fund managers are required to disclose how they are paid, and by fully knowing how the fund managers’ pay is structured, you can consider if their objectives and plans are similar to your own. Fund managers now must also disclose how much they have invested in the fund, within a certain dollar range.

3) Fees: Also in 2004, the SEC decided that mutual fund companies must disclose the amount of fees they charge per $1000 invested, as well as per $1000 invested assuming a hypothetical 5% gain. The increased transparency allows investors to compare fees to other mutual funds and decide if higher fees translate to performance.

4) Breakpoints: The SEC wants mutual fund companies to do more to inform investors of potential breakpoint discounts on large purchases.

These are just a few of the many disclosures and transparencies that are being encouraged or required by the SEC. The increased regulations are expected to continue in an effort to provide more information to investors.

To know every small detail of a specific mutual fund is a tedious task, but it is one that many financial professionals perform in order to give their clients informed recommendations. While you, as an investor aren’t expected to know everything, it does help to know that the extra information is available and more readily accessible than ever before. In the end, the more knowledge you have of your investment, the more confident you’ll be of your choice.

Mutual Fund Disadvantages

2010-08-01T02:28:00.000-07:00

If you’re new to stock market investing you may have heard that mutual funds would be a good way for you to get started. That’s actually good advice, but mutual funds have their own pitfalls to watch out for. Here are some of the things you need to know about the disadvantages of mutual fund investing.

First, many people are under the impression that mutual funds have a lower risk than investing directly in stocks because they are managed by professional fund managers. That’s not necessarily true, because the fund’s performance will ultimately be determined by the experience and expertise of the fund manager. So if the fund manager is good at her job, the fund will do well. If the fund manager is inexperienced or just lacks talent, the fund could perform poorly.

That means you still need to perform your own due diligence on the fund itself, and on its manager. And you’ll still need to monitor the fund’s performance over time. It won’t be something you can purchase and then ignore, and still expected to prosper.

Next, you will still have to take responsibility for diversifying your portfolio. You can do this by choosing a fund that purchases stocks in a wide variety of sectors, and is widely diversified across the market. Or you can invest in more than one fund if each fund specializes in a particular sector. But you will still have to become knowledgeable about investing in the stock market at some point, in order to make good choices about diversification. Otherwise you run the risk of over-diversifying and canceling out your profit, or under-diversifying and losing the risk-reducing characteristics that mutual funds can provide.

Another disadvantage of mutual funds is the cost of the management fees. Typically, there will be fees assessed each time you buy and sell shares. In addition, there are usually yearly management fees to offset the cost of the built in stock market research and the fund manager’s salary.

And there’s one more disadvantage that most people don’t think about. Mutual funds are usually marketed as being more liquid than owning individual stocks. Generally, it’s easier and faster to draw cash out of a mutual fund than it is to trade a stock. But that liquidity comes at a cost to the yield of your investment. In order for the fund to have the liquid cash available for quick and easy withdrawals, the cash cannot be invested in additional stocks (and earning money). So the cash liquidity of the mutual fund comes at the opportunity cost of investing in more stocks.

Despite these drawbacks, mutual funds may be a good investment for you. Just be sure to investigate the issues listed in this article in order to make an informed decision.

Why Invest in Mutual Funds

2010-07-31T18:30:00.000-07:00

Let us first define the concept of Mutual Funds. These are funds where money is collected from investors to form a common pool and then deployed into various asset classes (equities, debt instruments etc.) to meet some stated investment objective. When you buy shares of a company, it makes you a part owner of the company and its assets. Likewise if you subscribe to a mutual fund you become a part owner of the fund’s assets.

Mutual funds, as an investment option is really advantageous compared to other investment avenues particularly when the capital to be invested is small and the scope for an investor to carry out detailed market research is minimal. The advantages are as follows-

1)Diversification of Portfolio: Mutual funds invest in a well-diversified portfolio of securities. This enables an investor to hold a diversified portfolio irrespective of his invested amount.

2)Diversification of Risk: As investments are made in a well-diversified portfolio, the risk of investing directly in one/two shares or other debt instruments also gets reduced. Any loss in particular companies or sectors gets off-set by gains made in other companies or sectors

3)Benefit of SIP: SIP stands for Systematic Investment Plan. This allows an investor to invest regularly with whatever small amount one can invest, without worrying to time the market.

4)Professional Management: The persons running a fund are professionals who have got the skills of managing the money as well as technical tools and the much-needed research works behind them. So one can be sure that the money is in safe hands.

5)Reduced Transaction Costs: When one invests directly, he has to bear all the costs such as brokerage or custody of securities. Here the mutual funds enjoy

The Many Places Where you Can Mutual Fund Quotes

2010-07-31T10:32:00.000-07:00

Mutual fund quotes will help you to understand the ways in which your stock portfolio can be changed for the better. You will see many different financial reviews like the Morningstar even on the internet that can provide you with the information from the day’s quotes.

To find the various mutual fund quotes you need to have an understanding of what these are really like. The way that your stock can be affected by these quotes will need to be looked at too. In the mutual fund quotes you will find lots of information that will help you in every area of your mutual funds.

You will also find the information that is provided about fees and prices that a mutual fund company charges to be very helpful. By knowing these prices you can avoid getting into lots of problems. The mutual fund quotes are constantly changing due to various fluctuations in the market. As a result of this you will not be able to find a consistent quote for each day.

There are many places where you can however receive the current information that you need about mutual fund quotes. The USA.com web site has a section where you can find the day’s quote with the least amount of trouble. To get the stock information that you need you will have to type in the stock or mutual fund name in the window which will access this information. Alternatively you can use the ticker symbol which will also display the mutual fund that you are looking for.

With these types of mutual fund quotes web sites you can find stock quotes for more than one mutual fund or stock. You will also be able to see the how a company’s family stock quotes are doing for the day. There are also various selection boxes where you have the ability of refining your search. With these boxes you can choose to get the information that you need very quickly.

For the investor who needs information about how to diversify their stock portfolio, the mutual fund quote is the best way. By accessing this information you can then choose to spend your money on the stocks that will help you in getting a good profit. The mutual fund quotes are the best way for a new investor to get up to the minute investment tips.

Use the information wisely as you will learn all of the best funds and how to make them work for you. With mutual fund quotes you have the means at hand to make your dreams of wealth come true.

Etfs Vs. Mutual Funds: Miscalculate This and your Porfolio Will Bleed Profusely

2010-07-31T02:34:00.000-07:00

If you are still in mutual funds, listen up. Because if you are a reasonable person, you will want to run to the login screen of your online brokerage and look for proof to what I am about to reveal to you. ETFs offer downside risk protection no mutual fund can match.

It is a difference that could cost you thousands in your investment or retirement portfolio.

Okay, maybe you do not HAVE thousands in your investment accounts. If you are just starting to invest your money, pay particular attention my friend. The following page should make your decision between an ETF (exchange traded fund) and a mutual fund clear enough to make an investment decision or take corrective action if necessary.

Here are some basics.

ETFs and mutual funds are similar in that they both hold baskets of securities. A balanced mutual fund can hold bonds, stocks, T-bills and some cash. An ETF is essentially derived from stocks but takes on many forms.

Before I tell you about the potential mistake that could cost you thousands, here are the important differences between ETFs and mutual funds:

Mutual Funds, Guaranteed Investment Certificate or Savings Account?

2010-07-30T18:36:00.000-07:00

If you are lucky enough to have a bit of disposable income, you are doing the right thing by researching ways of saving or investing your money. By reading about the different options available to you, you’ll be able to make an informed decision and make the best possible choice for you and your money. How you decide to save and/or invest your money will depend on many variables. Some of these include how much money you’ve got to work with, how much time you’ve got to work with and your all-important tolerance to risk. After reading the brief overview of mutual funds, Guaranteed Investment Certificates (GIC) and savings accounts below, it is advisable to discuss all your options with a personal finance advisor who can assess your situation on an individual basis.
Mutual Funds
A mutual fund is an investment where the money invested by many investors is pooled and then invested in a wide range of investments. The investments typically included in mutual funds include stocks, bonds, securities, short-term money instruments and others. Mutual funds are generally considered to be pretty safe as they are highly diversified. Each mutual fund will have a manger that is charged with trading the fund’s assets regularly. This person’s job is to maximize the rate of return for all the investor’s whose money is invested in the fund. The benefit of investing your money in mutual funds is that you can start with as little as $25 dollars and contribute to your fund on a regular basis. This is a great way to get started in investments and to grow your money even when you do not have access to a lump sum.
Guaranteed Investment Certificates (GIC)
A Guaranteed Investment Certificate, or GIC is a type of Canadian investment in which the rate of return is guaranteed over a fixed period of time. Guaranteed Investment Certificates are relatively low-risk investments, and thus yield smaller returns than that of stocks, bonds and mutual funds. Within the category of GIC’s, there are lower-risk options and higher-risk options; however, GIC’s in general are considered low risk because even if you earn less interest or jeapordize your access to interest earned by withdrawing early your initial investment is guaranteed. These safe and secure Canadian investments earn interest at a fixed rate, variable rate, or based on a market-based index.
Savings Accounts
Savings accounts are very safe and flexible places in which to basically store your money. You can open a savings account at any bank and with as little as $25. You will have access to your money at all times, and depending on how much you keep in your savings account at any given time, may not even have to pay any bank fees. The downside of keeping money in a savings account is that your cash will earn little to no interest. Interest-bearing savings accounts earn very little interest compared to Guaranteed Investment Certificates or mutual funds. However, if you feel that you will (or may) need access to your cash during the short term, this is a great and safe place in which to keep your savings. Many people start saving with this type of account then transfer lump sums to other investments such as GIC’s or mutual funds.
The Verdict
Now that you know a bit more about GIC’s, mutual funds and savings accounts, you are better prepared to talk to your financial advisor about what’s best for you. If you don’t currently work with a financial advisor, speak with a customer service representative at your bank.

No Load Mutual Funds or Exchange Traded Funds (etfs)?

2010-07-30T10:38:00.000-07:00

If you are fed up with early redemption charges and ever increasing mutual fund management fees on top of bad-performing fund managers, read on. There is a quiet revolution going on in the no-load mutual fund industry and you, the individual investor, may benefit from it greatly.

I am referring to Exchange Traded Funds (ETFs), which have been around for years, but have grown tremendously since their inception. There are currently over 100 choices with around $10 billion in assets.

In a nutshell, an ETF is a specific kind of no-load mutual fund that you might consider to be a basket of stocks. ETFs are diversified like mutual funds, only they trade like stocks. They are cheap to trade (as low as $8.00) and don’t hit you with any short-term redemption fees. And they offer investing opportunities across the board.

ETFs track every index under the sun including the S&P 500, the Nasdaq 100, The Russell 2000 and many others. Available through any discount broker, they basically fall into one of three categories: broad-based U.S. indexes, sectors and international.

The have esoteric names such as iShares, StreetTracks, HOLDRs and SPYDRs. The difference is in the index they are tracking and the company marketing them. You will see big name companies offering them, like the American Stock Exchange, Barclay’s Global Investors, Vanguard, and State Street Global Investors.

In my newsletter I track the currently most appropriate ETFs for you to consider. For more detailed information you can visit these web sites:

www.nasdaq.com

www.amex.com

www.ishares.com

In addition to inexpensive trades and no short-term redemption fees, how else can ETFs save you money vs. no load mutual funds? One way is on their annual management fees. That fee for ETFs is in the area of 0.45% vs. 1.5% on average for no load mutual funds. The fees charged by discount brokers are so low they almost can be disregarded, usually less than 0.1% of the transaction.

For example, I have used ETFs for some managed account clients during my last Buy cycle, which started on 4/29/03, and paid $27 for a $28,000 order

Creating a Mutual Fund Portfolio

2010-07-30T02:40:00.000-07:00

Managing your assets is an important step towards creating your own personal wealth. You can research and figure out on your own which investment products can work for you. Hiring a professional financial advisor can be very beneficial as well. Money market funds are great for short-term investments that need to remain liquid. They earn an average of three times more than traditional savings accounts. If you are looking for long-term investments, consider mutual funds.

There are thousands of mutual funds to choose from, but don’t be discouraged. First find a company that you like. Their policies should be congruent with your needs and your lifestyle. Some charge fees and offer financial advice. Some are fee-free and can offer you education over the phone to help you make your own choices. Just about every company will help you assess your risk tolerance and guide you in the right direction. When choosing mutual funds, you should consider diversifying your portfolio. Use your best judgment and try not to put all of your eggs in one basket, so to speak. There are a few basic categories of mutual funds you should know about before investing in the funds that will best suit your needs.

Some mutual funds are made up of investments in mostly bonds and other fairly stable instruments. These can be great for conservative investors that don’t want to see their balance fluctuating wildly. They concentrate on slow growth and are fairly stable, although you should never count on any investment making money. If you have a few years to wait before you’ll need your money, then investing conservatively may be an appropriate choice for you. You can spread out your money over a few different bond funds to diversify. If you believe that you may need your money sooner, then you may want to stick to very conservative bond funds or money market accounts. They are more liquid and rarely have negative years. Keep in mind that any mutual fund can experience negative years, so consider the length of your investment and what it will be used for before investing.

Moderate funds are made up of some bonds and some stocks. Stocks are more risky and can create a higher or lower return than bond funds alone. Moderate funds can range from being heavy with bonds to being comprised mostly of stocks with a few bonds to stabilize them a little. You may consider moderate funds for longer term investments, as long as you can stomach watching your balance go up and down on a daily basis. Your initial investment isn’t totally safe in any mutual fund, but growth is generally higher in moderate funds if you have many years to invest. Keep in mind that as time goes on, you’ll approach the time when you need your investment. As retirement or your other goals get closer, you may consider moving to a more conservative investment. Any time that you move your money from one fund to another, it is a taxable event. In the year that you move it, any growth above and beyond your initial investment is taxable.

Stock funds are the most aggressive types of mutual funds. They can fluctuate a lot more than other types of funds, either making great profits, or experiencing great losses. These types of funds may look enticing to investors seeking high returns, but keep in mind that the percentages you see are long-term results and can vary greatly from year to year. You should only invest in stock funds for very long-term investments, and only if you can withstand the major fluctuations of the stock market.

When diversifying, keep your goals and risk tolerance in mind. You may choose to spread your investment over many types of funds. Keep track of your investment portfolio and seek professional advice whenever possible.

Tax Planning With Mutual Fund Investments

2010-07-29T18:42:00.000-07:00

By nature Mutual Funds are not tax saving instruments but some mutual fund investment products also offers tax saving plans. Generally income that is earned from Mutual funds is categorized under two heads dividend and capital gains. Given that the tax implications can have a significant impact on the return earned it is necessary to understand the tax for both these heads of income. Income earned through dividends is tax free in the hands of the investor. The tax on most occasions is actually paid by the Mutual Fund Company itself. Investors who fall in the highest tax bracket should opt for the dividend option in mutual fund schemes. Capital gains from mutual funds are of two types – short term (1-3year) and long term (more than 5 years). This classification is based upon the period of holding. If the investment is sold within a year 15 days from the date of purchase, any capital gain made would be treated as a short term nature. Hence the tax deducted will be normal. If the mutual fund investment is sold after a year from the date of purchase, any capital gain made during that period will be treated as a long-term capital gain. Here the tax that would be deducted will depend on how long the investment is kept after a year prior to getting it sold. The longer the fund is kept the lesser the tax to be paid.

A Good Fund that could be used to invest upon is the equity linked saving schemes fund (ELSS). They are strong favorites for investing as they provide tax concessions on investments and are also exempt from long term capital gains tax. Apart from ELSS schemes, diversified equity schemes are a good investment considering that capital gains in equity funds below one year are taxed at a rate of 10% and over a year are tax-free. This option can be best exercised using Growth Funds. The primary objective of Growth Funds is to provide investors long-term growth of the capital invested. Dividend paid in Dividend Plans is tax free, and no distribution tax is deducted. However, every time we buy or sell equity shares a Securities Transaction Tax, STT, of 0.25% is paid and further when you redeem your investment, again STT is deducted from your redemption price.

Tax Planning & saving options requires a through study of the market conditions, especially if you are trying to do it in a period of slump. Proper Asset Allocation, research and the advice of the Fund Manager will definitely help. Long term capital loss can be set off only against long term capital gains. Short term capital can be set off against any capital gains, whether short term or long term.

Mutual Fund Expenses - How They Diminish Your Returns

2010-07-29T10:44:00.000-07:00

An informed investor knows where his money is going. For an investor in mutual funds, it is essential to understand the expenses of mutual funds. These expenses directly influence the returns and cannot be neglected. The expenses of mutual funds are met from the capital invested in them. The ratio of the expenses associated with the operation of the mutual fund to the total assets of the fund is known as the “expense ratio.” It can vary from as low as 0.25% to 1.5%. In some actively managed funds it may be even 2%. The expense ratio is dependant on one more ratio – “the turnover ratio”.

“The turnover rate” or the turnover ratio of a fund is the percentage of the fund’s portfolio that changes annually. A fund that buys and sells stocks more frequently obviously has higher expenses and thus a higher expense ratio.

The mutual fund expenses have three components:

The Investment Advisory Fee or The Management Fee: This is the money that goes to pay the salaries of the fund managers and other employees of the mutual funds.

Administrative Costs Administrative costs are the costs associated with the daily activities of the fund. These include stationery costs, costs of maintaining customer help lines and so on.

12b-1 Distribution Fee: The 12b-1 fee is the cost associated with the advertising, marketing and distribution of the mutual fund. This fee is just an additional cost which brings no actual benefit to the investor. It is advisable that an investor avoids funds with high 12b-1 fees.

The law in US puts a limit of 1% of assets as the limit for 12b-1 fees. Also not more than 0.25% of the assets can be paid to brokers as 12b-1 fees.

It is important for the investor to watch the expense ratio of the funds that he has invested in. The expense ratio indicates the amount of money that the fund withdraws from the funds assets every year to meet its expenses. More the expenses of the fund, lower will be the returns to the investor.

However it is also essential to keep the performance of the funds in mind too. A fund may have higher expense ratio, but a better performance can more than compensate higher expenses. For example, a fund having expense ratio 2% and giving 15% returns is better than a fund having 0.5% expense ratio and giving 5% return.

Investors should note: It is not sensible to compare returns of funds in different risk classes. Returns of different classes of funds are dependant on the risks that the fund takes to achieve those returns. An equity fund always carries a greater risk than a debt fund. Similarly an index fund that invests only in relatively stable and thus less risky index stocks, cannot be compared with a fund that invests in small companies whose stocks are volatile and carry greater risk.

Avoiding funds with high expense ratio is a good idea for the new investor. The past performance of a fund may or may not be repeated, but expenses usually do not vary much and will certainly reduce returns in future too.

Mutual Fund Expenses

2010-07-29T02:46:00.000-07:00

An informed investor knows where his money is going. For an investor in mutual funds, it is essential to understand the expenses of mutual funds. These expenses directly influence the returns and cannot be neglected.

The expenses of mutual funds are met from the capital invested in them. The ratio of the expenses associated with the operation of the mutual fund to the total assets of the fund is known as the “expense ratio.” It can vary from as low as 0.25% to 1.5%. In some actively managed funds it may be even 2%. The expense ratio is dependant on one more ratio – “the turnover ratio”.

“The turnover rate” or the turnover ratio of a fund is the percentage of the fund’s portfolio that changes annually. A fund that buys and sells stocks more frequently obviously has higher expenses and thus a higher expense ratio.

The have three components:

The Investment Advisory Fee or The Management Fee: This is the money that goes to pay the salaries of the fund managers and other employees of the mutual funds.

Administrative Costs: Administrative costs are the costs associated with the daily activities of the fund. These include stationery costs, costs of maintaining customer help lines and so on.

12b-1 Distribution Fee: The 12b-1 fee is the cost associated with the advertising, marketing and distribution of the mutual fund. This fee is just an additional cost which brings no actual benefit to the investor. It is advisable that an investor avoids funds with high 12b-1 fees.

The law in US puts a limit of 1% of assets as the limit for 12b-1 fees. Also not more than 0.25% of the assets can be paid to brokers as 12b-1 fees.

It is important for the investor to watch the expense ratio of the funds that he has invested in. The expense ratio indicates the amount of money that the fund withdraws from the funds assets every year to meet its expenses. More the expenses of the fund, lower will be the returns to the investor.

However it is also essential to keep the performance of the funds in mind too. A fund may have higher expense ratio, but a better performance can more than compensate higher expenses. For example, a fund having expense ratio 2% and giving 15% returns is better than a fund having 0.5% expense ratio and giving 5% return.

Investors should note: It is not sensible to compare returns of funds in different risk classes. Returns of different classes of funds are dependant on the risks that the fund takes to achieve those returns. An equity fund always carries a greater risk than a debt fund. Similarly an index fund that invests only in relatively stable and thus less risky index stocks, cannot be compared with a fund that invests in small companies whose stocks are volatile and carry greater risk.

Avoiding funds with high expense ratio is a good idea for the new investor. The past performance of a fund may or may not be repeated, but expenses usually do not vary much and will certainly reduce returns in future too.

Get Reviews On Mutual Funds Stock And Investment Banker

2010-07-28T18:48:00.000-07:00

A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. Investing in mutual funds tends to lower the risk factor because they are the result of diverse investments. In order to get the most out of your returns, without paying a high fee, you need to be aware of the different classes of mutual fund stocks and their advantages and disadvantages. Mutual fund classes show the type of stocks covered under each mutual fund. The most common mutual fund classes are A, B, and C. Class A stocks attract lower 12b-1 fees and investing in such stocks makes you eligible to receive discounts. These types of stocks are considered the best to keep your investments for two or more years. Second type of mutual funds stock includes class B stocks which are characterized by their contingent deferred sales charge. Generally, they are suitable for the investors who have limited resources and are looking for long term investments. Small investors prefer these types of stocks because they are not required to pay front-end fees and the deferred sales charge keeps reducing.

Third type is class C stocks which are beneficial for those who are planning to redeem the stocks within a short span of time. This type of stocks is preferred sometimes as you don’t need to pay the front-end fees. However, there are some disadvantages of this type of stocks such as higher MER, zero discounts, lack of provision for automatic conversions and compulsory back-end load etc. Mutual fund companies often charge a higher fee when you opt to invest in high risk high return stocks. So, before investing in any type of stocks, be aware of all these factors. The analysis of the benefits and drawbacks of each class of stocks will help you to select the most appropriate investment option, based on your specific needs and preferences.

Investment Banking is one of the most competitive areas in the banking industry. Many investment banks seek to recruit candidates who are with top results from top universities or business schools. An investment banker has a wide scope for bright career in this field and you get best results in terms of handsome salaries. This is a responsible job, which needs hard work, long working hours, stamina, excellent analytical abilities, good communication skills, aptitude for numbers. Investment banking is composed of different sectors and selection of one of them depends on the interests and capabilities of an investment banker. One of them is corporate finance which includes debt and equity capital, appropriate capital structure, mergers and acquisitions etc. Second is Sales and Trading which needs fast thinking and decision making, good communication skills etc. In this sector, one has to inform the clients about the opinion of the bank on certain assets and markets. Additionally, employees working in the sales and trading department in investment bank need to have a complete understanding of the research produced by their company.

Third one is Research sector in which employees provide information to their clients about up-to-date reports on certain areas of interest. Analysts in the research department specialize in a specific business sector or area, thereby developing reports that can be safely distributed to clients. For entry level investment bankers, a position as a financial consultant is a good way to get board on-the-job training with an investment firm. Typically, entry level investment bankers have to work hard and spend long hours acquiring new clients. So, if you have a great amount of drive, determination and stamina, a career in investment banking could prove to be very lucrative, exciting and rewarding.

Mutual Funds: Good Choice for New Investors

2010-07-28T10:50:00.000-07:00

If you have been thinking about starting an investment portfolio, but feel overwhelmed by the amount of information you would need to make good decisions, there’s still hope for you. Mutual funds are a good way for a beginner with very little experience or limited funds to get started with investing in the stock market. Here are some of the advantages inherent in mutual funds.

One big advantage is that they can be a low cost way to manage risk, because there is at least minimal diversification present due to the variety of stocks included in the fund. However, you still may need to purchase shares in more than one fund to thoroughly diversify your investments. Some mutual funds only hold stocks in one industry (for instance, pharmaceuticals or energy). Even though the fund would allow you to diversify across that sector by owning shares in several different companies within it, you would not be truly diversified across the market. In that case, a good strategy might be to invest in another mutual fund that is expressly designed to diversify its holdings across several business sectors.

The reason for doing this, of course, is so that you don’t lose all of your money if one sector takes a downward turn. For instance, look at recent occurrences in the residential real estate industry. The downturn in residential mortgage lending affected new home construction as well. So if you owned shares in a mutual fund that was heavily invested in the residential real estate sector, you would be hard hit by the downturn.

If you have limited funds for investing, mutual fund shares can usually be purchased in relatively small dollar amounts, and in even increments. That means you may be able to buy as little as $100 worth of shares. With stocks, you would have to buy in increments of whatever the market price is. That means if the shares were currently trading at $171 per share, you would have to buy them in $171 increments. So if you had $200 available to invest, you could only buy one share.

If you have limited knowledge of the stock market and little or no experience, mutual funds offer the advantage of being professionally managed. That means the manager researches each stock that comprises the fund, so that you don’t have to. However, you still need to do your own research of the mutual fund. You also need to research the track record and experience of the fund manager. But that is substantially less research on your part than it would be if you had to research several dozens of stocks.

How a Mutual Fund Works

2010-07-28T02:52:00.000-07:00

I receive a lot of investing questions, and many of them have to do with mutual funds.

Mutual funds are not supposed to be confusing, but many so-called financial experts have confused us as consumers. A mutual fund is just what it sounds like… a fund that is funded mutually by many people.

A mutual fund usually has a team of managers that buy and sell stocks. The money they use comes from thousands and thousands of people who invest anywhere from $250 and up usually.

When you buy a mutual fund, you are giving your money to a specific team of managers who use it to do what is best for the fund. If you invest in Large Growth, you’re generally investing in big companies that are growing. If you invest in an International fund, you’re investing in stocks and bonds from overseas.

Many times a mutual fund can be as easy as that. Financial experts sometimes have a knack for overcomplicating things and that is where confusion enters the picture.

If you’re interested in learning more about mutual funds, check out the Morningstar Investing Classroom.

Evergreen Mutual Funds Offer Solid Background

2010-07-27T18:54:00.000-07:00

There are a number of companies that handle investment for clients both large and small. Evergreen Mutual Funds is one such company. Falling into the mid- to large-size range as far as investment companies are concerned, this company provides its customers with a solid background and a proven track record.

Founded more than 70 years ago, Evergreen is anything but a new comer on the investment scene. This is a selling point with a lot of individuals who view a company’s stability as key for proving ability to successfully manage money.

For those in the market to purchase mutual funds, Evergreen is typically considered a very solid choice. Mutual funds, for those that don’t know, are open-ended funds that aren’t listed for trading on stock exchanges. There are issued by companies that use their money to invest in other companies. The funds sell their own shares to investors and buy back their shares on redemption. This means capitalization is not fixed and shares can be issued as people seek them out.

Mutual funds are very common investment tools for those who want to make money over the short- and long-term. They can match a number of different investment styles and are also used quite regularly in creating retirement funding accounts. Both individuals and corporations are known to invest in mutual funds.

For Evergreen’s part, mutual fund investments have become a backbone of business. The company’s name is meant to inspire a confidence. Evergreen of course translates in some circles as that which is meant to last and remain beautiful.

The Evergreen company is considered one of the top 30 largest asset management companies in the country and it is in the top 20 largest mutual fund families. It boasts more than 334 investment pros on its payroll and has nearly $250 billion in assets under management for individuals and institutions.

The company caters to both private investors and companies that make investments. During the course of its 70 some odd years in business, Evergreen has served more than four million clients. Its calling card is the ability to work with many different types of investors and investments to assist in solid asset management.

With over 4 million individual and institutional investors and a history of innovation spanning more than 70 years, Evergreen Investments offers the strength that comes with experience. This is one of the top things investors consider when choosing what mutual funds to buy into and which ones to avoid.

Evergreen is also an industry leader, having garnered numerous awards for its ability to handle clients’ money wisely. It prides itself on being able to handle a number of different investment styles for different types of clients and tries to meet or beat its clients’ expectations when it comes to returns.

Evergreen has locations in several states, but is available for investors all over the country and beyond. Its headquarters are located in Boston and Charlotte.

When it comes to making mutual fund investments quality service is key in getting good returns. Companies such as Evergreen have made a name for themselves in providing good service and good results for decades.

Reasons to Fire Your Mutual Fund Company - Tax Inefficiency

2010-07-27T10:56:00.000-07:00

Mutual fund investors who hold their funds in a retirement account are not affected by this aspect, since income is tax-deferred in most cases. However, if you hold mutual funds in a taxable account, which includes a substantial portion of retirees, you will be doubly surprised this year. First, you will be hit with a tax bill whether or not you sold your fund during the year. To add insult to injury, you may be responsible for a large capital gains bill despite your fund being an overall loser for the year. Second — and few people know about this one yet — the expiration of three year tax loss carryforwards, means that your bill be larger this year than it’s been in the last five. Why? The losses sustained during the bear market of 2000-2002 enabled funds to offset gains in subsequent years. That expires this year. Lipper estimates that the average capital gains distribution is going to increase 50 percent this year (see Boston Globe).

How Did We Get Here?

Whether you are an individual or an organization, the IRS wants its cut of any income from capital gains and dividends. Mutual funds are not excluded. So, when your mutual fund manager sells positions for what you hope is a gain, that gain is taxable, regardless of whether there are offsetting losses. The same is true when a stockholding pays a dividend. For organizations that pass through these gains to the shareholders, the gains are taxable at the individual’s tax rate instead of the corporate tax rate. It is prudent to pass through these gains, since a large percentage of shareholdings are in non-taxable accounts, and few individuals that are in taxable accounts are in a higher bracket than the corporate rate.

You can’t fault the funds for choosing to pass through the gains. However, you can fault them for high turnover in their portfolios. In 25 years, funds have gone from an average turnover of 8 years (meaning that fifteen percent of their holdings are bought and sold in a year) to today’s average turnover of 100 percent. This means that in every year, all stocks are bought and sold. Some of the most egregious offenders turn over their portfolio five times in a year. The mutual fund industry has transitioned from buy-and-hold stewards of corporate America to being short-term, rent-a-stock traders in that time. Although evidence is unclear about why this has happened, the pessimist in me believes that it is because of soft dollar arrangements resulting in an incentive to trade frequently.

Why Should I Care?

High management and expense fees have already made it difficult to outperform their benchmarks consistently. Now, if you take into account that you will have to pay a larger bill to the tax man, that just means your performance suffers even more. If you lose one percent per year to taxes, that amounts to serious money over time. Over a 30 year saving period, this difference amounts to more than 25 percent of your ending net worth. Considering that this could make the difference between you running out of money before you die, it is not to be ignored.

What You Can Do About It

Index funds do not have high turnover. The only turnover they have is periodic rebalancing when their benchmark indexes change. This makes them more tax efficient.

An even better option is to engage First Sustainable to create a so-called Folio. This combines the technology available to a mutual fund to enable you to create your own diversified, asset-allocated mutual fund. You can buy fractional shares of individual stocks. This way, your only tax bill comes when you also do periodic rebalancing to suit your financial situation. To me, this is way more acceptable than swallowing a bill that was based on some conflicted manager’s financial situation.

Understanding Mutual Funds and Unit Trusts

2010-07-27T02:58:00.000-07:00

the purchases over a period of time. A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it on their behalf. The mutual fund will have a fund manager that trades the pooled money on a regular basis. The term mutual funds is used in the United States and Canada. In the UK, Ireland, Australia and some other countries they are known as unit trusts. For our purposes mutual funds and unit trusts have been to mean virtually the same thing, but note there are some differences, which should be checked at the time of any purchase. Trusts and OEICs provide a mechanism of investing in a broad selection of shares, thus reducing the risks of investing in individual shares. There are thousands of Unit Trusts and hundreds of OEICs to choose from, so it is important to select the right fund to meet your needs. Unit trusts are open-ended; the fund is equitably divided into units which vary in price in direct proportion to the variation in value of the fund’s net asset value. Each time money is invested new units are created to match the prevailing unit buying price; each time units are redeemed the assets sold match the prevailing unit selling price. Each Unit Trust has its own investment objective and the fund manager has to invest to achieve this objective. The fund manager will invest the money on behalf of the unit holders (or shareholders). The value of your investment will vary according to the total value of the fund. The trust manager makes a profit in the difference between the purchase price of the unit or offer price and the sale value of units or the bid price. This difference is known as the bid

Here is a Quick Way to Select Successful Mutual Funds

2010-07-26T19:00:00.000-07:00

Many investors look only at the track record when choosing a mutual fund. This is a big mistake. The warning that all investment companies give – “past results are not guarantee for further profits” – is there for a reason. Past performance is only one factor that you should consider when selecting a mutual fund.

If you want to pick a really successful fund, you should evaluate a combination of several criterias.

Here is a quick suggestion:

1. Past results. Of course! It’s not the only factor, but remains one of the most important factors. The higher the average yearly results are, the better – if you are ready to accept the higher risks.

2. Longivity. Since how long is this mutual fund in the market? You may think the longer is the better. Generally yes, because it means lower risk. But if you are looking for more aggressive opportunities, consider investing in younger mutual funds.

3. Size. The companies who manage large investment amounts are less liquid. Such funds are usually safer, but can’t offer too high returns. In case of market crash, such funds are unable to cash out fast enough because of the size of their positions. Generally I prefer smaller funds, because they give more opportunities.

4. Company reputation. What do websites, magazines, newsletters and independent advisers say about the company offering the fund? If most people are happy or unhappy, they probably have good reasons for that.

5. Market segment. Is the fund investing in regions with emergning ecomony? If it is specialized in certain industry, what’s the future of that industry? Mutual funds are long term investment – so thing long term when evaluating them.

There are hundreds of factors one should consider when picking a mutual fund. That’s why there are so many companies who provide mutual funds evaluation and even charge for that. But in most cases, considering the five factors listed above can help you enough to achieve good results.

Mutual Funds: Low Risk Yet High Return

2010-07-26T11:02:00.000-07:00

Why do we invest money in a particular busines? It is a question that you should answer first before you start any kind of business. Succesful investors always remember to include every detail on their planning activities– and they have answered every vital question that they should address first.

You invest money for profit. Thus, you need to consider investments that can give you a high return. You might consider gambling your capital in a stock market, where every cent can be doubled or tripled, depending on market conditions. Since stocks could be easily acquired and sold, it is one of the viable options that you may consider in choosing an investment portfolio.

However, a high return may also come with high risk. Do you remember the unwritten rule “high risk yet high return” and “low risk yet low return”? It is true that investing in the stock market may give you a huge profit, but expect your capital to be at a high risk. Unstable market conditions might cause you to lose all of your money.

If you do not like taking high risks, the stock market is not an ideal investment for you. You may look for an alternative that could give you the same return but with lower risk than investing in stocks. If you are under this category of investors, then you might consider investing in mutual funds.

Mutual funds are a good alternative for investors who do not want to take the risk when getting a huge profit. It is a “common fund” or amount of money pooled by a group of investors with a definite investment objective. Such pooled money would be managed by a fund manager, an individual who specializes in different types of investments, such as bonds and stocks. He would be the one responsible in managing and investing the pooled money in different securities.

In mutual funds, all profits and losses will be shared among the fund’s shareholders. In other words, all profits as well as losses will be shared among the group according to the percentage of individual share in the fund. For instance, if you are a group of five investors, investing $20,000 each, making your mutual fund to be worth a hundred thousand dollars. All profits as well as losses would be distributed on a 20-percent basis, thus reducing all possible risks.

Aside from the low-risk feature of mutual funds, you need not to be an expert in stocks or other forms of securities. The fund manager would be the one to take care of it. In addition, you can diversify your capital and spread it to other types of investment. Diversification means spreading all of your money into several investments. In case one investment is down, there are other investments that you can concentrate with. Thus, you will not be losing all of your money in a single investment as well as maximizing your potential profit through other types of investments.

The mutual funds will automatically diverse your investment across bonds or other securities. Again, the fund manager would be the one to handle all transactions and determine if it is viable for you to invest on that particular security.

Form a pool of investors and combine all of your capital into a single mutual fund. Share the huge profits out of diversified investments as well as enjoy the reduced-risk feature that comes along with it.

Us Mutual Funds Migrating Overseas

2010-07-26T03:04:00.000-07:00

US large-cap mutual fund managers lift foreign equity holdings above 8% The never-ending quest for better returns has led portfolio managers of US large-cap mutual funds to boost their exposure to non-US stocks. We analyzed $780 billion of equity holdings of 90 mutual funds in the Lipper Large-cap Core, Growth, and Value benchmark indices. Foreign stock holdings of large-cap Growth mutual funds range between 0% and 19%. US mutual fund portfolio managers buy European, but avoid Asian stocks On a combined basis stocks in Japan and Asia Ex-Japan account for less than 1% of total equity assets of the average US large-cap mutual fund. A majority of foreign holdings of US large-cap mutual funds is in Europe and North America (Ex-US, Bermuda, Cayman Islands). Foreign stocks enhanced returns in 2005 but not in 2006 A positive correlation existed in 2005 between US large-cap core mutual fund returns and the percentage of foreign equity investments in a portfolio. This correlation broke down in 2006. Invest in 30 stocks with the largest upside to Goldman Sachs Price Targets We identify 10 stocks in each region with upside return to our target prices averaging 30.

The Goldman Sachs Group, Inc. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Customers of The Goldman Sachs Group, Inc. in the United States can receive independent, third- party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at http://www.independentresearch.gs.com or can call 1-866-727-7000 to request a copyof this research. For Reg AC certification, see page 8. For other important disclosures, see page 11, go to http://www.gs.com/research/hedge.html, or contact your investment representative.

How to Find Value in No Load Mutual Fund Investing

2010-07-25T19:06:00.000-07:00

What are you thinking when it comes to your no load mutual fund selections? Are you saving pennies and sacrificing dollars?

Are you spending your time looking at expense ratios, analyzing Morningstar ratings and searching for funds with low fees and no 12b1 charges? If you are like most people, you know these things in and out. You’ve spent hours evaluating them, and your chosen mutual funds cost little to purchase and maintain. But they still don’t perform to your hopes and expectations.

So, why is this happening? Because this kind of investing focuses on cost as opposed to value.

Investors with this philosophy have usually interviewed numerous advisors. But instead of trying to find someone suitable with a sensible approach, they only want to know who has the lowest fees. That’s like going to the cheapest auto repair shop and getting the best price, but your car still doesn’t run well.

Then there are the investors who call or email me wanting a recommendation on a no load mutual fund. They want one with no 12b1 charge, but they completely ignore the issue of how the fund might perform.

Both these kinds of investors spend their time trying to save pennies and in the process they are losing dollars. Instead of falling into the penny wise, dollar foolish trap, here are some ideas that will assist you in evaluating the end profit rather than just the short term saving.

1. Shift your focus from penny pinching to looking at the big picture: What can a mutual fund or an advisor do for you, not how much does it cost? Why? If you buy a given no load mutual fund at the right time and it gains a tidy 15% for you over a 6 week period, would you really care about the costs? If a mutual fund

What are the Advantages of Structured Settlement Mutual Funds?

2010-07-25T11:08:00.000-07:00

When you have been awarded a settlement due to arbitration or through the order of a judge as a result of a lawsuit, one of the options open for receiving the award is by accepting structured mutual funds. But is this really a smart way to go? The fact is that it can be an ideal way of getting the most from the settlement. Here are a couple of reasons why.
Mutual funds are considered to be relatively safe in most markets. That is not to say that there is no risk involved whatsoever. However, the potential to realize more income from your settlement if it is invested in a mutual fund account is very real. When your situation is such that you do not need the settlement money to handle medical bills or provide revenue to fund home care, it is a very wise move to invest the money in something promises a higher yield than just a standard savings account. If you can manage without having to rely on payments from your settlement to take care of ongoing expenses, this can be a great way to build a nest egg for your later years.
A second advantage to structured settlement mutual funds is that you have some leeway to move the funds around as you experience life changes. This is not true when you are working with a fixed annuity program. There is no way to go back and make any type of changes in your payment structure. If you anticipate some life changes down the road, or even if you don’t but would like to make some changes in the payment disbursements at some point just because you want to, then mutual funds might be the smarter move for you.
Structured Settlement mutual funds are not right for everyone. It is important that you take a long hard look at this option before you agree to anything. To some degree, this means you will need to conduct some research before any firm decision is made. Do not be afraid to ask questions. The goal is to make sure you have what you need to live an equitable quality of life both now and in the future. If you need the money to make that happen now, then by all means set up the payments accordingly. But if you do not have to depend on the payments to meet ongoing expenses, then investing for the future is a smart idea.

Reasons To Fire Your Mutual Fund Company: 12b-1 Fees

2010-07-25T03:10:00.000-07:00

The 12b-1 fee is the obscurely-named outrage that dings investors in mutual funds so that management can market the fund. In 1980, the mutual fund industry successfully lobbied the SEC to allow this fee with the justification that a larger fund lowers the expenses for everybody. In theory, the logic is right when you take into account the same expenses being spread over a larger pool of assets. However, there are several problems with this thinking:

1) A larger fund does not necessarily become easier to manage. Over the last 25 years, multi-billion dollar mutual funds have become the norm. When I worked for Fidelity in the early 1990′s, the largest fund in the world at the time, the famous Fidelity Magellan, was around $25 billion. Even then, concerns had set in that it had become too large to outperform the market. Since then, Magellan’s size has been a deterrent. Like a large barge, meaningful changes in its trajectory take too long to implement. Of the funds with in excess of $5 billion, most of them track the S&P 500 minus their outsize fees because that is all they can do. Yet, even these large funds continue to charge the 12b-1 fee.

2) Certainly, if a fund is closed to new investors (which makes the fund easier to manage), the existing shareholders should be relieved of the 12b-1 fee. But, as of November 2003, when the House introduced HR 2420, 139 closed funds still levied the fee. The funds are charging a marketing expense for funds that no longer accept new investors. Huh? Like crack cocaine, fund management firms just became addicted to the stream of poorly disclosed fund fees.

3) A fund is able to call itself “no load” as long as the 12b-1 fee is 25 basis points (.25%) or lower, although many funds charge the max-allowable 100 basis points.

In practice, the 12b-1 fee is partially shared with advisers who tout the funds, and the rest is gravy to the fund firm. They do not disclose this fee as part of their management fee, and even obscure the fee in their overall expense ratio.

Two thirds of mutual funds charge this fee, and I would bet that few investors know about it. HR 2420, introduced by congressman Mike Castle of Delaware, sought to ban this fee for closed funds only, and even that was stalled in the Senate, despite broad bi-partisan support and backing from the white house.

No Load Mutual Funds: Investment Hype Vs. Investment Help

2010-07-24T19:12:00.000-07:00

With the internet such a huge part of our daily lives, many investors have access to a wide range of instant investment information.

Whether you’re into stocks, bonds, mutual funds, futures or options, there are tons of electronic investment newsletters offering to turn your small stake into a giant fortune. All you need to do is subscribe and watch your portfolio soar.

Yeah, right!

As a practicing investment advisor specializing in no load mutual funds, I have received my share of e-mails from disillusioned subscribers wanting to know how to better evaluate newsletter services.

While there are no absolutes, I can give you a few pointers that might help you make a better decision:

1. Stay away from the most obvious hype. Ads promising to turn your $10,000 into $1 million in 2 years by buying this incredible stock or hot commodity are not promoting investing

Investing in Mutual Funds Online

2010-07-24T11:14:00.000-07:00

Are you thinking of investing some money? There are thousands of different mutual funds that you can start investing your money in, but the question is how do you pick the best one to fit what you are looking for? Or maybe you’re wondering if is the right thing for you to do.

When you are setting up an account over the internet with your online broker, you must first meet three important requirements. Your computer must be able to connect to the internet, your web browser must be at least 128-bit compatible such as Netscape 3.0 or Internet Explorer 3.0 or higher, and you must have at least a small amount of money if not more to start. Some online brokers require that you have as much as $1,000 or the equivalent in securities to open an account.

When investing in mutual funds, you should check around for different accounts that may be available. Some require you to place cash up front and others may not require any cash to open the account. You should do an extensive detailed search to find an account that fits your needs as well as your bank account. Your best research tool is the World Wide Web and it is right at your finger tips 24 hours a day, seven days a week.

are always subject fees and this can be a tricky subject. Brokers charge fees and these can widely differ depending on the broker you choose to go with. Always read the fine print with anything dealing with money exchanging hands. There could be hidden fees or fees for changing funds that are within the same fund family. Some brokers don’t charge any fees and these may be the ones you should look into. There are websites like http://www.globefund.com that can provide you with daily, monthly and historical mutual fund data. You can also view the performance charts of a particular fund and compare funds against each other. This is an easy way to find the one that is best for you.

How to Maximize your 401k Mutual Fund Returns

2010-07-24T03:16:00.000-07:00

phoned and asked if I could help him with his 401k. Jack works for a large company as Senior VP of lending and is financially pretty astute. However, when it came to his 401k mutual fund decisions, he had repeatedly made the same mistake most people were making. As a result, he saw his account drop in value substantially.

At the time we were in the midst of the 2000 bear market, which showed no sign of letting up. Jack had purchased into a Lifestyle fund because someone recommended it. By the time he finally bailed out, it cost him dearly. However, he continued to make the same mistake by reinvesting.

He checked with the 401k representative and subsequently switched to a variety of mutual funds ranging from World Stock to Domestic Hybrids, Large and Small Value as well as Growth. But nothing worked and his portfolio value headed further south.

By the time we met to discuss his 401k Jack was pretty disgusted by the canned advice he had received and the continued losses he was sustaining.

Jack knew that I had pretty much eluded the bear market of 2000 by having sold all of my clients’ positions on 10/13/2000. We were safely in our money market accounts weathering out the storm (see my article “How we eluded the bear in 2000.”

Thinking about this, Jack could only shake his head because at no point in the market slide had he ever been given what I believe was the right advice. That is, no one suggested that, since we were in a bear market, he might want to step aside and remain in the safety of his money market account. So he stayed invested, hoping against the evidence all around him to find something that was not crashing. That was his mistake, and one shared by many.

The advice that he consistently and continually received was that the market was close to a bottom, stocks

Reasons to Fire Your Mutual Fund Company - Enablers of Poor Corporate Governance

2010-07-23T19:18:00.000-07:00

An entire book could be written about the happy conspiracy between corporate managers and the investment community that pads both pockets at the expense of the everyday shareholder. In fact, one has been written. You should check out “The Battle for the Soul of American Capitalism” by John Bogle, the founder of the Vanguard Group. Bogle has been one of the few mutual fund industry luminaries that publicly decry the abuse taking place. It is an easy read. Check it out. Many of my top ten reasons are touched on in this book.

Over fifty percent of corporate America is owned by the top 100 financial fiduciaries. One would think that this alone would make them the most vigilant voices in the boardroom. In fact, few mutual funds demand accountability from management, and in many of the most egregious cases, they are guilty of downright aiding and abetting the fudging of numbers and the looting of otherwise good corporations. Why? Two glaring conflicts of interest prevent the industry from becoming the activists that they should become.

First, every company is a potential client for 401k and pension administration. Over half of invest-able assets are in defined contribution plans (401k, 403b, etc) or defined benefit plans (pensions). Company management gets to decide who handles these assets on behalf of their employees. Corporate managers who take a dim view of shareholder activism (and who does, except those that are abusing shareholders?) are unlikely to award this business to institutions who meddle too much. Management wants shareholders to blindly follow the recommendations of management. Shareholders who file corporate resolutions and offer up competing board slates are not likely to get a piece of the company’s investment assets.

The second conflict is similar to the first. So many of the mutual fund industry’s parent companies also have operations in investment banking. They are reluctant to raise hay because offending their management clients may result in their firms being left out in the cold when it comes to investment banking deals.

This is really a shame. Mutual funds have the expertise, the resources, and the position to demand accountability from management. Instead, management has used the diffusion of corporate ownership to increase their pay, fudge the numbers, cut sweetheart deals, etc. Bogle calls this a transition from “owners’ capitalism” to “managers’ capitalism”.

Investing In Bonds and Bond Mutual Funds Can Be A Good Deal.

2010-07-23T11:20:00.000-07:00

Most people think of investing in Bonds as being a dry subject, and to a degree, they are right. However, boring can sometimes be a good thing, especially when it comes to investments. Too much “excitement” in your portfolio can lead to undue stress, so a diet rich in bonds and bond mutual funds can help smooth out the rough edges in a portfolio made up mostly of common stocks.

Bonds are generally considered to be less risky than stocks, but they are not without peril in their own right. The risk in a bond is directly related to the issuing company, and the type of debt instrument. Depending on the type of debt issued, and what underlying assets are involved, certain bond investments can be as risky or more risky than investing in stocks. But there’s good news: with a higher risk generally comes a greater return.

Bonds tend to be less flexible to trade than common shares, so most individual investors will end up investing a a bond mutual fund. This has many advantages for the beginning investor, not the least of which is that she can rely on the investment experience of a firm that specializes in analyzing the companies, and their capability of repaying their notes.

The biggest risk associated with bonds is referred to as the interest rate risk. This term refers to changes in the market interest rates, which have a direct bearing on bond returns. Fixed-income securities, in general, move inversely with the changes in interest rates. What this means is that during a period of rising interest rates, like the current climate in the
U.S. in 2006, people holding bonds will end up seeing declining bond returns. This will affect long-term issues the most.

In fact, the longer the time to maturity, the greater the risk of interest rate erosion becomes. For this reason, careful pruning of a bond portfolio becomes of greatest interest to the fund manager. One technique bond mutual funds use is staggering maturity dates so that they have less risk based on any one scenario. The great size of the funds allow them to do this easily and quickly.

The biggest risk for any bond holder is the risk that the company will default before making its’ scheduled payments. This is directly related to how credit worthy the company is, and their capacity and will to repay their debts. Companies with lower credit ratings have to pay higher interest rates, just like consumers in the same boat. The worse the credit, the higher the interest rates to bond holders have to be in order to attract investment dollars. Companies with excellent credit ratings pay a much lower cost for capital, which is one of the reasons they have superior credit in the first place!

Whenever considering an investment in a bond, make sure first and foremost that the company has an excellent rating from Standard and Poors or Moody’s. This will ensure they have the capacity to pay back your loan to them over the entire duration of the bond contract.

How (not) to Buy Mutual Funds

2010-07-23T03:22:00.000-07:00

When it comes to mutual funds, there is a lot more to success than just finding a good one. Sad investment stories like the following are all too common. I hope my sharing it with you will help you avoid making the same devastating financial mistake one of my former clients made.

This story begins during the height of the investment madness in 2000, just prior to the bear market. I had been managing an IRA account for “Bob” for around six years, with a better than average record of success. So I was surprised when Bob sheepishly called in July, 2000 to let me know he was transferring his IRA account, which had done particularly well during our latest Buy cycle going into the year 2000.

However, his tax preparer, a long time personal friend of Bob’s wife’s, was now also offering investment services, having recently received his Registered Representative’s license.

Fast forward to the end of September. It had become increasingly clear to me that the Bull market had run its course. So, in accordance with the Sell signal from our trend tracking methodology, we sold all of our mutual fund positions on October 13, 2000 and went 100% into money market. (See my article

Reasons to Fire Your Mutual Fund Company - Fresh out of High School

2010-07-22T19:24:00.001-07:00

The fudging of expertise is appalling in our business. Believe me, I know. I am 35 years old now, and have been in the financial services business 13 years now. When I was 22, fresh out of the University of Texas with a History degree, my first job was with Fidelity Investments as a mutual fund adviser. I passed the Series 6 exam in a matter of days. After a few weeks of training, most of which was listening to one of the more tenured reps (by “tenured”, I mean someone with six months experience), I was on the phone taking calls from all over the country, advising people on how to take care of their financial future. If you had called an 800 number on a prospectus or an advertisement, you would have been speaking with someone like me. Dozens of reps like me fielded calls, and not one of them had more than three years experience. I, myself, only lasted a year and a half in that job. Call center work has a way of burning you out.

In the 1990′s, Fidelity was undergoing rapid growth, and they could not keep the place staffed. They had planned on staffing to a level where no more than five customers were holding at any given time. Shortly after I arrived, we were constantly on “red alert”, which meant that 30 people or more were holding all the time. So, they relaxed their hiring requirements. They had previously insisted on a college degree for their newly hired reps. Soon, I was sitting next to pimply-faced 18-year-olds who had been in a high school classroom only a few months prior. Looking back on it, who was I to feel so superior? It’s not like I learned how to plan someone’s financial future in my “Western Culture, 1865-present” seminar at UT.

Think about that, though. Customers were entrusting their retirement plans to kids. If you go to Fidelity, Schwab, E