Advantages of Mutual Funds

Advantages of Mutual Funds

A Mutual Fund can be defined as a trust wherein the savings of the investors with the same financial goal are pooled in. The collected money then goes for investment in capital market instruments. These can include debentures, shares and other such securities. These investments in turn yield an income. The income and capital appreciation are distributed amongst its unit holders. The advantages of mutual funds are many. Some of the advantages of mutual funds in India are listed below:

Mutual Funds Advantages

There are several advantages of investing in a Mutual Fund and that is why more and more people are taking to it. Some of the major benefits of mutual funds in India are as follows:

• Diversification: The top Indian mutual funds create their portfolio designs in such a manner that the interested individuals who invest in mutual funds react differently even under similar economic conditions. This can be explained with an example. An increase in the rates of interest may lead to the diminishing of the asset value of securities in the portfolios. Again, an increase in the value may result to the appreciation in value of the other set of portfolio securities. Over time, a balance is created in the portfolio which leads to an overall increase of the portfolio, even if some security values diminish.
• Professional Management: A majority of the mutual funds in India employ the leading professionals in their investments management. These managers make decisions on what securities, the buying and selling of the funds will take place.
• Regulatory oversight: There are certain rules and regulations framed by the government which every Mutual fund are required to follow. This is to protect the investors from any fraudulent activities.
• Liquidity: Getting your money out from the mutual fund is no difficult task. All you have to do is just write a check, make a telephone call and you are done.
• Convenience: Mutual fund shares can be bought via phone, mail, or even over Internet.
• Low cost: The expenses of the Mutual fund seldom cross the 1.5 % mark of the investment you make. The Index Funds expenses are usually lesser. Instead, the company stocks are bought by them which are found on the specific index.
• Ease of process: Investing in a mutual fund is easy if you are a bank account holder and you posses a PAN card. All you will need to do is fill up the application form, attach the PAN card (for transactions over Rs 50,000), sign the cheque and your Mutual Fund investment is complete.
• Well regulated: The SEBI (Securities Exchange Board of India) regulates the India mutual funds for the security and convenience of the investors. SEBI ensures that a transparency is maintained by keeping a strict vigilance on the mutual funds. This keeps the investor informed and helps him/her to make his/her choice. To keep a track whether the investment in Mutual Fund is in line with the objective or not, SEBI demands the disclosure of portfolios once in every six months

Article Source:http://mutualfunds.headlinesindia.com/advantages.html

Read more...

Mutual Funds Information

Mutual Funds Information

In our current economic situation, it’s becoming more important to diversify our investments in order to reduce risks. The old adage, “Don’t put all your eggs in one basket” is especially true in that you risk losing everything if you pour all your money into a particular stock or investment.

Mutual funds are becoming an extremely popular vehicle for investments as it offers diversification, liquidity, professional management and simplicity. Here are essential mutual funds information to get you started.

Definition of Mutual Funds

There is often considerable confusion about what exactly mutual funds are and how they work. In simplistic terms, mutual funds are professionally managed funds pooled by various investors which are then invested into stocks, bonds and other assets. Each investor holds shares of the mutual fund which entitles the investor a percentage of the fund.

You can earn income with mutual funds from dividends on stock or interest on bonds. In addition, if the fund sells a security and makes a capital gain then the profit is typically distributed amongst the investors. You can also sell shares of the mutual fund for more than you bought it for thus leaving you with a profit. In addition, there are also several different types of mutual funds depending on your investment level. Mutual funds information is essential if you want to become a successful investor.

Top Reasons to Invest in a Mutual Fund

1. Selection – There are literally thousands of mutual funds that you can select that range from funds that invest only into energy stocks or those that invest in global stocks so you’ll be sure to find something that suits your investment needs and risk levels.

2. Ability to start small – Depending on the mutual fund you choose, you can opt to start with a small investment. Most mutual funds will allow you to invest with less than $1,000 and some will even let you start with as little as $50 if you set it up for automatic deposits.

3. Professional management – Mutual funds are typically managed by professional advisors who earn their salaries through commission and yearly fees. Before investing in a fund however, it’s a good idea to do thorough research into the board of advisors and how they allocate the funds.

4. Diversification – One of the advantages of investing in a mutual fund is that they consist of different assets, thereby reducing your risks. But if one particular stock goes down, it is very well possible for the mutual fund to still be going up if the other investments go up.

5. Specialization – Due to the immense number of mutual funds, there are funds that invest in a very particular number of companies ranging from different industries. For example, there are funds that invest only in global funds or stocks from energy companies.

Mutual funds information is essential for any serious investor. Mutual funds are an excellent investment vehicle and should be part of your portfolio if they aren’t already. While there are many benefits to investing in a mutual fund, it’s important that you do thorough research into the fund and its financial advisors. Gathering as much mutual funds information is vital to your success as your picks will determine how well you do.
Article Source:http://topmutualfundsonline.com/

Read more...

Best Mutual Funds

Best Mutual Funds
For those who do not have an in depth knowledge of stocks but would like to start investing, finding the best mutual funds are a great way to get started as they allow you to diversify your investment and thereby reduce your risk. Some of the best mutual funds are typically managed by a financial advisory board that use funds pooled from a group of investors to invest in short term investments like stocks, bonds or securities depending on which fund you choose.

For those who do not have an in depth knowledge of stocks but would like to start investing, finding the best mutual funds are a great way to get started as they allow you to diversify your investment and thereby reduce your risk. Some of the best mutual funds are typically managed by a financial advisory board that use funds pooled from a group of investors to invest in short term investments like stocks, bonds or securities depending on which fund you choose.

While you want to be able to find the best mutual funds to invest your money in, what may have been the best in previous years may not be so today. It’s also important to keep up with current trends and to thoroughly do your research behind each company and its board of advisors. If possible, consult a financial advisor for further mutual fund advice and how to invest.

When choosing the best mutual funds, be sure that it has income-dividend potential. Choosing the right mutual funds can provide you with a steady cash flow either through dividends or bond interest payments.

Another factor to consider is to find funds that have the potential to perform well in future years to come. This entails being able to effectively identify trends. One trend that has seen explosive growth in recent years is the movement towards being green and eco-friendly. Here are five of the best mutual funds for 2009 based on the research of performance, stability and income potential.

1. American Century High Yield Fund (AHYVX)

With the current economic crisis, one of the best ways to make money is to find mutual funds with a stated income. This includes those with high dividend yield and bond interest payments. The American Century High Yield Fund has a much larger dividend yield than most typical mutual funds or stocks.

2. Franklin Gold & Precious Metals (FKRCX)

The FKRCX mutual fund has been one of the top performances with a 10-year return on investment of 14.42% with a dividend yield of 8.34%. Gold has been a fairly stable investment for investors.

3. The New Alternatives Fund (NALFX)

This mutual fund has investments in renewable energy sources that are also concerned with environmental production and energy conservation. Over the next couple of years, energy stocks are likely to see explosive growth as our country moves towards a greener friendly environment.

4. Vanguard Energy Fund (VGENX)

Although prices of energy commodities have reached its peak in earlier years, oil prices are likely to raise again. The VGENX fund has seen a 10-year annualized return of 14.81%. This is exactly the kind of mutual that is positioned to perform well.

5. ING Corporate Leaders Trust Fund (LEXCX)

Though this fund has had a poor annualized return due to the recent stock market downturn, this mutual fund has consistently outperformed the S&P500 by 10% over the past year. In addition, it also has a divided yield of 2.46%.

Keep in mind that these mutual fund picks are only recommendations. It is important that you always do your research first into which fund is the best investment for your situation and why. While these may be good choices now, they may not be great investment choices in later years. Prior to investing, it is essential to gather as much mutual funds information as possible.
Article Source:http://topmutualfundsonline.com/best-mutual-funds/

Read more...

Understanding Mutual Funds

Understanding Mutual Funds
Before you can successfully invest in mutual funds, you need to understand what they are and how they work. Let’s take a look at the basics so you can learn what will make a difference in your portfolio’s performance and what won’t. We’ll start from the beginning—what is a mutual fund?

Mutual Fund

A mutual fund, according to the Securities and Exchange Commission (SEC), “is a company that brings together money from many people and invests it in stocks, bonds or other assets.” In other words, a mutual fund is like a basket, and that basket holds assets, like stocks. When you buy a mutual fund, you purchase a piece of the fund, or basket. You do not actually own any of the assets the mutual fund owns.

But while you may not own the assets themselves, they are important because the value of the fund is based on the value of the assets it holds. As the stocks, bonds and so on within the fund increase in value, the fund increases in value. Conversely, as the stocks, bonds and so on within the fund decrease in value, the fund also decreases in value.

Now that you know what a mutual fund is, what are the benefits of mutual funds?

Benefits

Mutual funds offer two key benefits: diversification and professional management. Diversification means owning many different assets at one time. Mutual funds offer instant diversification because each fund, or basket, owns multiple stocks, bonds and so on. When you buy a piece of the fund, you essentially buy a piece of every asset held by the fund.>

Professional management means that somebody who spends a lot more time analyzing financial markets than you do will be helping you invest your money.

Now that you know what the benefits of mutual funds are, what types of mutual funds are available?

and more visit to http://finance.yahoo.com/funds/mutual_funds_101/article/101979/understanding-mutual-funds

Read more...

Types of Mutual Funds

Mutual funds are divided into two categories: closed-end and open-end.

Closed-end funds have a limited number of shares. If you want to purchase a piece of the fund, you have to purchase an existing share.

Open-end funds have an unlimited number of shares. If you want to purchase a piece of the fund, the fund creates a new share and sells it to you. There are significantly more open-end funds than there are closed-end funds.

Now that you know what types of mutual funds are available, how are those mutual funds classified?

Mutual-fund Classification

Mutual funds are classified by various groups and institutions, but Morningstar is the industry standard when it comes to mutual-fund classification. Morningstar has two classification systems: the Morningstar Style BoxTM and Morningstar Categories.

The Morningstar Style BoxTM is a 3×3 grid that categorizes equity-based mutual funds by the style and size of the equities they hold and fixed-income mutual funds by the duration and quality of the fixed-income instruments they hold.

Morningstar also classifies mutual funds according to the following 48 predetermined categories based on the assets held by the fund:

Diversified Emerging Markets
Diversified Foreign
Diversified World
Europe
General Intermediate-Term
General Long-Term
General Short-Term
General Ultrashort-Term
Government Intermediate-Term
Government Long-Term
Government Short-Term
International Hybrid
Japan
Large Blend
Large Growth
Large Value
Latin America
Mid Blend
Mid Growth
Mid Value
Muni California Intermediate-Term
Muni California Long-Term
Muni National Intermediate-Term
Muni National Long-Term
Muni New York Intermediate-Term
Muni New York Long-Term
Muni Short-Term
Muni Single State Intermediate-Term
Muni Single State Long-Term
Pacific/Asia
Pacific/Asia (ex Japan)
Small Blend
Small Growth
Small Value
Specialty Precious Metals
Specialty Communications
Specialty Emerging Markets Bond
Specialty Financial
Specialty Health
Specialty High-Yield
Specialty International Bond
Specialty Multisector
Specialty Natural Resources
Specialty Real Estate
Specialty Technology
Specialty Utilities
U.S. Hybrid

Now that you know how mutual funds are classified, how can you measure a mutual fund’s performance?

and more visit to http://finance.yahoo.com/funds/mutual_funds_101/article/101980/types-of-mutual-funds

Read more...

Types of Mutual Funds

Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.

• By Structure
  • Open - Ended Schemes
  • Close - Ended Schemes
  • Interval Schemes
    
    
• By Investment Objective
  • Growth Schemes
  • Income Schemes
  • Balanced Schemes
  • Money Market Schemes
    
    
• Other Schemes
  • Tax Saving Schemes
  • Special Schemes
    • Index Schemes
    • Sector Specfic Schemes

Read more...

The Best Mutual Funds For New Investors

The Best Mutual Funds For New Investors

You want to get started as a mutual fund investor. What funds should you invest in? You have thousands of different mutual funds to choose from. I suggest you first open an account with a major no-load mutual fund company like Vanguard, Fidelity or T. Rowe Price. Then pick these two funds to invest in, investing an equal amount in each.

Remember, you are just getting your feet wet and don't want to start with a bad experience. So, here are what I suggest are your best mutual funds to get started with. Your overall risk will be low to moderate.

Your first pick is a no-brainer, a money market fund. These are the safest of all mutual funds and their value or price does not fluctuate. In this investment you simply earn interest in the form of dividends. The amount of interest you earn varies, based on interest rates in the economy.

There should be zero cost to invest in a money market fund, no commissions or sales charges called LOADS. Once you have money invested here, you can move it at will to other funds offered by the fund company (also called a fund family).

Keeping things simple, your other best "starter fund" is called a BALANCED FUND. These funds invest in both stocks and bonds, so risk is generally moderate. These days there are several variations of balanced funds, giving the investor plenty of latitude. There are traditional balanced funds, asset allocation funds, lifecycle funds and target retirement funds.

All balanced funds have a diversified portfolio of stocks and bonds, but they vary in terms of safety, dividends, and growth potential. Basically you can place them into three different risk categories: conservative, moderate, or aggressive. I suggest you go with a balanced fund labeled as moderate in the fund literature you get from the fund company.

Traditional balanced funds have been around for many years and have a moderate asset allocation of about 60% stocks and 40% bonds. This ratio of stocks to bonds remains fairly constant. These traditional funds are generally simply called "balanced funds", and are a good solid place to invest for the new investor.

If you want to get more conservative or aggressive, I suggest lifecycle funds. For example, an aggressive-growth lifecycle fund would be the riskiest and would be heavily invested in stocks vs. bonds. Dividends would be low to insignificant. On the other hand, a conservative lifecycle fund emphasizes bonds vs. stocks, and hence is safer and pays higher dividends.

For most new investors I suggest a traditional balanced fund, or a lifecycle fund labeled as either moderate-growth or conservative-growth.

With half of your money in a money market fund and half in a balanced fund you won't get rich quick, but you won't lose your shirt when things get ugly in the economy either.

Once you learn how to invest and gain in confidence, you can expand your horizons. All three of the fund families mentioned offer a wide array of investment choices. Plus, all three offer funds with no commissions, no sales charges ... NO-LOAD. Learn how to invest at your own pace. Until you feel up to speed, just relax and stick with your starter funds.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals. Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com

Article Source: http://EzineArticles.com/?expert=James_Leitz

Read more...

The Best Time to Invest Money

The Best Time to Invest Money

The best time to invest your money is NOW ... if you understand diversification and dollar cost averaging. Look at it this way. If you don't invest your money, you'll either spend it or earn low interest rates as a saver.

The only way to get ahead is to learn how to invest. This is not as difficult a proposition as most folks believe it to be. Let me explain with some simple logic, in the form of a short story.

At a wedding reception in the early Spring of 2009, a young man named Cameron listened as his much-older uncles complained about their investment losses. "My broker's worthless, and I've lost half my money in stocks in the past year", stated Uncle Ron. "I'm earning less than 1% in interest", declared his conservative Uncle Jack. "My real estate investments are under water", Uncle David added.

Cameron had a thought as he vacated the circle of conversation. He applied simple logic to what he had just heard. He knew that both stock prices and real estate values usually went up. That's why most investors make money in both investment arenas.

If both real estate prices and stock prices are low, it might be a good time to invest money, Cameron reasoned. But he had a few unanswered questions on his mind. First, he did not know how to invest. Second, he didn't have a pot full of money. Finally, which was the better investment ... stocks or real estate? Obviously, no one ever gets rich earning low interest rates.

The next morning Cameron sat down for a cup of coffee with Uncle Jim, who was supposed to know all about this investment stuff. They formulated the following plan.

Cameron would open an IRA with a large no-load mutual fund company, since he wanted to invest money for retirement. He would have $400 a month flowing from his checking account to the fund company. It would be divided equally into four different mutual funds: an S&P 500 Index fund, an international stock fund, a real estate fund, and a money market fund.

This would give him diversification in both stocks and real estate. The money market fund offered a bit of safety and flexibility.

Cameron would keep the value of his four funds about equal. If the value of a fund got out of line with the others, he would transfer money from one to another to even things out. Uncle Jim called this "rebalancing" his portfolio. He would do this once a year.

Plus, he would have dollar cost averaging working for him, since he had a fixed amount of money flowing into each fund every month. If the price of a fund fell, the money flowing into it would automatically buy more of the cheaper shares. If the price rose, he would be buying fewer at the higher price.

Should the stock market and/or real estate market get real cheap, Cameron would have some powder dry to take advantage of the situation. He could move the money in his safe money market fund into the other three funds.

Now is always a good time, if you know how to invest.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com

Article Source: http://EzineArticles.com/?expert=James_Leitz

Read more...

The Best Mutual Funds

The Best Mutual Funds

There are thousands of mutual funds and well over 100 mutual fund families to choose from. How does the average investor go about selecting the best mutual fund(s)? Here's a basic investor guide to help you eliminate the losers and focus in on the best.

Your objective in selecting mutual funds should not be to chase performance, but rather to participate in the stock market, bond market and money market. First, concentrate on the type of fund that fits your objectives, and what percent of your assets you want to allocate to it. Your basic fund types are stock funds, bond funds, money market funds, and balanced funds. Then, get specific looking for the best fund(s) of that type. Here are some investor guide tips to help you.

Consider mutual funds that belong to a major fund family. The largest families offer a wide variety of funds to choose from, and are likely to be financially strong companies that offer a wide range of customer services. My favorite families include Vanguard, Fidelity, and T. Rowe Price. The larger families attract management talent, and tend to have well-established track records. Some manage well over $100 billion in investor assets. You can locate fund families on the internet, and request free information.

Pay attention to yearly fund expenses and sales charges. For example, you can pay as much as 2% or more a year for expenses, and this comes out of your investment. Sales charges for stock funds can be over 5%, and can come right off the top when you invest. The three fund families mentioned earlier offer no-load funds, which means there are no sales charges. Some of their funds charge less than .5% per year for total expenses.

The best mutual funds have track records for performance that outperforms other similar funds, and indexes of comparable funds. This information should be clearly shown in the fund's literature. The best funds show consistency in performance relative to their benchmark. For example, steer clear of a stock fund that lost 50% last year when its peer group was down only 30%.

The best mutual funds offer a wide variety of services that are important to many investors. These include switching privileges, periodic investing plans, periodic redemption of shares, and automatic transfers of money from fund to fund in the same family.

If you are starting out as a small investor, look for a fund with low investment minimums. For example, you can invest as little as $100 a month in some funds, with the money set up to automatically flow from your checking account to the mutual fund to buy shares.

Most investors I have known would be best off avoiding the performance trap. Mutual funds are not investments for speculation. Don't move from fund to fund in search of better performance. Don't be too impressed by a fund that has a great year. Last year's big winner in the stock category likely placed some risky bets and got lucky. A repeat performance is highly unlikely.

Here's a final investor guide tip. For the majority of investors, an index fund is probably the best mutual fund. For example, an S&P 500 Index Fund tracks the stock market as measured by that major index, the S&P 500. You won't beat the market holding such a fund, but you won't have a bad year relative to the market, either.

Plus, the major no-load fund families offer index funds with no sales charges, and low yearly expenses of .25% and less. These fund companies have toll-free numbers you can call, and they will be happy to work with you on getting started as an investor.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com

Article Source: http://EzineArticles.com/?expert=James_Leitz

Read more...

What Kind of Mutual Funds Should I Buy

What Kind of Mutual Funds Should I Buy?

What exactly defines the "best mutual funds" anyway? Funds are by far the most widely used investment vehicle in the world. There are now more mutual funds than there are stocks in the US market. With over 26 thousand funds that Morningstar keeps track of, how can someone know where to find the best ones?

You've come to the right place to find out!

You'll have to read all the way to the end of this page to see my recommended list of "Best Mutual Funds for 2009". But before we dive into that, let's back up and do a little mutual fund 101.

What is a mutual fund? A mutual fund is the most popular form of a pooled investment known today. They are designed for people who want to have their money professionally managed at a fairly reasonable cost. In addition to professional management, they give an investor convenience, diversification, record keeping, tax reporting, and safekeeping of securities.

How do mutual funds make money? Mutual funds make money in several ways. The main way is from internal fees that are called expense ratios. Expense ratio sounds a lot better than FEES, right? But it's the same thing. It's a percentage of the funds assets that are taken out every day, and it's how the mutual fund company stays in business. You never see these fees come out, but they definitely affect your annual returns. You want to try to make sure your expense ratios are around 1% or less per year. Some specialty funds are going to be higher, but for the most part you should try to buy funds that are under 1%. Funds are required by law to produce a document called a prospectus, which no one ever reads, that tells you important information about the fund. Fortunately, Morningstar reports most of this same information in a much easier to understand way. The best mutual funds will keep these internal costs to a minimum.

What about commissions? This is an important one. Many mutual funds sold today by bank brokers and full-cost brokers like Merrill Lynch and Edward Jones have commissions, or loads. Loaded funds commissions can vary, but most are between 1% and 5.75%. That means for every $1000 you invest, $45 to $57.50 could be coming out for a commission to the broker, and the rest gets invested into your account. That's not such a bad thing if the broker getting paid is actually helping you manage your account of mutual funds. Loaded funds can have either front-end or back-end commissions. Front-end means you pay it when you go into the fund with new money, these are called A share funds. Back-end means you pay it when you eventually sell the shares, these are called B share funds. With a B share, the back-end commission gradually declines the longer you hold it. It's usually completely gone after 7 years. The problem is, B share funds have much higher internal expense ratios, sometimes 2.5% per year. This is how they make up for the commission that they paid the broker when you bought it. If you're going to buy a loaded fund, you should NOT buy a B share. The other option is a C share. C share funds have no commission when you buy it, and a 1% back-end commission if you sell within the first year. The best mutual funds will have little or no commission on them.

What are 12b-1 Fees? These are another kind of internal fee that you'll never see come out, but you need to be aware of. Most loaded funds have 12b-1 fees, and a few no-load funds do too. These are basically an annual trailing commission that goes to the broker who sold you the fund. It's supposed to be his or her incentive to continue to take care of your account. It's generally .25% per year, so it's not going to break you. But when you add that on to an up front commission of 5.75%, and an expense ratio of 1.50% or 2.5%, and it starts to become very difficult to keep up with the market. If you're looking for the best mutual funds, try to avoid 12b-1 fees.

What are No-Load funds? No load funds are funds that have no commission for the investor to pay at all. So every $1 that you invest goes right into the fund. Some famous no-load mutual fund companies are Fidelity Investments, Vanguard, and the Dimensional Funds. The only way a no-load mutual fund makes money is from the internal expense ratios. But that doesn't mean that their expense ratios are higher. In fact, quite the opposite can be true. No-load funds are in our opinion are some of the best mutual funds available today.

What is an ACTIVELY managed fund This is a fund where the fund manager is actively buying and selling securities inside the fund in attempt to outperform the market. Many people think that actively managed funds are the best mutual funds. Keep in mind that each time a trade is placed, the fund has to pay a commission. These commissions are in addition to the funds expense ratio and are only reported in the annual report. Morningstar says that these trading commissions can run as high as 1% - 2% of the funds assets per year if the manager is a very active trader. You can get a feel for how much trading is going on by looking at the funds turnover rate, which is also reported by Morningstar. If a fund has a turnover ratio of 50%, that means the manager is selling and then buying again 50% of the funds assets each year. Many stock funds commonly have turnover ratios of over 100% per year.

Also, when a stock inside a fund is sold by the manager, any capital gains that are realized from that sale will be passed on to you as the shareholder. So even though you didn't do anything, you could be paying taxes on your investment at the end of the year. Funds will estimate the amount of capital gains that they plan to pay out at the end of each year. It's important to look at those estimates (usually published in November) and see if you should sell your shares before they pay it to you. This way you can avoid taking that gain and getting taxed on it. Yet, some of the best mutual funds are still actively managed.

So what's a PASSIVELY managed fund? A Passively managed fund, usually called an index fund, is a portfolio of stocks or bonds that replicate a major market index. The S&P 500 or the Lehman Brothers Aggregate Bond Index are two major indexes that most people have heard of. There are a lot of people who now agree that the best mutual funds are passively managed. Passively managed funds are very low cost funds to own because there are not a lot of analysts doing research on what stocks to buy and sell. These kinds of funds generally don't do much trading of the stock or bonds they own, so this keeps the trading commissions and taxes low. Expense ratios of passively managed funds are usually in the 0.08% - 0.5% range, much lower than actively managed funds. These are an excellent choice for an investor who is satisfied to match the performance of the index.

So which mutual funds ARE the best mutual funds? OK, so you're just about ready to see my list. The best mutual funds to own tend to be index type funds. The truth is, most actively managed mutual funds UNDER-perform the major market indexes over time. There are a lot of reasons for this, and we've already mentioned most of them. Commissions, expense ratios, and taxes all add to the cost of owned actively managed funds. All these costs make it much harder for the manager to keep up with, not to mention out-perform the market index. Here are a few quotes from some famous investors about investing in index funds...

"...the best way to own common stocks is through index funds... - Warren Buffett, Berkshire Hathaway Inc. 1996 Shareholder Letter

"A very low-cost index is going to beat a majority of the amateur-managed money or professionally-managed money," - Warren Buffett 2007

"Additionally, those index funds that are very low-cost (such as Vanguard's) are investor-friendly by definition and are the best selection for most of those who wish to own equities." - see page 10 of Berkshire Hathaway Inc. 2003 Annual Report

"Over the 35 years, American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns: All they had to do was piggyback Corporate America in a diversified, low-expense way. An index fund that they never touched would have done the job. Instead many investors have had experiences ranging from mediocre to disastrous." - page 5, 2004 Berkshire Hathaway Annual Report

"Most individual investors would be better off in an index mutual fund." - Peter Lynch

Finally, I'm done with all of that! Now here's my list of recommended funds for your own portfolio for 2009.

The Best Mutual Funds For 2009

The following are all no-load funds. (Of course!)

Dimensional Small Cap Value (DFSVX) This is a small cap value fund that I believe is poised to perform extremely well as the market and economy begin to recover from this recession. Small cap stocks tend to be the first to recover after a recenssion ends, and this fund should be a top performer. Dimensional funds are index funds, but they are enhanced index funds. Dimensional Fund Advisors takes a market index and then screens out the stocks they feel are less likely to perform as well. They use 26 different screening methods to narrow down the list of stocks they want to buy. Then they use some timing and trading strategies to determine when to buy the stock.

Dimensional Emerging Markets Value (DFEVX) This is an index fund that invests in emerging foreign countries. Emerging markets, or under-developed countries, also tend to lead in performance coming out of a recession. This fund invests in countries like Brazil, Chile, China, South Africa, Czech Republic, Hungary, Mexico, Poland, Israel, Malaysia, South Korea, Indonesia, Philippines, Thailand & Turkey. It does not invest currently in Argentina.

Dimensional Tax Managed US Marketwide (DTMMX) This is another index fund that invests in large, mid and small cap companies here in the United States. Morningstar has is rated as a mid cap, but it really invests in all of them. Due to it's heavy mid and small cap holdings, I believe it is also poised to do well coming out of this recession.

iShares FTSE/Xinhua China 25 Index (FXI) This is actually an ETF (which is basically a mutual fund). Basically this is an index fund that buys the 25 largest and most liquid Chinese companies. The Chinese market lost a huge amount of it's value in 2008 and has some great potential for 2009. This fund trades on the NY stock exchange, and trades just like a stock. This fund lost almost 68% of it's value during the last 12 months, so there can be some heavy volatility here. Don't bet the farm on it, but this would be a nice portion of your international exposure. Save yourself the effort of doing research on Chinese companies and just buy some of this.

iShares U.S. Financial Sector (IYF) This is another ETF index fund that tracks the Dow Jones U.S. Financials Index. This fund lost over 75% of it's value during the last 12 months, and is now having a nice rebound as you can imagine. I think there is most likely some great potential for returns in the financial sector, and a low cost index fund like this is an excellent way to get some exposure.

Energy Select Sector SPDR (XLE) Yes, it's another ETF index fund that invests in companies from oil, gas, energy equipment & energy services. This is a great, low-cost way to get exposure to the entire energy sector, including the servicing companies. These stocks all tend to move up and down with the price of oil. Last year oil got over $147/barrel in May, and by October it was below $38/barrell. We could easily see oil prices right back up above $100 in no time at all.

Dimensional International Value (DFIVX)

This is another DFA index fund that invests in developed foreign countries. This would include the following: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. This would be an excellent choice for the bulk of your international exposure.

Amana Mutual Income (AMANX) This is a large cap value fund that invests in mostly U.S. stocks for preservation of capital and current income. It currently has a 5-star rating from Morningstar. Although this is not a small cap fund, you still need to have some exposure to large caps at all times in your portfolio. The unusual thing about this fund is that investment decisions are made in accordance with Islamic principals. It diversifies investments across industries and companies, and generally follows a value investment style.

Fidelity Strategic Income (FSICX) This is another one of my best mutual funds picks for 2009. This is a bond fund that invest in many different types of bonds, so it's called a multi-sector bond fund. It invests primarily in debt securities by allocating assets among four general investment categories: high yield securities, U.S. Government and investment-grade securities, emerging market securities, and foreign developed market securities. The fund uses a neutral mix of approximately 40% high yield, 30% U.S. Government and investment-grade, 15% emerging markets, and 15% foreign developed markets. High yield bonds are another type of investment that tend to out-perform as the economy and market begins to recover.

So there you have it. Hopefully you now know at least a little bit more about mutual funds than you did before, and you have a list of excellent funds to check out for your own portfolio. Bottom line is, keep your internal expenses low, try to eliminate commissions if possible, and buy index funds as much as possible. Do these things, and you'll be ahead of about 95% of your peers.

Mark Kenison is a Certified Financial Planner and a Chartered Life Underwriter. He has been helping people successfully plan for and successfully retire for over 14 years. You can learn more about this topic and any other personal financial planning topic by visiting his site http://www.Great-Financial-Planning.com His practice is based in Charlotte, NC, and has clients all over the United States. You can also contact Mark by calling him toll free at 1-866-983-4222.

Article Source: http://EzineArticles.com/?expert=Mark_Kenison

Read more...

The Best Mutual Funds

The Best Mutual Funds

There are thousands of mutual funds and well over 100 mutual fund families to choose from. How does the average investor go about selecting the best mutual fund(s)? Here's a basic investor guide to help you eliminate the losers and focus in on the best.

Your objective in selecting mutual funds should not be to chase performance, but rather to participate in the stock market, bond market and money market. First, concentrate on the type of fund that fits your objectives, and what percent of your assets you want to allocate to it. Your basic fund types are stock funds, bond funds, money market funds, and balanced funds. Then, get specific looking for the best fund(s) of that type. Here are some investor guide tips to help you.

Consider mutual funds that belong to a major fund family. The largest families offer a wide variety of funds to choose from, and are likely to be financially strong companies that offer a wide range of customer services. My favorite families include Vanguard, Fidelity, and T. Rowe Price. The larger families attract management talent, and tend to have well-established track records. Some manage well over $100 billion in investor assets. You can locate fund families on the internet, and request free information.

Pay attention to yearly fund expenses and sales charges. For example, you can pay as much as 2% or more a year for expenses, and this comes out of your investment. Sales charges for stock funds can be over 5%, and can come right off the top when you invest. The three fund families mentioned earlier offer no-load funds, which means there are no sales charges. Some of their funds charge less than .5% per year for total expenses.

The best mutual funds have track records for performance that outperforms other similar funds, and indexes of comparable funds. This information should be clearly shown in the fund's literature. The best funds show consistency in performance relative to their benchmark. For example, steer clear of a stock fund that lost 50% last year when its peer group was down only 30%.

The best mutual funds offer a wide variety of services that are important to many investors. These include switching privileges, periodic investing plans, periodic redemption of shares, and automatic transfers of money from fund to fund in the same family.

If you are starting out as a small investor, look for a fund with low investment minimums. For example, you can invest as little as $100 a month in some funds, with the money set up to automatically flow from your checking account to the mutual fund to buy shares.

Most investors I have known would be best off avoiding the performance trap. Mutual funds are not investments for speculation. Don't move from fund to fund in search of better performance. Don't be too impressed by a fund that has a great year. Last year's big winner in the stock category likely placed some risky bets and got lucky. A repeat performance is highly unlikely.

Here's a final investor guide tip. For the majority of investors, an index fund is probably the best mutual fund. For example, an S&P 500 Index Fund tracks the stock market as measured by that major index, the S&P 500. You won't beat the market holding such a fund, but you won't have a bad year relative to the market, either.

Plus, the major no-load fund families offer index funds with no sales charges, and low yearly expenses of .25% and less. These fund companies have toll-free numbers you can call, and they will be happy to work with you on getting started as an investor.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com

Article Source: http://EzineArticles.com/?expert=James_Leitz

Read more...

Tax-Free Bonds & Bond Funds

Tax-Free Bonds & Bond Funds

Municipal bonds (munis) have been around for years and offer investors interest income that is tax-exempt, free from federal income taxes. This is important to many bond investors, because they buy bonds for the higher income they pay vs. CDs and savings accounts. Municipal bond funds invest in munis. Hence, if you buy the fund, you are invested in municipal bonds and receive dividends that are free of federal income taxes.

Municipal bonds are issued by states and local government entities to raise capital (money) for major projects. The U.S. government gives them a break by not levying income taxes on the interest they pay to investors. This makes it easier for the state of Ohio, for example, to sell bonds and raise money. It also allows the state to pay a somewhat lower interest rate than a corporation with a high credit rating would need to pay to attract investors.

When you invest in a municipal bond fund professional money managers manage a diversified portfolio of munis for you. Some fund families offer funds that are double tax-exempt. For example, an Ohio Tax-Exempt Bond Fund would pay Ohio residents dividends free from both federal and state income taxes.

There are three factors you should consider before investing in any muni bond fund. One, your tax bracket. Two, expenses. Three, interest rate risk.

Let's say that you are in the 25% tax bracket, which means that in 2008 your taxable income was over $65,100. You want to invest $10,000 into a bond fund. You find a high-quality taxable bond fund that will pay 6% in dividends, or about $600 a year. After paying 25% to the IRS, you net $450, or 4.5%. You pay tax on the interest (dividends) whether you receive it or simply allow it to reinvest and buy more shares in the fund.

In the 25% tax bracket, if you can find a muni bond fund that pays over 4.5% tax-exempt, it is to your advantage to invest in it. The higher your tax bracket, the greater the advantage. If your taxable income was over $200,300 in 2008, for example, you were in the 33% or 35% tax bracket. A 6% taxable bond fund would have left you with only about 4% net after taxes.

Second, mutual fund expenses and sales charges only work against the investor. On a $10,000 investment, a 3% sales charge (load) can take $300 off the top, and yearly expenses could be .5% or more per year. Or, if you go with a major no-load fund family, a municipal bond fund investment has zero sales charges, and yearly expenses can be as low as .15% a year.

Third, all bonds and bond funds are subject to interest rate risk. This means that if interest rates go up, the value or price of bonds and bond funds that invest in them will fall.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com

Article Source: http://EzineArticles.com/?expert=James_Leitz

Read more...

The Best Bond Fund

The Best Bond Fund

The best bond fund for most average investors could be a high-yield, or long-term, or corporate bond fund. Then again, maybe not. This article takes you back to bond basics to find the best bond fund for most investors. Read on. You could save thousands, or make additional thousands based on the information presented here.

Getting back to bond basics, folks invest in bonds and bond funds primarily to earn higher income than they can get from stocks and savings vehicles like bank CDs. Few average investors invest in individual bond issues, because that requires significant knowledge and experience.

Bond funds, on the other hand, are professionally managed and offer investors diversification, sometimes at a reasonable cost. These funds hold bonds in their portfolio, and these bonds pay interest. This interest is passed on to investors in the form of dividends.

There is only one way I know of to get rich with bond funds. Wait until interest rates get historically high, as in the early 1980's. Then, borrow a ton of money, and buy as soon as rates start to fall. Now, let's get back to reality because interest rates are near historical lows.

When you buy shares of a bond fund these days, you are simply trying to get the highest income you can, without taking on heavy risk. As I have said in other articles, bond funds have interest rate risk. This means that if you invest now and interest rates go up in the future, the value of your investment will fall. Who wants a bond(s) that pays 6% when new bonds are paying 9%? Investors will buy it ... but only at a reduced price.

NOW, let's look for the best bond fund available. We will play "elimination" and weed out the risky ones and the losers. First, high-yield bond funds pay higher dividends for one reason. They hold high-risk bonds that are often referred to as JUNK. Second, long-term bond funds pay higher than average yields (dividends) because they have higher interest rate risk. Third, foreign bond funds are riskier because the value of the dollar fluctuates, and this could work against you.

Now, let's eliminate bond funds because they pay lower dividends. Government bond funds invest in the likes of U.S. Treasury bonds, which are the safest on earth. And short-term bond funds are relatively safe because they hold bonds that mature in a few years. The problem is that neither of the above pays dividends worth taking any risk to get.

Now, we're ready to zoom in on the best bond fund, which would probably be a higher-quality intermediate-term bond fund. We don't need the highest quality, because we want good dividends.

I have in front of me such a fund, and it has a dividend yield of over 6%. But this is not the best bond fund I can find. The reason is that even though it is offered by one of the biggest and best mutual fund companies, it is rather expensive to buy and to own.

If you invest $10,000, 4% comes off the top for sales charges. Then, as long as you stay invested, 1% a year is taken to pay for expenses.

Now we save/make some money. The best bond fund is similar to the above, except that it costs you zero to buy it and yearly expenses are less than .25% a year vs.1%. This bond fund is a no-load, intermediate-term BOND INDEX FUND.

After all, we are not out to make a killing here, and a dollar saved is a dollar earned when it comes to bond funds.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com

Article Source: http://EzineArticles.com/?expert=James_Leitz

Read more...

Learn How to Invest in Mutual Funds

Learn How to Invest in Mutual Funds

If you are unwilling to take much of a risk, you are likely to stick with investing in fixed funds which won't leave you in a position where you are likely to lose everything, but they are also unlikely to put you in a position where your savings will multiply low risk often equals low growth . Over Confidence - more than one employee told me that they are investing their money in only one or two funds. Consider Lifestyle Funds - lifestyle funds are an excellent option for investors who feel that they don't know enough to invest for themselves or that don't want to deal with the hassle. Stay Out of the Money Market Fund or Stable Value Funds - such funds are great if you are building an emergency cash reserve or saving for your summer vacation, but if your investment time horizon is long, putting your money in such vehicles is a poor decision. When the price is below the average you use, be in the Money Market, or stable value option that does not lose money! Move your investments to the stable option as soon as the indexes and funds move below the average you use.

Mutual Funds are really great investment options designed to reduce risk. In general, you can further divide this form of investing into the following categories: - money market funds are considered very low risk and have very low return. Sometimes, the return on these investments is less than inflation - bond funds invest in government loans, both federal and local. They are low to moderate risk investments and are very sensitive to interest rate changes - balanced funds mix stocks and bonds to reduce the investment risk of stocks and to benefit from the certainty of bonds - stock index funds consist of stocks of companies which are found in market indexes and who generally follow the stock market. As you near retirement, you might want to switch your investments to more conservative funds to preserve their value. Target-date funds simplify long-term investing.

Mutual Fund Companies - These companies allow you to open up a Roth IRA and then choose which of their mutual funds you would like to invest your money in. If you are diligent in keeping up with how the funds are performing, you can switch your money from one fund to another easily. MSN Money's Start Investing message board from participants in plans that offer C shares of mediocre mutual funds. All the matters are the long term trends, and in the long run stable value funds barely keep up with inflation. Unless you are talking about a lifestyle fund, or a couple of very broad based index funds, you are probably not going to get the diversification you need from such a small number of funds. Generally speaking, if you are given the choice between two funds that cover the same asset class, you probably want to pick the one with the lower cost. Select funds that cover different asset classes. Once you have discovered which index your fund tends to follow it will be obvious on the charts then pick one or two funds that follow the $RUT, one or two that follow the $MID, one or two that follow the EFA foreign funds are usually easy to spot by their names , and finally one or two that follow the NASDAQ.

Watch the indexes, and watch your funds if they have symbols. Fixed Funds Fixed Funds, sometimes called Guaranteed Funds, are known for steady, predictable growth in the long term. They carry Guaranteed Interest Contracts underwritten by insurance companies, and because of that fact are commonly considered very low risk funds. This includes the additional protection of the funds from garnishment or attachment by creditors or assigned to anyone else, except in the case of domestic relations court cases dealing with divorce decree or child support orders QDROs; i e , qualified domestic relations orders . While it doesn't help the employee's current tax situation, funds that were contributed on an after-tax basis may be easier to withdraw since they are not subject to the strict IRS rules which apply to pre-tax contributions. It does not include any matching funds that the employer might graciously throw in. Because every penny taken in the form of expenses is at least a nickel you won't have in retirement, you want low-cost funds. If these conditions are met, the funds can be withdrawn and used for one of the following five purposes.

Daniel Sandoval writes in investing and business related issues. For more information visit my blog http://howtoinvestforyourfuture.blogspot.com/ Article Source: http://EzineArticles.com/?expert=Sandoval_Daniel

Read more...

Mutual Funds - The Down-to-Earth Basics

Mutual Funds - The Down-to-Earth Basics

Mutual funds are designed for average investors who wants to invest but do not want to select and manage investments like stocks and bonds on their own. In other words, they are the investment of choice for most people.

When you invest in them, professional money managers deal with all the details. You select the fund(s) you want to invest in and they do the rest for you. The average person can have a diversified and balanced portfolio of securities (investments) by simply owning shares of the appropriate mutual funds.

If you know little about how to invest, you might want to know if mutual funds are good investments. The answer to that question is that the less you know about investing, the more attractive mutual funds are. I'll take that a step further. Most people who invest in stocks and bonds and other investments on their own would be better off just owning mutual fund shares, because few of them are capable of managing a portfolio (list) of investments on their own.

So, getting down-to-earth, you need to know your choices before you rush out and invest in mutual funds. Here they are in a nut shell.

There are 4 basic types of mutual funds based on what they invest in.

MONEY MARKET FUNDS are the safest and they pay interest in the form of dividends. These funds invest in safe short-term IOUs like CDs and U.S. Treasury bills, the safest investment in the world. The value of these funds does not fluctuate.

BOND FUNDS pay higher interest, also in the form of dividends. There is moderate investment risk here, and the value of your investment will fluctuate. These funds invest in bonds.

STOCK FUNDS are the riskiest type of fund, and there are many varieties. This is where investors go for higher returns (profits). The share price (value) can fluctuate significantly, because these funds invest in stocks.

BALANCED FUNDS go by various names. Examples include asset allocation funds, lifecycle funds, and target retirement funds. All of them invest in some combination of the three types of investments mentioned in the above three fund types.

There are 2 basic types of mutual funds based on how you buy them and what it will cost you to buy (or sell) and own them.

LOAD FUNDS are sold to you by someone in the investment business. You pay a commission or sales charge (called a LOAD) to buy, hold or sell these funds. Yearly expenses are also deducted from each fund you own.

NO-LOAD funds you must purchase on your own, traditionally through a mutual fund company directly. For your efforts you avoid a sales charge (load). Yearly fund expenses still apply, but if you know where to shop, they can amount to less than 1% a year.

There's a lot more to learn, but now you know the bare-bones basics.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals. Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com

Article Source: http://EzineArticles.com/?expert=James_Leitz

Read more...

Five Things Everyone Should Know About Investing in Mutual Funds

Five Things Everyone Should Know About Investing in Mutual Funds

Not everyone needs to know everything. I have an uncle who was recently honored as a university fellow at Lakehead University (Congratulations, Uncle John). He specializes in the study of Banach spaces and abstract convexity. Now I have no idea what any of that means and furthermore have no idea how someone can specialize in it. So I am glad that I don't need to know that. But, in the field of math I do need to know how to add, subtract, multiply, and divide. No everyone needs to know everything, but life is a lot easier if you at least know some minimal facts about important things. So here are the five things I think everyone should know about investing.

1. What is a mutual fund?

Mutual funds are places where a group of investors (everyday folk like you and me) pool their money. Due to minimums or fees an individual investor might be limited to buying only a few stocks. When your investments are so concentrated, any poorly performing stock can have a dramatically negative impact on your losses. Some mutual funds can be purchased with as little as $500 and give you ownership of hundreds of stocks. Mutual funds have different goals and focuses depending on how they choose to invest. The greatest advantage of mutual funds is that your money is spread out between many different stocks.

2. What do the terms 'large cap', 'small cap', 'value', 'growth' and 'international' mean?

Not all mutual funds are equal. They have different purposes. Some will invest in bonds, others in specific sectors of the economy. Some mutual fund companies invest primarily in big companies. Others in small companies. Some might do a little of everything. It is crucial that you know the 'categorization' of your mutual fund as that has the greatest impact of your expected risk and return. Small cap(italization) mutual funds basically invest in smaller companies. These stocks provide a lot more opportunity for quick growth as smaller can grow twice as big, twice as fast. On the other hand, because they are smaller there is a lot more opportunity for failure. Large caps focus on bigger companies. They would buy stocks from places you have heard of like Wal-Mart, Exxon, and General Electric. These companies are established and might be expected to provide steady results, but likely will not provide a surge of gains or losses.

Growth and Value refer to the style the fund manager prefers for buying stocks. Value managers look for great stocks that for some reason or another seem to be under priced. In the mall they would be the ones looking through the50% off rack. Growth managers, however, buy stocks that are performing well. The stock has posted positive results so they buy these stocks with the expectation that the growth will continue.

International funds will typically buy stocks that are owned by companies that are either owned or operated outside the United States or the home country.

3. What are mutual fund management fees?

Someone out there is managing your money. They are deciding which stocks to buy and which to sell. They take a salary. They have people who do research and analysis. They get paid. They send out information and furnish offices. Some pay for advertising. Who pays for it all? You do - the mutual fund investor. It is easy to find out what you will pay when you get a prospectus. They will tell you the percentage they charge in fees. They will also show you how much that would be in actual dollars based on a preset dollar investment. Always remember: when it comes to fees they are always included when you see their performance. In other words, at the end of a trading day when a mutual fund posts their returns, all fees have already been accounted for.

Mutual funds structure their fees in different ways. One way that funds earn money is by charging a load. For example, a fund might charge a 5% front end load. That means when you give them $1,000 they will take $50 as their fee and invest $950. A back end load is a fee that is assessed when you take the money out. If a company has a back end load of 1% and you withdraw $1000 you will pay $10 towards the load fee and they would give you $990. No load funds will invest the full amount. No load funds will typically have higher management fees.

4. What is a prospectus?

A prospectus is an introductory booklet. Much of the information will seem dry and useless. This is because prospectuses are written for lawyers as much as buyers. However, the prospectus will introduce you to the management style. From that style you can get a good idea at the level of risk you are assuming.

5. Where can I buy a mutual fund?

Mutual funds can be purchased directly form the organization (fund family) who oversees the fund. These days you can just get online and view all the important information. That organization will only sell their own brand of funds.

You can also purchase funds through an online brokerage firm. A brokerage firm will allow you to purchase mutual funds from any fund family they have access to. You are not limited to only one fund family.

You can also purchase mutual funds through a financial advisor who works either independently or for a brokerage firm. Your advisor will suggest funds, and make purchases on your behalf (with an extra layer of fees).

Craig is a Christian, missionary, family man, traveler and blogger. He writes a blog on personal finance from a Biblical perspective at http://www.moneyhelpforchristians.com.

Article Source: http://EzineArticles.com/?expert=Craig_E_Ford

Read more...

What is the Best Way to Invest Money

What is the Best Way to Invest Money?

Most people have got this in common. They don't invest "much time." I would like to quote Robert Kiyosaki's Rich Dad. "Since most people don't invest much time, they lose their money."

Robert also talks about the 90/10 rule of money. He explains that 90 percent of investors invest their money, but they don't invest much time at all. So how do you find the "best way to invest money?" Check this out. The 10 percent that make 90 percent of the money have invested more time than they have money.

Highly successful and well knows entrepreneurs Donald Trump & Robert Kiyosaki both follow this method, and thereby ultimately use less of their own money and more of their own returns to gain even higher returns. So why do people in general think that investing is risky? Well, first of all most investors take financial advice from so called "financial experts" who have very little financial education or experience. Here is an interesting fact. Less that 20 percent of stockbrokers do not or have not invested in the products they recommend to their clients.

Another really important thing to remember is that most people run off of hot tips. And these come from poor people, not rich people. They believe that someone else has the answer, and knows the best way to invest money. The real problem in today's society is that there is no financial education being taught in our schools, and teachers don't really have any real world financial experience or training.

So what can you do to get past this wall of confusion among the majority? Well, it's simple really. Just choose your advice with more caution. Always remember that your mind is your most important gift, so value it and use it with caution and respect. You have to do this. Let go of the thoughts and ideas that are already in your mind, flush your mind of these things! Often it's harder to get rid of these old thought patterns that creating new ones. But there is a solution - in your mind!

My name is Michael Fritz, I am the creator of My Official Web Site. I come from a simple background, just like you. I have a clear focus on the future and I know exactly where I am headed, do you? My Official Blog.

Article Source: http://EzineArticles.com/?expert=Michael_Fritz

Read more...

Money Market Mutual Funds

Money Market Mutual Funds - Safe and Less Risky Investment

Do you have excess cash and don't know what to do about it? Well, why don't you invest it? If you will just use the money for something else like taking a shopping spree, you'll be losing the opportunity to generate more cash. It's better to look ahead for the future than just live for today. One way of assuring for a brighter future is by making investments. However, there are different kinds of investment vehicles available. If you're a newbie in the field, I advise you to invest in money market mutual funds. Actually, putting your money in mutual funds is the best thing you should do.

Mutual funds are the most appropriate investment for amateurs. The main objective in making investments is to make big returns. It's a means of reaching a healthy financial life. There are people who became financially successful just because they made wise investments. If they can do it, why don't you do it, too? You can start by making even a small investment. So why would you choose money market mutual funds over others? First, investing in mutual funds doesn't require huge capital outlay. You can open an account with just $500 in hand. Isn't it great? Unlike other investments which you need to have big capital like in stocks, bonds and other types of mutual funds.

You don't even need a financial adviser regarding your investment for the risk involved here is lower. You won't be worrying much whether you will incur any losses. Instead of putting your money in savings account in a bank, try investing it in the said fund. Actually, it's like putting your cash in a savings account but the benefits are more. Savings account have lower rate of return. Mostly, banks only give a return of about 1% while money market mutual funds have an average return of 4.5 %. The rate of return can make a huge difference. After how many years, you can earn big profits if you will invest in the said fund.

After the fund has accumulated big profits, you can start thinking about going into bigger investments. With a bigger capital in hand, you can invest in stocks if you want too. The only concern in stocks is the law of leverage. If you will be lucky enough, it can really be profitable. But you can also suffer big losses if you will be unlucky. That's why before you go make some investment decisions; you should make some thorough research on where you want to invest. Another thing about money market mutual funds is in terms of liquidity. You can easily take back the money you invested if you want to.

In times of emergency, you can always remove it and use in whatever purpose you intend. Not like some other investments where you can't easily pull out your money. The liquidity feature of the money market mutual funds has attracted some investors. Investing in the said fund is becoming popular because you will not only generate profits but it's considered a kind of safe investment too. So better run to a local bank and invest immediately!

The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available at http://www.SaveWhileYouSpend.com.

Article Source: http://EzineArticles.com/?expert=Rick_Goldfeller

Read more...

The Big Investment Mistakes Made In Retirement

The Big Investment Mistakes Made In Retirement

Taking too much risk with your investment: We all want the highest interest rate possible and the lowest risk possible - unfortunately these are competing objectives. High rates always spell high risk BUT high risk does not always spell high rates. You should know that risk and reward are traveling companions: if you want low risk you've got to settle for low rates and if you want the chance of making high rates you've got to accept high risk.

Most people work a lifetime to save enough so they can have a comfortable retirement - the last thing in the world they want is to lose their retirement nest egg in bad investments. So why is it that most retirees have all their money in mutual funds, stock, bonds, a diversified portfolio of securities, variable annuities, etc.? All these things carry the risk of loss - yeah I know that "in the long run" you'll do a lot better than with a safe money alternative. BUT, in retirement you don't have a long run. A great economist once said, "in the long run we're all dead".

In the closing years of the 1900's and up until 2002 the stock market was roaring upward - would-be-retirees were making loads of paper profits and looking forward to retirement next year. Out of the blue came the dot.com bust and a market meltdown - over the next two years the S&P lost half its value, the DJIA sank like a rock and the poor NASDAQ stocks lost 80% of their value (that's where most of the dot.coms were traded). Instead of retiring, or continuing to be retired, many "risk taker" had to change plans or go back to work as Walmart greeters, taxi drivers or whatever they could get in the depressed employment environment. Can this ever happen again?

Look around you: sub-prime problems, foreclosures shore to shore, the dollar losing ground at an alarming rate, inflation picking up, real estate activity grinding to a halt, economic recession being mentioned often, bank stocks losing half their value, major corporation turning to China and the UAE for capital infusion to stay solvent, record federal deficits, commodity prices shooting upward and lots more of gloom and doom. I don't want to be negative...but there are storm clouds gathering and you don't have an risk umbrella if you've put your retirement money in the market.

The first big mistake retirees (or would-be-retirees in the red zone before retirement) make is they have taken too much risk with them retirement money.

What can you do? Find a financial adviser quick if you don't know how to lower your risk without one. Examine every retirement investment you have and make sure the money you'll be using in the next 10-15 years is in rock solid saving places like bank CDs (for use in years 1 - 5) or fixed annuities (for use in years 6 - 15). If you don't like either for-the-first-half-of-your-retirement money, you can continue to keep your money at risk and hope for the best.

Putting your money only in short-term bank CDs: Many of you have all your retirement money in 6-months CDs because you want safety and are afraid you'll need it all very soon. The good news is that you've got safety and ready access...the bad news is that this is costing you a king's ransom.

Generally, the longer you commit you money the higher the rate of interest you'll earn - that's why 5-year CDs pay more than 3-months CDs. You should space, or ladder, your money so that it comes due at about the same time you think you'll need it. Yes, you may guess wrong sometime but the penalty will be a lot less than if you always keep your money short and liquid.

Let's say you now have $150,000 in short-term bank CDs that you've earmarked for retirement. You think you'll need about $15,000 a year of this money to cover expenses above your Social Security, pension (if you have one) and other income. Here how a CD ladder could work. Put $15,000 in a money market account (can get anytime you want without penalty), $15,000 in a one, two, three and four year bank CD. You now set so that every year for the next five you'll have access to $15,000 (plus interest which will keep you up with inflation) to cover your needs.

What do you do with the other $75,000? Why not look into a five year tax-deferred fixed annuity? You'll pay no taxes on the interest you earn in the annuity until you withdraw it (that means triple compounding: interest on principal, interest on interest and interest on money you would have paid in taxes) and you'll have rock solid safety because your principal and interest is guaranteed by a major insurance company. The same insurance company that insures you home, life, health, business, car and everything else of value. Oh yes, you'll probably get a much better earnings rate than if you put the money in a bank CD.

Yes, you will lose the opportunity to hit it out of the park with a high flying stock your brother-in-law told you about but you'll also avoid the risk that goes with that high flying stock. When you annuity matures in five years you an annuitize (take an income) over the next five years or do another 5-year bank CD ladder.

Retirement is a time to keep what you've got rather than trying to double or triple your money in a short period of time. But, you can err by being too safe and too liquid with everything in short-term bank CDs. Retirement is also a time to reassess your risk and make sure you can afford the worse case outcome. That's why money in the market don't make sense unless you've got a lot more money than you'll need for retirement.

If you think the market can't turn around and bite you, check out the following links:

www.fool.com/investing/dividends-income/2007/03/21/a-market-crash-is-coming.aspx

mutualfunds.about.com/cs/history/a/marketcrash.htm

finance.yahoo.com/expert/article/richricher/26878

Check out the Retirement Pros for safe money choices: http://www.theretirementpros.com

Article Source: http://EzineArticles.com/?expert=Dr._Shelby_Smith

Read more...

What Are the Best Mutual Funds?

What Are the Best Mutual Funds?

The best mutual funds are no-load funds…funds that do not charge you any commissions to put your cash in or to take it back out. Unbelievably, some of the best mutual funds are available only to residents of specific states or to people who go to certain religious, work, or other organizations. However, there are many diverse opinions out there, on what the best mutual funds are. Currently, some of the best mutual funds are value mutual funds. I think the best mutual funds are almost not my favorite. Some of the best mutual funds are closed -- what a drag, eh. In addition, some of the best mutual funds are mid cap funds.

What about the market?

Many people have a burning desire to do better than the overall market. Therefore, whether you want to wipe the floor with the market, or figure out how to get a return of 10 to 12 percent without risking the whole lot. If you take money out of a bank account and put it into a money market fund, you will get a higher return. Kenneth French at Yale University demonstrated that stocks of companies that have the highest book values compared with their market cost were likely to pay investors much higher returns over time than stocks of companies with low book values relative to their market prices.

Lets not for get Investing

Resolved questions in Investing Is this portfolio mix good or what. MsFinancialSavvy's Mutual Fund Host Mutual Fund Popularity Is Changing Just a few years ago anything with a great risk was acceptable in mutual fund investing. Now, for those who have gotten their sagacity about them, or never lost it in the first place, are back to value investing. First, you need to settle on how long you will be investing the money. Just remember, investing is not a one size fits all procedure. When it comes to investing, there will always be risk. One way to manage the risk linked with stock investing is to include mutual funds in your investment portfolio.

How about Companies

Learn why a BlackBerry Smart phone is a business essential Great MIDSIZE companies run SAP. The same dollar invested in an index of stocks of large, more or less mature companies has grown to be worth $2,533. In addition, one dollar invested in an index of stocks of smaller public companies has developed to be worth $12,968. In addition, the exact same thing is true for international stocks – small companies outperformed large ones. Large companies had a compound annual return of 11. Investors did get some premium in small companies, but at a much higher-level deviation…26.

To achieve diversity and the experience of the top stock pickers in the country, only the best mutual funds are well thought-out. It is important to know what stocks the best mutual funds are buying and selling. Thanks for reading this and I hope it was very helpful. For more free information on investing go to: www.learn2cookorganicrecipes.com/mutualfunds

Darryl Harrison is a critic on many subjects and has written a few articles. For more free information check out http://www.learn2cookorganicrecipes.com/mutualfunds

Article Source: http://EzineArticles.com/?expert=Darryl_Harrison

Read more...

Performance Funds

Performance Funds

Mutual funds are doing more and more to discourage investors from leaving them and taking their money to a better performing fund. What does better performing mean? It has nothing to do with who the manager is, what the expense ratio is or how well they performed over the past 5 or 10 years.

Remember the old one, “What have you done for me lately?” That is the ONLY thing that counts. If you ever expect to make money in the stock market you must take the time to find the best performing no-load, no-redemption fee funds that are going up the fastest during the past 3 and 6 months. Usually any fund that has done well for a year or more has just about run its course and once it starts weakening in its upward movement, goes flat and starts down it should be sold and replaced. This can easily be seen in a chart on your computer or at the library at www.bigcharts.com.

There are many funds that will advance at the rate of 1% per week. Yes, per week, but you must find them. It is certainly worth the effort. There are services you can buy such as No-Load FundX; however, there are many free areas on the Internet that will locate excellent funds such as Bar Charts (http://www2.barchart.com/funds.asp , Bloomberg http://quote.bloomberg.com/apps/data?pid=mutualfunds and Yahoo www.yahoo.com/finance as well as Investor’s Business Daily newspaper that lists the best 3-month and 6-month performers each week. Be careful to check with the fund or your broker that there are no hidden fees. Those that charge a commission do NOT outperform those that have no loads (commission).

Most full service brokers will not sell you no-load funds so you will have to own an account with a discount broker such as Ameritrade, Scottrade or Brown & Company. Many of the well known discount brokers such as Fidelity, Schwab and Waterhouse have adopted hidden fees.

Brokers and financial planners will tell you not to switch around, but that is because they have not learned their trade. It also might mean they are too lazy to do their job. If you remain with a weak fund you will have a weak return or even lose money.

I may sound too harsh in my criticism of brokers and financial planners, but I have hired more than 300 brokers when I owned a brokerage company and I know that only about 1% (yes, one) know how to make money and protect capital. You have to find a good one or take charge yourself.

There may be times when very few, if any, funds are going up. Then you will be in cash in a money market. CASH IS A POSITION. Performance also includes not losing while the market is going down.

Knowing how and when to switch will double or triple your returns and most importantly you will not lose profits you have made. Stay with the best performers at all times.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

Article Source: http://EzineArticles.com/?expert=Al_Thomas

Read more...

Assessing Your Investments

Assessing Your Investments

How are your investments doing? In these economic times, this is probably one of the more common opening comments when business leaders get together. The response depends on the investments each is considering. Some will focus on the investment in the stock market. Others may be more interested in the heavy investment in technology required to keep their company at the leading edge for their industry.

I recently asked Mark Parrish an Investment Advisor with RBC Dominion Securities what questions he is getting from his clients about their investments in the market. A couple examples were:

• "Is my portfolio OK?"
• "What are the opportunities for growth right now?"

Knowing Mark's excellent understanding of the markets and passion for helping clients I will defer answers to these questions to his expertise. mark.parrish@rbc.com or www.markparrish.ca.

Instead, let's take a look at one investment often overlooked, investment in your people. These investments easily relate to the two questions above.

First; "Is my portfolio OK?" The concept here is the investment you have made in getting the right people on board. Regardless of whether you recruit using an internal HR department or rely on one of the many professional recruiting firms, there is a cost AKA investment in hiring.

This investment then becomes something like an annuity fund where you continue to make deposits, salary and benefit payments, in the expectation of receiving a positive return. Like buying the right investment items, you need to ensure you have the right people in the right place doing the right things in the right way. If that is the case, then your portfolio is probably OK.

Turning to the second questions; "What are the opportunities for growth right now?", again this is readily adapted to your human resources investment. By and in large firms recruit based on attributes or the ability to grow with the company. These attributes must be developed to ensure the proper growth. That development can take many forms. It could be cross-training within the company to expand the employee's knowledge and enable them to fill in during emergencies. It could mean funding formal learning workshops / seminars attended either in-house or externally. Another means of growth and development is the assignment of a mentor or coach to individuals you wish to develop.

If there is one truism that applies regardless of the nature of the industry any firm is involved in it is:

Your competition can easily purchase the technology or equipment used by your firm;

what sets you apart is the people who use that equipment and technology.

Are you looking at the investment in your human resource assets as an investment in the future growth and prosperity of your company? If not, why not?

Gordon J. H. Newman, CPT?
Gordon is President of The Newman Learning Group Inc. an organization dedicated to providing value add solutions to improve the bottom line performance of organization and individuals. Gordon may be reached at gordon@newmanlearning.com or 905-790-2944 http://www.newmanlearning.com

Article Source: http://EzineArticles.com/?expert=Gordon_Newman

Read more...

Invest in Your Family's Future With Bullion Vault

Bullion Gold Bars - Invest in Your Family's Future With Bullion Vault

For years now there has been consistence all over the world and that is the recognition of what we simply call ... Gold! From the times of ancient Egyptians unto our modern day, gold has changed the lives of so many people. Today, Bullion Gold Bars are far ahead making that same rare distinction known all over the world for its easy diversification investments.

Bullion Vault enables people all over the world to own market gold and keep it in either of their secured vaults in New York, London, or Zurich in Switzerland. Bullion Vault guarantee the purity and weight of its gold whenever you buy or sell through its Good Delivery Form.

As a Bullion Vault customer, you save a lot of money by cutting out the middleman dealing directly with each other. Bullion Vault's public order board makes this possible with their open price competition between thousands of users which drives down the cost of trading gold.

Compared to other gold markets, Bullion Vault stays open 24 hours a day, 7 days a week for the convenience of their gold owners. Whether buyers or sellers, Bullion Vault is the only gold market that lets its customers compete with its own quoted prices to get all users the best possible deals.

You can purchase Bullion Gold Bars, coins, or jewelry right now for several reasons. Around the world inflation has led to a greater demand for gold. Also, gold production is either flat or falling around the world. However, there are certain strategies you can use to insure you buy at the lowest possible rates.

Make sure that you are dealing with a trusted dealer whenever you purchase gold online. Also, be sure that the gold is solid and true to avoid complications later down the road. There are legitimate dealers across the Internet but you must take caution each step of the way. This is why more and more people are turning to the most trusted name in the gold market.

Whether you're purchasing Bullion Gold Bars or gold coins for its beauty and collection, you should always exercise care when handling them. Before your gold purchase, always remember to check for the weight stated in Troy ounces, the purity percentage (on average this is 99.98% pure), and the serial number to the particular bar. This is a great time to invest in gold for the sake of your family's future.

Start today with Bullion Gold Bars and get up to the minute reports for everything you need at Gold World today.

Article Source: http://EzineArticles.com/?expert=Truby_Johnson

Read more...