January 9th, 2009
weavey wonder asked:
I am 16 and my dad wants to open a mutual fund for the family,but what happens if he dies or something. How and who is the funds carried to. Do we need a will?A lawyer will be too much money. Will hais children have access to the funds?
Tags: Dad, Lawyer, Mutual Fund
Posted in Investing | 4 Comments »
January 4th, 2009
dee asked:
What are the top performing mutual funds in India today. Can you please elaborate since i am new to mutual funds and am thinking of investing in one. Also, what type of fund (balanced/equity) would be best suited for a newbie?
Tags: Invest, Newbie, Top Performing Mutual Funds
Posted in Investing | 2 Comments »
January 4th, 2009
Sacha Tarkovsky asked:
Can you make good gains in stock and mutual funds? Well the facts suggest you cant and the risk reward is against you. If you do then you don’t make much.
Mutual funds simply are a bad investment and with soaring oil prices choking economic growth the near term future is bleak.
Let’s look at the facts.
1. 90% of mutual funds have performance that doesn’t even beat the index
2. Those that do, consider a mutual fund performance as 10% + good. Add in inflation and that doesn’t leave you much.
3. Downside risk is high and many mutual funds can drop by 30% and some even more
4. Mutual funds that do badly simply disappear and another with a short term track record comes in its place and that if it fails it gets replaced.
5. Mutual funds are selling organisations and the sales patter always sounds great but if you wrote to one and asked for an aggregate of all funds ever managed you wont get a reply
6. Do mutual funds go out of business of they lose money? No, they still have their fees so performing is not an issue.
So reality is over 10 years if you make double figures consistently, that’s good in terms of mutual fund performance, but not good if you are interested in building wealth.
The best mutual performance (if your lucky to get it ) wont make you rich so what are the alternatives?
Firstly, you can find better performing investments with lower downside risk and you do not have to blindly give your money to a fund manager to lose.
Do a bit of research and homework - it wont take much effort and you will find a better investment.
A better alternative
A great investment is land. You may never have considered this but its cheap, easy to do has low risk and you can make big profits quickly.
You don’t need insider information or even to do a lot of work, but you will be able to get better growth than the best mutual fund performance.
A great investment in land is
Costa Rica. Land prices has been steadily increasing year after year and many investors are doubling their investment in just a couple of years and that’s way ahead of the best mutual fund performance.
Why is it increasing in value
Well the reasons are simple and compelling
Costa Rica is just a 3 hour flight from the US and property is 70% cheaper and so to are living costs.
Americans in record numbers are buying property here to improve their lifestyle and these properties need to be built on land in fact, investment is at record highs.
Why this bull makret will continue
Land bought in the way of the influx of new buyers can be sold quickly, at big profits and this bull market is set to continue. Why?
With 70 million baby boomers retiring in the next 15 years, with most unable to maintain their existing lifestyles means they will continue to go to Costa Rica for the good life at far lower cost they can get in the US.
By land here and you can beat the best performing mutual trust and have less risk.
We don’t have room here to explain all the advantages such as tax efficiency and ease of purchase but if you look into the facts you will see why this is a much better investment to build wealth longer term than even the best performing mutual fund.
Tags: Aggregate, Building Wealth, Patter
Posted in Investing | No Comments »
January 2nd, 2009
Justin Lukasavige asked:
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.
Tags: Financial Experts, Knack, Many People
Posted in Mutual Funds | No Comments »
January 1st, 2009
jhcashman asked: I have a few mutual funds with fidelity which distribute dividends once a year. By default all the dividends are reinvested back into the funds. I would rather have the dividends in cash so I can invest into different funds. Is there any tax benefits to having the dividends reinvested instead of just taking the dividend in cash?
Thanks
Tags: Dividend, Fidelity, Mutual Funds
Posted in United States | 3 Comments »
December 25th, 2008
Sachin A asked:
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:
It had an embedded lottery. There was an assured 4% dividend, which was slightly less than the average rates prevalent at that time. Thus the interest income exceeded the required payouts and the difference was converted to a cash reserve. The cash reserve was utilized to retire a few shares annually at 10% premium and hence the remaining shares earned a higher interest. Thus the cash reserve kept increasing over time - further accelerating share redemption. The trust was to be dissolved at the end of 25 years and the capital was to be divided among the remaining 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.
Tags: Investment Decisions, Mutual Funds, Prospectus
Posted in Investing | No Comments »
December 24th, 2008
Ulli G. Niemann asked:
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 — they are selling gambling. Follow the “If it sounds too good to be true, it usually is” rule.
2. Most mutual fund newsletters won’t make those outlandish claims, but some of them are still pushing the truth as far as they can. So try to get a free issue or two to examine. If you can’t get a sample, check if they have a trial period? How about a money back guarantee? If not, pay with your credit card. These days you’re pretty well protected by this payment method even if the newsletter doesn’t offer a satisfaction guarantee.
3. Consider the editor as well as the disclaimer notes. Is he or she only publishing a newsletter? Or is he also an investment advisor with a practice?
Why would that last point matter? I may be biased, but I believe that you get far better advice from a writer who also is in the trenches every day investing their own as well as their clients’ portfolios. They would have far better insights as to what works and what doesn’t than someone who has the theory down but no practical experience.
4. Look at the investment recommendations. Are they suggesting you buy into a certain orientation such as mid cap, small cap or large value? Or are they picking specific investments based on a variety of technical indicators?
In my no-load mutual fund practice I use specific recommendations, even for my free newsletter subscribers. They are first based on my trend tracking indicator giving us the green light and secondarily on the selection of mutual funds based on momentum analysis.
The more specific the recommendations, the better, because that allows you to follow along either just on paper (which you should do at first) or with your actual portfolio.
5. Are they recommending when to sell a mutual fund either because of gains or to limit your losses? This to me is the most important issue. If there is no plan in place for getting out, how will you ever know when to sell? This has been the greatest downfall of most publishers (and investors!) since the bear market of 2000 — not selling even if market conditions dictate it would be in your best interest to do so.
The advice of most newsletter services can make you money in bull markets. However, with the continuation of the bear market still a distinct possibility, be sure to look at any newsletter’s investment advice record since 2000.
For many people investing is an emotional issue. The pendulum swings between fear of loss and greed for greater returns. If a complete methodology for buying and selling is offered in a newsletter, such as one I advocate, be sure that it fits your emotional make up.
There is no sense in following an investment approach, which may have merits, if it means sleepless nights for you. You won’t stick with it for the long term — and long-term investing is essential for making your portfolio grow and prosper.
So, the bottom line is to look for a newsletter that:
* does not promise the moon,
* has a track record through up and down markets, and
* recommends an approach that not only is compatible for your investment style but also has an exit strategy so you can capitalize on your gains — in the bank, not only on paper.
Following these guidelines may not make you rich, but it will help you avoid some bad advice.
Tags: Commodity, Newsletter Services, Practical Experience
Posted in Investing | No Comments »
December 22nd, 2008
hockeymom asked:
I’m needing to collateralize against my mutual funds to use money towards starting a new business. What banks will do this?
Tags: Funds Money, Mutual Funds, Starting A New Business
Posted in Other - Business & Finance | 1 Comment »
December 20th, 2008
Randall Berry asked:
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 are actively managed by a person who gets paid by people like us usually from the money that WE give him to manage. ETFs are purchased by us and can be bought and sold all day long with few restrictions and almost no minimums.
* Mutual funds charge 2% or more between loading and maintenance, whereas ETFs typically charge between .5 and 1%. Mutual funds usually have no transaction fee. Brokerage commissions must be paid when purchasing an ETF.
* Mutual funds incur capital gains even though no distribution activity (money back to you) takes place. ETFs usually find a way to avoid these taxable events. This is a significant advantage for an ETF and worse, it is not always clear to the investor how and when it happens.
* Mutual funds mitigate risk by sometimes holding cash in anticipation of a down stock market. ETFs are not actively managed, therefore, YOU the investor and purchaser of the ETF must account for this risk when you decide to buy them. Position sizing is one important consideration with an ETF purchase to manage this particular risk.
Here we go now. The biggest mistake you can make in your decision to allocate to mutual funds or ETFs is to overlook one HUGE advantage an ETF holds over the mutual fund:
* STOP-LOSS order: This is a tool you can employ to nail-down a floor beneath which the price of your ETF cannot fall. You arrange this with your broker or click a button if you are investing with an online brokerage. NO SUCH PROTECTION IS AVAILABLE with a mutual fund. And do not expect your fund manager to point this out.
This tactic can stop the bleeding if things really go wrong with the stock market. Better yet, you can set the stop loss and put it on automatic.
This is proactive management of your money, not merely active.
Whether you are just starting your investment portfolio or are a qualified investor you will want to keep yourself informed about the risks and strategies inherent with each class of personal financial investments. It is now possible to acquire a comprehensive library of knowledge on personal finance in audio format if you know where to look.
Carefully consider the point of view of any financial adviser with whom you seek counsel: Is the person carefully considering your future plans for your job or business before advising you?
________________________________________________________________________
Tags: Brokerage Commissions, Distribution Activity, Investment Accounts
Posted in Mutual Funds | No Comments »
December 15th, 2008
Shankar r asked:
I want to go for mutual funds which gives me more returns with tax exemption. can anyone plz suggest me how do i do with it. I am planning for a short term investment for 2-3years.
Tags: Mutual Funds, Short Term Investment, Tax Exemption
Posted in Investing | 1 Comment »
