1001mutualfund tips :
A monthly bill organizer is very important for maintaining positive cash flow. Very simply, cash flow in and cash flow out are two important aspects of one's financial stability.
It hurts when one has to pay more than he is entitled to. Taxes are inevitable but late fees can be curbed down to level zero.
For most of us it is the credit card bill that takes a toll. A common mistake made by not so frugal ones. Use credit cards until they max out and pay little every month.
By the time you realize your credit card bill would have soared higher than the expense you incurred with maximum interest charges and late fees. For some it would be the phone and internet bills, gas and electricity and the list goes on.
Ever picked up a financial best seller? The first thing they talk about is organizing your expenses before saving. You can take the first step by getting a monthly bill organizer. Money that you save from those monstrous interest rates and late fees will actually go into your savings. A mail and bill organizer can certainly help you to have the money you need on hand at any given time.
Unfortunately, many people fall behind on their payments because they simply can't keep track of them all, and therefore, end up not paying them at all. Also, it's pretty hard to stay within your budget when you don't know how much you've spent and have coming in per month. This is where a bill paying organizer comes in.
A monthly bill organizer has its greatest value in helping you to easily keep track of cash flow and make adjustments accordingly if you have more going out then coming in. without having this information, it's impossible to see the areas you need improvement on.Keeping track of your expenses is certainly an underutilized skill nowadays, as it's something not really taught much ins school, and this is why so many people have so much trouble staying on target with their expense throughout their lives. The reality is, your financial situation is one of the most important of your life; if you don't have your finances in order, you are in serious trouble.
Unfortunately, in school today you are often taught accounting, history, physical education, science, etc, but very rarely taught how to manage money. this is one of the prime reasons so many people have trouble with this. Fortunately for you, a monthly bill organizer can take some serious pressure off of you in this situation.
Depending upon the number of bills you receive every month and your budget you can go either for a leather bill organizer or a wooden, plastic box one that has different slots for different bills. Place it on your desk or near your dining, coffee table where you can easily spot them.
This way you won't miss on a payment. If you can get a small sliding door attached to your organizer it would be good to keep pens, checks handy. Otherwise, you can place a pen stand near your organizer. This organizer will make your corner clutter free as you would find your statements and bills stacked neatly on it and not crumpled in your drawer.
With the help of monthly bill organizer you will find money in your wallet that used to go away as late fees. You will notice this after couple of months when you will have extra money for the beautiful dress you always wanted to buy but hesitated to keep your monthly expenses at par.
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Tuesday, January 29, 2008
A few way to find out the MUTUAL FUND performance
Mutual funds allow people to invest their money in a way that will provide them with future benefits. When you are looking at a mutual fund in which you can invest in you may wish to look at several different ones. The mutual fund performance will help you to see what stocks and bonds work well in the market as compared to others. You can also find more help with this answer in various financial news articles.
One such article or guide that you may find to be useful is that of the Morningstar review. The review will have the latest market news which will indicate how a mutual fund performance has gone. You will also need to look at various other factors before you make any type of commitment about a mutual fund that you have seen.
These factors are the price you need to pay to buy and sell your stocks and bonds. The type of load that you are signing up for and also the other administrative expenses you will be expected to help out with. In looking at the mutual fund performance you should consider how your tax bill will be affected.
The tax bill is likely to be affected by a capital gains distribution. You can use various online mutual funds calculators to find what these tax costs are likely to be. The other item that should be investigated in a mutual fund performance evaluation is that of the volatility. When you are thinking of investing in mutual funds you want the stocks that you have chosen to be relatively stable.
The choice of a volatile mutual fund will only spell higher risks for you. The best way to know if any given mutual funds have a tendency to volatility is by reading the funds annual reports and prospectuses. You should also compare the yearly performance figures. All of this information will inform you if various companies that you are looking into have the ability to weather the stock market with ease or if there are drastic ups and down periods of investment.
Another way to find out the mutual fund performance is to ask about any changes which may have occurred. These changes will include a change of personnel or the investment advisor that you were working with is no longer available. All of these minor changes have the ability of affecting the outlook of your mutual fund.Therefore before you choose to invest with any mutual funds group it is always best to see what the mutual fund performance of this company is like. This knowledge is vital to getting the best deal on mutual funds that you can.
One such article or guide that you may find to be useful is that of the Morningstar review. The review will have the latest market news which will indicate how a mutual fund performance has gone. You will also need to look at various other factors before you make any type of commitment about a mutual fund that you have seen.
These factors are the price you need to pay to buy and sell your stocks and bonds. The type of load that you are signing up for and also the other administrative expenses you will be expected to help out with. In looking at the mutual fund performance you should consider how your tax bill will be affected.
The tax bill is likely to be affected by a capital gains distribution. You can use various online mutual funds calculators to find what these tax costs are likely to be. The other item that should be investigated in a mutual fund performance evaluation is that of the volatility. When you are thinking of investing in mutual funds you want the stocks that you have chosen to be relatively stable.
The choice of a volatile mutual fund will only spell higher risks for you. The best way to know if any given mutual funds have a tendency to volatility is by reading the funds annual reports and prospectuses. You should also compare the yearly performance figures. All of this information will inform you if various companies that you are looking into have the ability to weather the stock market with ease or if there are drastic ups and down periods of investment.
Another way to find out the mutual fund performance is to ask about any changes which may have occurred. These changes will include a change of personnel or the investment advisor that you were working with is no longer available. All of these minor changes have the ability of affecting the outlook of your mutual fund.Therefore before you choose to invest with any mutual funds group it is always best to see what the mutual fund performance of this company is like. This knowledge is vital to getting the best deal on mutual funds that you can.
Tuesday, January 22, 2008
Winning With Mutual Funds
A mutual fund (called 'unit trust' in Asia) is an investment vehicle that pools money from many individual investors. A professional fund manager invests and manages these funds into stocks, bonds and other securities.
People usually invest in mutual funds because it is offers the advantage of broad diversification (it spreads your money over tens or hundreds of stocks to reduce risk) and professional management. However, do remember that as broad diversification reduces risks, it also reduces return.
First, here is the bad news. If you speak to most people who have invested in unit trusts in Asia (especially Singapore) or in mutual funds, most would report losing money or just earning measly returns of 2%-4%. In fact, in the year 2004, it was reported in the Straits Times that 559,000 Singaporeans lost $680 million by investing their CPF in these funds. By going to the largest unit trust distributor Asia, you can easily calculate that only 6% of unit trusts beat the S&P 500 over a ten-year period. What are the chances of you placing your bet on this 6%? Chances are you would have had lower returns that the index, while still having to pay those hefty sales charges and annual management fees.
How about the US mutual fund market? On average, less than 10% of mutual funds beat the S&P 500 index each year! What's worse is that it is a different 10% each year. Less than 3% of mutual funds are able to beat the S&P 500 Index over a five to ten year period. So again, what are the chances of you beating the market through betting on the right fund? Only 3%! You have better odds at the Black Jack table. The worse thing is that the fund manager gets paid an annual management fee whether or not the fund makes money.
Why is it so difficult for most people to make money in mutual funds? There are four main reasons.
1) High Sales Charges & Management FeesMost people buy mutual funds through banks and financial institutions at retail prices where there is a sales charge (front load) and high annual management fees (expense ratios).In Asia, most banks & financial institutions sell unit trusts with a sales charge of 5%-6% and with annual fees of 1.5%-2%. It means that before you even begin, you are down 6.5%-8% on your investment and will be down another 1.5% every year. Your fund must outperform the S&P 500 by 6.5%-8% just to make it worth your while! Again, less than 10% of funds worldwide can achieve this every year and less than 3% can achieve this over five years.
2) Buying the Hottest Performing FundsMost people choose funds based on high short-term returns. These are the funds that are normally pushed and advertised by financial retailers. They feature impressive and enticing returns like 'This fund was up +65% in the last six months'.The fact is that the best short-term performing funds tend to also be big losers in the subsequent years and long term. Why? Because these funds tend to be invested in hot stocks or hot sectors where the stocks have been rising rapidly and fund managers buy, riding on the momentum. That is why they post very spectacular returns. However, strong buying activity tend to push these stocks to be overvalued and sure enough, the stocks will come crashing down in the next few years. Mutual funds that consistently beat the S&P 500 tend to be invested in non-hot sectors and do not post spectacular short-term returns.
3) Limited Selection of Unit Trusts LocallyIf you are in Asia, then you are normally exposed to only a limited number of unit trusts. A check with fundsupermart.com (the largest Asian unit trust distributor) shows that there are just about 300 funds available here compared to over 8,000 funds in the US market.When I made a search on the Top Performing Fund sold locally (year 2005), I was presented with 'Fidelity America USD' with a 10-year annualized return of 11.27%. (Recall that the S&P 500 returned 12.08% a year). So, even the top-performing fund couldn't beat the S&P 500 after deducting expenses & fees!!
4) Lack of Research Knowledge, Data & ToolsThe single most important reason why investors lose money in mutual fundsis because they don't have the knowledge or necessary information to search for the top 3% of consistent performing funds at the lowest costs. Investors tend to buy on the advice of their bank managers, facts from the fund fact sheet or prospectus which does not provide enough information to select the right fund.
People usually invest in mutual funds because it is offers the advantage of broad diversification (it spreads your money over tens or hundreds of stocks to reduce risk) and professional management. However, do remember that as broad diversification reduces risks, it also reduces return.
First, here is the bad news. If you speak to most people who have invested in unit trusts in Asia (especially Singapore) or in mutual funds, most would report losing money or just earning measly returns of 2%-4%. In fact, in the year 2004, it was reported in the Straits Times that 559,000 Singaporeans lost $680 million by investing their CPF in these funds. By going to the largest unit trust distributor Asia, you can easily calculate that only 6% of unit trusts beat the S&P 500 over a ten-year period. What are the chances of you placing your bet on this 6%? Chances are you would have had lower returns that the index, while still having to pay those hefty sales charges and annual management fees.
How about the US mutual fund market? On average, less than 10% of mutual funds beat the S&P 500 index each year! What's worse is that it is a different 10% each year. Less than 3% of mutual funds are able to beat the S&P 500 Index over a five to ten year period. So again, what are the chances of you beating the market through betting on the right fund? Only 3%! You have better odds at the Black Jack table. The worse thing is that the fund manager gets paid an annual management fee whether or not the fund makes money.
Why is it so difficult for most people to make money in mutual funds? There are four main reasons.
1) High Sales Charges & Management FeesMost people buy mutual funds through banks and financial institutions at retail prices where there is a sales charge (front load) and high annual management fees (expense ratios).In Asia, most banks & financial institutions sell unit trusts with a sales charge of 5%-6% and with annual fees of 1.5%-2%. It means that before you even begin, you are down 6.5%-8% on your investment and will be down another 1.5% every year. Your fund must outperform the S&P 500 by 6.5%-8% just to make it worth your while! Again, less than 10% of funds worldwide can achieve this every year and less than 3% can achieve this over five years.
2) Buying the Hottest Performing FundsMost people choose funds based on high short-term returns. These are the funds that are normally pushed and advertised by financial retailers. They feature impressive and enticing returns like 'This fund was up +65% in the last six months'.The fact is that the best short-term performing funds tend to also be big losers in the subsequent years and long term. Why? Because these funds tend to be invested in hot stocks or hot sectors where the stocks have been rising rapidly and fund managers buy, riding on the momentum. That is why they post very spectacular returns. However, strong buying activity tend to push these stocks to be overvalued and sure enough, the stocks will come crashing down in the next few years. Mutual funds that consistently beat the S&P 500 tend to be invested in non-hot sectors and do not post spectacular short-term returns.
3) Limited Selection of Unit Trusts LocallyIf you are in Asia, then you are normally exposed to only a limited number of unit trusts. A check with fundsupermart.com (the largest Asian unit trust distributor) shows that there are just about 300 funds available here compared to over 8,000 funds in the US market.When I made a search on the Top Performing Fund sold locally (year 2005), I was presented with 'Fidelity America USD' with a 10-year annualized return of 11.27%. (Recall that the S&P 500 returned 12.08% a year). So, even the top-performing fund couldn't beat the S&P 500 after deducting expenses & fees!!
4) Lack of Research Knowledge, Data & ToolsThe single most important reason why investors lose money in mutual fundsis because they don't have the knowledge or necessary information to search for the top 3% of consistent performing funds at the lowest costs. Investors tend to buy on the advice of their bank managers, facts from the fund fact sheet or prospectus which does not provide enough information to select the right fund.
Three Things To Consider When Choosing Unit Trust
With so many funds to choose from it becomes harder to choose a unit trust that won't steer you wrong. With so many choices it can be tricky to pinpoint the goals of the funds and whether they match with your goals.
Here are three things to consider when choosing a unit trust.
1. Are you looking for stability, income, or growth? If growth is what you seek then you are looking for the investment to increase in value over time. If you are looking for stability then you are looking for a unit trust that will protect your investment. This is the first of three things to consider when choosing a unit trust.
2. What is the funds investment strategy? You will want to obtain the fund fact sheet and prospectus from the company which will outline what securities and shares the fund might invest in and what their method of selecting them is. It will also outline the funds investment practices as well as how the fund has done in the past 1 to 10 years. Of the three things to consider when choosing a unit trust this requires the most research.
3. Knowing the riskOne of the three things to consider when choosing a unit trust is to know the risks. Funds go up and down and that's the risk you need to understand. There are types of risks that you need to be aware of. Currencies, politics, inflation - these are all other risks you face. If you are investing out of your country currency and politics are a big risk factor. Inflation may be a big or small risk factor depending on the economy at the time of investment. Understand your risks.Consider any fees attached to both purchasing and selling the unit trust and you'll want to note if there is a lock in. Selling before this period and you will pay a penalty which can be substantial.
Of the three things to consider when choosing a unit trust this is the most critical of the three things to consider when choosing a unit trustThese three things to consider when choosing a unit trust are just the beginning. There are many things you need to watch for but it will get you going. In fact now that you know what three things to consider when choosing a unit trust you should be prepared to shop wisely?There is no need to choose any one of the three things to consider when choosing a unit trust because you need to be involved in all strategies.
Here are three things to consider when choosing a unit trust.
1. Are you looking for stability, income, or growth? If growth is what you seek then you are looking for the investment to increase in value over time. If you are looking for stability then you are looking for a unit trust that will protect your investment. This is the first of three things to consider when choosing a unit trust.
2. What is the funds investment strategy? You will want to obtain the fund fact sheet and prospectus from the company which will outline what securities and shares the fund might invest in and what their method of selecting them is. It will also outline the funds investment practices as well as how the fund has done in the past 1 to 10 years. Of the three things to consider when choosing a unit trust this requires the most research.
3. Knowing the riskOne of the three things to consider when choosing a unit trust is to know the risks. Funds go up and down and that's the risk you need to understand. There are types of risks that you need to be aware of. Currencies, politics, inflation - these are all other risks you face. If you are investing out of your country currency and politics are a big risk factor. Inflation may be a big or small risk factor depending on the economy at the time of investment. Understand your risks.Consider any fees attached to both purchasing and selling the unit trust and you'll want to note if there is a lock in. Selling before this period and you will pay a penalty which can be substantial.
Of the three things to consider when choosing a unit trust this is the most critical of the three things to consider when choosing a unit trustThese three things to consider when choosing a unit trust are just the beginning. There are many things you need to watch for but it will get you going. In fact now that you know what three things to consider when choosing a unit trust you should be prepared to shop wisely?There is no need to choose any one of the three things to consider when choosing a unit trust because you need to be involved in all strategies.
Monday, January 7, 2008
How Mutual Funds Works?
What are Mutual funds?
A company dealing in mutual funds invests the money of several investors in bonds, stocks, securities, assets and several other short-term money-market instruments. The combined holdings owned by the mutual fund are known as its portfolio. When you invest in a mutual fund you become a shareholder of the company.
Each share in a mutual fund company is the representation of he investor's proportionate ownership of the fund holdings and the income generated. You earn dividends when the mutual fund company earns a profit, however, your shares will decrease in value if it faces a loss. A professional investment manager does the buying and selling of securities for the growth of the fund.
Types of mutual funds: Equity funds: These funds involve only common stock investments. They can earn a lot of profit, but are also very risky.
Fixed income funds: They include corporate and government securities. These funds offer fixed returns at a low risk.
Balanced funds: This is the combination of bonds and stocks with a low risk. However, the investment does not earn a lot through these funds.
How it works?
Mutual fund shares can be purchased from the company itself or a broker. There are secondary market investors also, like the New York Stock Exchange. Per share net asset value of the funds or NAV is the price that you pay for buying a mutual fund share. It also includes the shareholder fee that is imposed by the fund, at time of purchase. The best feature of mutual funds is that these shares are redeemable. You, as an investor, can sell your shares back to the broker. In order to accommodate new investors, mutual fund companies generally create new shares and sell them. They keep selling their shares continuously till they become large.
Investment advisers act as separate entities and are responsible for managing the investment portfolio of the mutual funds. Investing in mutual funds tends to lower the risk factor because they are the result of diverse investments. Since someone else manages your investments, you need not worry about keeping constant tabs on the investment, though a periodical check enhances your personal book of accounts. Managing funds is the full time job of the fund manager and he is responsible for the performance and health of the investment.
The rate of returns in mutual funds is based on the increase or decrease of the value, during a specific period. Returns of a fund indicate the track record. It is important to remember that the past performance cannot guarantee future results. As in the case of any investment or business, mutual funds also have risks associated with the returns. It is essential to set your financial goals and requirements, before investing in a mutual fund.
A company dealing in mutual funds invests the money of several investors in bonds, stocks, securities, assets and several other short-term money-market instruments. The combined holdings owned by the mutual fund are known as its portfolio. When you invest in a mutual fund you become a shareholder of the company.
Each share in a mutual fund company is the representation of he investor's proportionate ownership of the fund holdings and the income generated. You earn dividends when the mutual fund company earns a profit, however, your shares will decrease in value if it faces a loss. A professional investment manager does the buying and selling of securities for the growth of the fund.
Types of mutual funds: Equity funds: These funds involve only common stock investments. They can earn a lot of profit, but are also very risky.
Fixed income funds: They include corporate and government securities. These funds offer fixed returns at a low risk.
Balanced funds: This is the combination of bonds and stocks with a low risk. However, the investment does not earn a lot through these funds.
How it works?
Mutual fund shares can be purchased from the company itself or a broker. There are secondary market investors also, like the New York Stock Exchange. Per share net asset value of the funds or NAV is the price that you pay for buying a mutual fund share. It also includes the shareholder fee that is imposed by the fund, at time of purchase. The best feature of mutual funds is that these shares are redeemable. You, as an investor, can sell your shares back to the broker. In order to accommodate new investors, mutual fund companies generally create new shares and sell them. They keep selling their shares continuously till they become large.
Investment advisers act as separate entities and are responsible for managing the investment portfolio of the mutual funds. Investing in mutual funds tends to lower the risk factor because they are the result of diverse investments. Since someone else manages your investments, you need not worry about keeping constant tabs on the investment, though a periodical check enhances your personal book of accounts. Managing funds is the full time job of the fund manager and he is responsible for the performance and health of the investment.
The rate of returns in mutual funds is based on the increase or decrease of the value, during a specific period. Returns of a fund indicate the track record. It is important to remember that the past performance cannot guarantee future results. As in the case of any investment or business, mutual funds also have risks associated with the returns. It is essential to set your financial goals and requirements, before investing in a mutual fund.
Sunday, January 6, 2008
The Actual Cost of Term Life Insurance
The Internet has lots of information about the benefits of life insurance, but few websites tell how much life insurance actually costs. Each year, however, Insure.com surveys 25 leading insurance companies—those with A.M. Best Company ratings of A++ or A+, called “Superior,” and those with ratings of A or A-, considered “Excellent”—to find the lowest rates available for level term life insurance by age and gender.
The latest survey was taken on November 12, 2007 and published on the website three days later. The results were positive for consumers: The price of life insurance continues to decline.Part of the reason for the decline is competition. Websites that offer price comparisons are causing insurance companies to lower their prices to compete. It is a variation on the theme of the “when banks compete, you win.” When insurance companies compete, you win, too.
The Internet has also helped by automating—and thus lowering the cost of—the application process. Another reason prices are falling is the declining death rate. The age-adjusted death rate in 2004 was 800.8 deaths per 100,000 people, a decrease of 3.8 percent from the 2003 rate and a the lowest recorded U.S. figure. Fewer deaths mean the insurance companies pay fewer death benefits. This reduces costs and gives the insurance companies more time to earn more income from the premiums paid into the system.
Some of the extra income goes to the bottom line, enhancing profits, but some income is plowed back into operations, allowing the companies to lower their rates.The Insure.com survey included 10-, 20-, and 30-year level term policies with three popular death benefits: $250,000, $500,000, and $1,000,000. The survey assumes the consumer is in ideal health, meets stringent guidelines for height-to-weight ratios, and does not partake of any risky activities, such as skydiving, motorcycle racing, or mountain climbing. To keep the survey simple, it focused on rates in just one state: California.
The survey found that lowest annual rate for a 10-year level term policy worth $250,000 was $108. The lowest rate for a 20-year, $250,000 policy was $153 a year. Those rates were available to both men and women aged 30 and 35. The lowest annual rate for a 30-year, $250,000 policy was $228. That rate was available to 30-year-old men and women. At 35, the rate rose slightly for both genders, to $250 a year.Rates increase with age. They also go up depending on other factors, such as death rates at certain ages. Because women encounter breast and cervical cancer at relatively early ages, they actually pay more than men do for 30-year policies at age 40. Women pay $355 a year for a 30-year, $250,000 policy, while men pay $335 a year.
Men and women age 40 pay the same for 10-year policies ($130 a year) and 20-year policies ($203 a year).The actuarial tables begin to turn at age 45. Women no longer pay more than men do for any policy. However, men pay more than women do for 20- and 30-year term policies: $340 and $520 a year for men, compared to $318 and $428 a year for women. Men and women both pay $183 a year for 10-year term policy worth $250,000.The pattern holds at age 50: Men and women pay the same for a 10-year policy ($263 a year), but men pay more than women do for a 20-year policy ($510 a year compared to $370 a year) and for a 30-year policy ($768 a year compared to $585 a year).Men and women no longer pay the same for any term policies, beginning at age 55. The lowest rate for men for a 10-year, $250,000 policy is $403 a year. For women, it is $345 a year.
The lowest rate men can get for a 20-year policy is $773 a year, while women can get the same policy for $580 a year. Age 55 is the last year in the survey that men or women can qualify for a 30-year term policy. The lowest rate for men was $1,550 a year; the lowest rate for women was $1,080.The purpose of the death benefit is to replace the lost income of a deceased family member. The amount of the death benefit should equal the deceased person’s annual income for a period of years, giving the family time to adjust to the changes. Experts differ on how long that period should be. Some say as little as three years, others say as much as 10 years.
If the breadwinner contributes $50,000 a year, then a $250,000 death benefit would cover five years of lost income. To cover 10 years of lost income, the death benefit would need to be $500,000. To compensate for 10 years lost of an annual $100,000 income, the policy would have to pay $1 million.As death benefits increase, so do rates, of course. The gap between men and women increase for the larger amounts, as well. This is because differences in mortality rates that are statistically insignificant at $250,000 begin to have an impact at the $500,000 level. Rates are not the same for 30-year-old men and women seeking a 30-year term policy worth $500,000. The lowest rate for men is $395 a year.
Women can get the same policy for 18% less, or $325 a year. The difference between the genders increases—not just in dollar amount, but in percentage—at the $1 million level. 30-year-old men must pay $710 a year for a $1 million, 30-year term policy. Women the same age pay 21% less, or $565 a year, for the same policy.Although the survey was based on individuals in ideal health, the increases in life expectancy and ongoing competition among insurers mean good deals are available for almost everyone.
The latest survey was taken on November 12, 2007 and published on the website three days later. The results were positive for consumers: The price of life insurance continues to decline.Part of the reason for the decline is competition. Websites that offer price comparisons are causing insurance companies to lower their prices to compete. It is a variation on the theme of the “when banks compete, you win.” When insurance companies compete, you win, too.
The Internet has also helped by automating—and thus lowering the cost of—the application process. Another reason prices are falling is the declining death rate. The age-adjusted death rate in 2004 was 800.8 deaths per 100,000 people, a decrease of 3.8 percent from the 2003 rate and a the lowest recorded U.S. figure. Fewer deaths mean the insurance companies pay fewer death benefits. This reduces costs and gives the insurance companies more time to earn more income from the premiums paid into the system.
Some of the extra income goes to the bottom line, enhancing profits, but some income is plowed back into operations, allowing the companies to lower their rates.The Insure.com survey included 10-, 20-, and 30-year level term policies with three popular death benefits: $250,000, $500,000, and $1,000,000. The survey assumes the consumer is in ideal health, meets stringent guidelines for height-to-weight ratios, and does not partake of any risky activities, such as skydiving, motorcycle racing, or mountain climbing. To keep the survey simple, it focused on rates in just one state: California.
The survey found that lowest annual rate for a 10-year level term policy worth $250,000 was $108. The lowest rate for a 20-year, $250,000 policy was $153 a year. Those rates were available to both men and women aged 30 and 35. The lowest annual rate for a 30-year, $250,000 policy was $228. That rate was available to 30-year-old men and women. At 35, the rate rose slightly for both genders, to $250 a year.Rates increase with age. They also go up depending on other factors, such as death rates at certain ages. Because women encounter breast and cervical cancer at relatively early ages, they actually pay more than men do for 30-year policies at age 40. Women pay $355 a year for a 30-year, $250,000 policy, while men pay $335 a year.
Men and women age 40 pay the same for 10-year policies ($130 a year) and 20-year policies ($203 a year).The actuarial tables begin to turn at age 45. Women no longer pay more than men do for any policy. However, men pay more than women do for 20- and 30-year term policies: $340 and $520 a year for men, compared to $318 and $428 a year for women. Men and women both pay $183 a year for 10-year term policy worth $250,000.The pattern holds at age 50: Men and women pay the same for a 10-year policy ($263 a year), but men pay more than women do for a 20-year policy ($510 a year compared to $370 a year) and for a 30-year policy ($768 a year compared to $585 a year).Men and women no longer pay the same for any term policies, beginning at age 55. The lowest rate for men for a 10-year, $250,000 policy is $403 a year. For women, it is $345 a year.
The lowest rate men can get for a 20-year policy is $773 a year, while women can get the same policy for $580 a year. Age 55 is the last year in the survey that men or women can qualify for a 30-year term policy. The lowest rate for men was $1,550 a year; the lowest rate for women was $1,080.The purpose of the death benefit is to replace the lost income of a deceased family member. The amount of the death benefit should equal the deceased person’s annual income for a period of years, giving the family time to adjust to the changes. Experts differ on how long that period should be. Some say as little as three years, others say as much as 10 years.
If the breadwinner contributes $50,000 a year, then a $250,000 death benefit would cover five years of lost income. To cover 10 years of lost income, the death benefit would need to be $500,000. To compensate for 10 years lost of an annual $100,000 income, the policy would have to pay $1 million.As death benefits increase, so do rates, of course. The gap between men and women increase for the larger amounts, as well. This is because differences in mortality rates that are statistically insignificant at $250,000 begin to have an impact at the $500,000 level. Rates are not the same for 30-year-old men and women seeking a 30-year term policy worth $500,000. The lowest rate for men is $395 a year.
Women can get the same policy for 18% less, or $325 a year. The difference between the genders increases—not just in dollar amount, but in percentage—at the $1 million level. 30-year-old men must pay $710 a year for a $1 million, 30-year term policy. Women the same age pay 21% less, or $565 a year, for the same policy.Although the survey was based on individuals in ideal health, the increases in life expectancy and ongoing competition among insurers mean good deals are available for almost everyone.
Friday, January 4, 2008
Pros And Cons of Different Types Of Investments
When deciding where to invest your money, you need to always take into account your investment goals and objectives. Different types of investments carry varying degrees of risks and potential return.
CD
A bank CD is a very safe investment. The CD is FDIC insured up to $100,000, so there truly is minimal risk. The only downside is that you cannot withdraw that money in the CD for a specific amount of time or else you'll receive a penalty. Bank CDs generally only pay up to 5% interest.
Bonds
A bond is essentially a loan you make to a company or a government. Bonds have varying degrees of risk, from essentially risk-free treasuries to junk bonds. The higher the risk of the bond, the higher the return will generally be.
Stocks
Stocks are investments in companies. Depending on the company, the risk of the investment can be high or low. Obviously, buying stock in Johnson and Johnson is a lot less risky than a new internet startup company. In general, the stock market returns on average about 10% a year, though the actual return of any given stock will vary significantly.
Mutual Funds
A mutual fund typically invests in over 100 stocks, so it's an instant way to diversify your portfolio. However, the mutual fund generally charges a fee, which is about 1% of your assets per year. Because of this fee, most mutual funds do not outperform the market; a monkey blindly picking 100 stocks but not charging you a fee could easily outperform most mutual funds.
Real Estate
Real estate is a popular investment. The most obvious real estate investment you'll make is when you purchase your home. Your home can go up or down in value when you sell it; it depends on the housing market in your area.
CD
A bank CD is a very safe investment. The CD is FDIC insured up to $100,000, so there truly is minimal risk. The only downside is that you cannot withdraw that money in the CD for a specific amount of time or else you'll receive a penalty. Bank CDs generally only pay up to 5% interest.
Bonds
A bond is essentially a loan you make to a company or a government. Bonds have varying degrees of risk, from essentially risk-free treasuries to junk bonds. The higher the risk of the bond, the higher the return will generally be.
Stocks
Stocks are investments in companies. Depending on the company, the risk of the investment can be high or low. Obviously, buying stock in Johnson and Johnson is a lot less risky than a new internet startup company. In general, the stock market returns on average about 10% a year, though the actual return of any given stock will vary significantly.
Mutual Funds
A mutual fund typically invests in over 100 stocks, so it's an instant way to diversify your portfolio. However, the mutual fund generally charges a fee, which is about 1% of your assets per year. Because of this fee, most mutual funds do not outperform the market; a monkey blindly picking 100 stocks but not charging you a fee could easily outperform most mutual funds.
Real Estate
Real estate is a popular investment. The most obvious real estate investment you'll make is when you purchase your home. Your home can go up or down in value when you sell it; it depends on the housing market in your area.
Tips For Choosing High-Performance Mutual Fund
Most people who invest in mutual funds don't know what they are doing. They take advice from someone at a bank or perhaps a friend and plunk down money into a fund. Sometimes this strategy works, but most of the time, it doesn't.
When you invest your money in a mutual fund, you are trusting someone to invest in the stock market for you. Because of this, you want to be sure this person knows what he or she is doing. Also, you want to make sure that this person is not charging you too much to manage your money for you. Mutual funds fees are "hidden," in the sense that they do not charge you an upfront fee but rather a percentage of the amount of money in your account. If this percentage is too high, you would do better just blindly picking stocks yourself.
Here are five helpful tips for choosing the right mutual funds.
1. Keep the fees low. Generally, expense fees should not be much higher than 1% if it is just a basic domestic equity fund. You should never invest money in a fund that also charges a "load," which is an additional fee that is ridiculous to pay. Never invest in funds that charge loads; those funds are for suckers.
2. Check the asset base. Mutual fund managers only know of so many good investments. When they have too much money to manage, they begin investing in stocks they don't like much but need to invest in anyway or else they'll just have money laying around. There's little reason to invest in a fund with over $5 billion in assets. It's best if it's under $2 billion generally.
3. Consider an index fund. This is a fund that tracks a stock index, such as the S&P 500. For these funds, the manager just buys whatever stocks happen to be in the index. Since this is not much work, the fees are much lower. Even though this method is simple, it has proven to perform better than most mutual funds. Some high performance index funds include FSMKX (Fidelity S&P 500) and VIMSX (Vanguard S&P 400 Midcap.
4. Evaluate the fund's strategy. If you have a long term outlook, look for a more aggressive fund that invests in small-cap stocks, international stocks, and riskier stocks in general. High risk tends to result in high performance in the long run. If you are more risk-averse, consider an S&P 500 index fund.
5. Keep the fees low. Did I mention this already? Well, I'll mention it again. This is where most people mess up. Make sure you are not paying a load or paying too much in fees to the mutual fund.
More information about mutual funds can be found at Research Mutual Funds.
When you invest your money in a mutual fund, you are trusting someone to invest in the stock market for you. Because of this, you want to be sure this person knows what he or she is doing. Also, you want to make sure that this person is not charging you too much to manage your money for you. Mutual funds fees are "hidden," in the sense that they do not charge you an upfront fee but rather a percentage of the amount of money in your account. If this percentage is too high, you would do better just blindly picking stocks yourself.
Here are five helpful tips for choosing the right mutual funds.
1. Keep the fees low. Generally, expense fees should not be much higher than 1% if it is just a basic domestic equity fund. You should never invest money in a fund that also charges a "load," which is an additional fee that is ridiculous to pay. Never invest in funds that charge loads; those funds are for suckers.
2. Check the asset base. Mutual fund managers only know of so many good investments. When they have too much money to manage, they begin investing in stocks they don't like much but need to invest in anyway or else they'll just have money laying around. There's little reason to invest in a fund with over $5 billion in assets. It's best if it's under $2 billion generally.
3. Consider an index fund. This is a fund that tracks a stock index, such as the S&P 500. For these funds, the manager just buys whatever stocks happen to be in the index. Since this is not much work, the fees are much lower. Even though this method is simple, it has proven to perform better than most mutual funds. Some high performance index funds include FSMKX (Fidelity S&P 500) and VIMSX (Vanguard S&P 400 Midcap.
4. Evaluate the fund's strategy. If you have a long term outlook, look for a more aggressive fund that invests in small-cap stocks, international stocks, and riskier stocks in general. High risk tends to result in high performance in the long run. If you are more risk-averse, consider an S&P 500 index fund.
5. Keep the fees low. Did I mention this already? Well, I'll mention it again. This is where most people mess up. Make sure you are not paying a load or paying too much in fees to the mutual fund.
More information about mutual funds can be found at Research Mutual Funds.