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Monday, July 11, 2011

Disadvantages of Mutual Funds

Are There Really Disadvantages of Mutual Funds?

Before you invest, you should do your homework. Will you choose to use mutual funds, closed-end funds, ETFs, and/or individual stocks and bonds? Inevitably, your homework assignment will lead you to articles outlining the disadvantages of mutual funds. But are all of these so-called disadvantages of mutual funds really disadvantages of mutual funds? Let’s take a look at several so-called disadvantages of mutual funds, and how you can avoid them.

So-Called Disadvantages of Mutual Funds?

Disadvantage 1: Mutual Funds Have Hidden Fees
If fees were hidden, those hidden fees would certainly be on the list of disadvantages of mutual funds. The hidden fees that are lamented are properly referred to as 12b-1 fees. While these 12b-1 fees are no fun to pay, they are not hidden. The fee is disclosed in the mutual fund prospectus and can be found on the mutual funds’ web sites. Many mutual funds do not charge a 12b-1 fee. If you find the 12b-1 fee onerous, invest in a mutual fund that does not charge the fee. Hidden fees cannot make the list of disadvantages of mutual funds because they are not hidden and there are thousands of mutual funds that do not charge 12b-1 fees.
Disadvantage 2: Mutual Funds Lack Liquidity
How fast can you get your money if you sell a mutual fund as compared to ETFs, stocks and closed-end funds? If you sell a mutual fund, you have access to your cash the day after the sale. ETFs, stocks and closed-end funds require you to wait three days after you sell the investment. I would call the “lack of liquidity” disadvantage of mutual funds a myth. You can only find more liquidity if you invest in your mattress.
Disadvantage 3: Mutual Funds Have High Sales Charges
Should a sales charge be included in the disadvantages of mutual funds list? It’s difficult to justify paying a sales charge when you have a plethora of no-load mutual funds. But, then again, it’s difficult to say that a sales charge is a disadvantage of mutual funds when you have thousands of mutual fund options that do not have sales charges. Sales charges are too broad to be included on my list of disadvantages of mutual funds.
Disadvantage 4: Mutual Funds and Poor Trade Execution
If you buy or sell a mutual fund, the transaction will take place at the close of the market regardless of the time you entered the order to buy or sell the mutual fund. I find the trading of mutual funds to be a simple, stress-free feature of the investment structure. However, many advocates and purveyors of ETFs will point out that you can trade throughout the day with ETFs. If you decide to invest in ETFs over mutual funds because your order can be filled at 3:50 pm EST with ETFs rather than receive prices as of 4:00 pm EST with mutual funds, I recommend that you sign up for the Stress Management Weekly Newsletter at About.com.
Disadvantage 5: All Mutual Funds Have High Capital Gains Distributions
If all mutual funds sell holdings and pass the capital gains on to investors as a taxable event, then we have a found a winner for the list of disadvantages of mutual funds list. Oh well, not all mutual funds make annual capital gains distributions. Index mutual funds and tax-efficient mutual funds do not make these distributions every year. Yes, if they have the gains, they must distribute the gains to shareholders. However, many mutual funds (including index mutual funds and tax-efficient mutual funds) are low-turnover funds and do not make capital gains distributions on an annual basis.

In addition, retirement plans (IRAs, 401ks, etc.) are not impacted by capital gains distributions. There are also strategies to avoid the capital gains distributions including tax-loss harvesting and selling a mutual fund prior to the distribution.

credit to :
http://mutualfunds.about.com

Thursday, June 30, 2011

Purchasing Gold Jewelry Online Tips - How To Find Good Dealers

The world wide web has greatly changed the way people do business. It made transactions easier and simpler for both the buyers and sellers. Lots of people are enticed to invest in gold and silver as these valuable commodities are at its peak when it comes to global pricing. Then again, it is vital to be watchful and to stay focus whenever you are making deals online. Although there are a lot of genuine websites, there are also websites and perpetrators who are drawn in scams that prey on credulous individuals. Cited below are strategies on how to protect yourself when transacting online particularly when dealing with gold and silver pieces.

Know How Much Your Items Are Worth
If retailing online, be certain that you know how much you are retailing. Understand everything even the tiniest details. Is retailing gold, know the percentage, karats and weight of your items. If retailing silver coins, discover when the coins are actually minted. The date of minting will tell you the percentage of silver is in your items.

Negotiate Using Trustworthy WebsiteTrust only those that are consistent in dispensing good service to their customers. These companies are profitable since they are adhering to sets of codes to hedge themselves and their patrons from embezzlement. Their success doesn't happen overnight. To keep their name in good standing, they have to ensure that everything is in order from the posting of products to the payment dealings.

Be Clever And Use Your Instincts
If you are a voyager traveling across the country, you need to be street wise in order not be attacked or preyed on by a shoplifter, filch or a burglar. The same goes when transacting online, you need to know the intricacies of the industry. Do not be easily convinced. They say that in order to counteract embezzler, you need to think like a crook. Understand how the scams work. There are so many articles online that help merchants and consumers fight fraud. If you feel that you are dealing with someone who is going to ripped you off, like he is asking too many facts about you, get out of the deal immediately. Be internet wise.
Be Active In Joining Forums
Birds of the same feathers flock together. If you hope to fight fraud, join decent forums who believe in the same principles. Here you can find people who are concerned about their fellow investors. They share facts about the latest trend in gold market. They also fill in one another about the websites and companies that they feel are involved in scams. For sure, you will find these forums very helpful especially when you are the buyer or the retailer of gold and silver.

Do Not Be Persuaded By "Too Good To Be True" Offers
One strategy of people involve in scams is to persuade people by offering golden opportunities to those they are eyeing on. Let's say you are fascinated to buy gold. They will offer you plane or train tickets for you to see the items first hand. This is very harmful. If you visit their place, there is a high possibility of you ending up robbed or dead.

Without doubt, with the high exigency for gold and silver these days, people will do anything to take advantage of other people in order to gain quick cash. Do not believe the scams.
Before transacting online, you need to be prepared and know how the online scams work so that you will not end up being the prey. The tips mentioned above are just some of the pointers in order to protect yourself from fraud. Use these tips to your advantage. Cheers!