I don't like computers - another great waste of time as far as I'm concerned, though I am forced to use one a couple of hours a week for work - but spotting my wife's laptop on the kitchen, I figured I could at least go online and try out one of those sites where they do all the searching around for the best quotes.
But how much money was I actually going to save? I could have given in and simply renewed with my existing insurer, regardless of the fact that they'd seem to have ignored my five years of no claims and spotless driving record and lovingly given me practically the same price as last year.
Sorting out car insurance was not the best, most interesting way to use up a morning off work, so I allowed my dislike of computers to be overridden by a sheer necessity to alleviate this increasing boredom and disinterest.
The clock was ticking and there were a range of more appealing jobs to do around the house, like mending the fence, oiling that squeaky living room door, or even chucking the dog's blanket in the wash.
I looked at the computer again. Feeling my arm still aching from cradling the phone while struggling around with my driving documents and scribbling numbers and names down on scraps of paper I knew I was going to have to make a rational decision over my now apparent irrational dislike of modern technology.
So I made a cup of tea. Then refreshed, and with a combination of mock enthusiasm and a desire to get on with the rest of the morning, I turned on the computer and found a web site that, without me barely realising, had found me a pretty good deal on car insurance.
And I saved some money. So much in fact that for spending 10 minutes online filling out a simple and easy to use form, it was worth more to renew my car insurance this way than it was to have gone into work and earn money!
Of course, I put the laptop back in exactly the same place as my wife had left it. I'm always telling her they're a waste of time, though maybe know I'll have to admit that for some things, they're pretty useful. Though of course, I'd rather wash the dog any day of the week.
Tuesday, February 19, 2008
GETTING THE LOWEST CAR INSURANCE QUOTE
Finding the lowest car insurance quote is something that most people do not take the time to do. I have a hard time understanding this, because many of these people are the same ones who will drive all the way across town to save a penny a gallon for gas or will buy 15 cases of mustard because they save 50 cents. But while they are saving nickels and dimes, the dollars are racing out the door because they are not paying attention to their car insurance.
I have no beef with bargain hunters and commend them for their perseverance. But at the same time, it only makes good common sense that if you are going to get the best prices on things, be sure to include a big ticket item such as your auto insurance. Sure it takes more effort to understand what you are comparing, but at the end of the day it makes a huge amount of financial sense.
If you are like most people, you simply renew your auto insurance every year without getting a new quote, even from the same company. It's the easiest way to do it, but remember that easy is not the same as cost effective. Car insurance rates are changing all the time, and if you don't spend the time to comparison shop, chances are better than excellent that you are paying more than you need to.
I am not saying that your current car insurance company is ripping you off. The truth of the matter is that they might be offering you the best deal available for your particular driving habits and situation. But the keyword here is "might", and if you don't do any comparison shopping, you'll never know that, will you?
One classic example is one of the most costly coverages you can have on your car, which is collision insurance. When your car was new, your finance company required you to carry collision insurance. But if your car is paid off, did you know that you can legally DROP the collision coverage? Or if your collision deductible is $100, you are paying about three to four times more for it compared to having a collision deductible set at $1000.What are your coverage limits? As an example, looking at the personal liability coverage that almost all states require you to have, if the policy limit is set at $25,000 that is barely going to cover anything in today's lawsuit-happy world and you are really not protecting yourself with that level of coverage limit.
A more reasonable limit that would truly protect you would be something like $250,000. Yes it will cost more, but there is no sense in paying for something that is going to provide inadequate protection if you need to file a claim.Get car insurance quotes from various companies to compare rates and programs, and make sure you are comparing apples to apples in terms of deductibles and coverage limits. You are also encouraged to get an online car insurance quote to see what can be offered there. Frequently these companies can offer extremely aggressive rates, and you might be pleasantly surprised to find out how much you can save.
There is no cost to get an online quote, but you cannot really compare quotes if you don't get one.Do your comparison shopping, just as you would for any other major purchase, to make sure you are getting the most value for the money you are spending. Don't merely renew your existing policy every year just because it is easy.
I have no beef with bargain hunters and commend them for their perseverance. But at the same time, it only makes good common sense that if you are going to get the best prices on things, be sure to include a big ticket item such as your auto insurance. Sure it takes more effort to understand what you are comparing, but at the end of the day it makes a huge amount of financial sense.
If you are like most people, you simply renew your auto insurance every year without getting a new quote, even from the same company. It's the easiest way to do it, but remember that easy is not the same as cost effective. Car insurance rates are changing all the time, and if you don't spend the time to comparison shop, chances are better than excellent that you are paying more than you need to.
I am not saying that your current car insurance company is ripping you off. The truth of the matter is that they might be offering you the best deal available for your particular driving habits and situation. But the keyword here is "might", and if you don't do any comparison shopping, you'll never know that, will you?
One classic example is one of the most costly coverages you can have on your car, which is collision insurance. When your car was new, your finance company required you to carry collision insurance. But if your car is paid off, did you know that you can legally DROP the collision coverage? Or if your collision deductible is $100, you are paying about three to four times more for it compared to having a collision deductible set at $1000.What are your coverage limits? As an example, looking at the personal liability coverage that almost all states require you to have, if the policy limit is set at $25,000 that is barely going to cover anything in today's lawsuit-happy world and you are really not protecting yourself with that level of coverage limit.
A more reasonable limit that would truly protect you would be something like $250,000. Yes it will cost more, but there is no sense in paying for something that is going to provide inadequate protection if you need to file a claim.Get car insurance quotes from various companies to compare rates and programs, and make sure you are comparing apples to apples in terms of deductibles and coverage limits. You are also encouraged to get an online car insurance quote to see what can be offered there. Frequently these companies can offer extremely aggressive rates, and you might be pleasantly surprised to find out how much you can save.
There is no cost to get an online quote, but you cannot really compare quotes if you don't get one.Do your comparison shopping, just as you would for any other major purchase, to make sure you are getting the most value for the money you are spending. Don't merely renew your existing policy every year just because it is easy.
Tuesday, January 29, 2008
Monthly Bill Organizer-How To Stay On Top Of Your Finances Quickly And Easily
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.
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.
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.
Subscribe to:
Posts (Atom)
