A Simple Sector Mutual Fund Strategy to Beat the Market by John Ruppel - The overall stock market has not been a great place to invest for the last several years. If you look at the performance of the S&P 500 from 1999 through 2005, you'll see that it was up about 0.2% compounded annual return, not much better than a money market fund. The Nasdaq 100 has fared even worse, losing 1.5% per year.
One popular alternative to buy and hold investing is a sector fund rotation strategy. This is often most easily done by using sector mutual funds, such as the Fidelity Select Funds family.
Here we look at a mutual fund trading system that trades the Fidelity Select Mutual Funds. We like Fidelity Select Mutual Funds for a number of reasons:
* Fidelity Select Mutual Funds have historically have shown enough persistence in their trends so that they can be held for the minimum 30 day holding period and still realize a return significantly above that of the market.
* If you are willing to hold the funds for the 30 day holding period, Fidelity allows virtually unlimited trading between the funds with no redemption fees.
* With at least 41 Fidelity Select Funds, a sector mutual fund is available for almost any stock market sector, so if there is market sector strength anywhere at a given time, there's a good chance you can capture it using Fidelity Select Funds.
* You don't need a lot of money to start. Fidelity's minimum for the Fidelity Select Funds are only $2500 per fund. Fidelity has eliminated the load on these sector funds, so there is no longer a load fee to get into them.
While there are a number of sector rotation strategies that have been published, this one is one of the simplest to actually implement. The steps are as follows.
1) Track the 22 day price change in each of the Fidelity Select Mutual Funds. (22 days is approximately one trading month).
2) Pick the Select Fund with the highest percentage gain over that time.
3) Hold that mutual fund for at least 30 calendar days, to avoid the Fidelity early redemption fee of 0.75%.
4) After 30 days, if that Select Fund is still the top fund, continue to hold it. Otherwise, exchange it immediately for the current top ranked fund.
5) Hold the new Select Fund for 30 calendar days
For the same 7 years that the major indices have been in a holding pattern, this simple sector mutual fund system would have gained almost 200%, or over 16% per year.
Now, to be fair, there is one significant weakness to this strategy. From a maximum drawdown perspective, it does almost nothing to do better than the overall markets. During the bear market of 2000 to 2002 you would have seen a drawdown almost 50% using this strategy. Granted, it has since come back to see new highs in 2006, but those kinds of drawdown are tough to live through.
So, does buy and hold investing in index funds really give you what you are looking for? Or would you rather have your money working harder for you? As you can see, even a simple sector rotation strategy can make your money work for you.
About the Author
John Ruppel is the managing principal for Fundztrader.com. Fundztrader offers model portfolios featuring Fidelity Mutual Funds, Fidelity Select Mutual Funds, and Exchange Traded Funds. More information and a free newsletter are available at
http://www.fundztrader.com
Saturday, January 27, 2007
Introduction to Mutual Funds
Introduction to Mutual Funds Jim Pretin - If you know absolutely anything about investing, then you have probably heard of mutual funds. Once an obscure investment vehicle, they are now popular with almost all investors. If you ask your average investor whether they have any of their investment dollars allocated to a fund, they will likely answer yes. There are literally trillions of dollars of American money currently invested in mutual funds.
Funds have made investing for the average investor a little less complicated. A person no longer has to sift through stocks individually in the newspaper or spend hours watching the financial news on television. You can simply select a diversified fund that contains a bunch of different stocks of companies that fit into a certain paradigm, such as a fund containing nothing but small cap stocks, mid-cap stocks, large cap stocks, technology stocks, bonds, etc.
A mutual fund is really an investment company in and of itself, with a manager and other officers who administer it. When you buy shares, you are buying a portion of the holdings of the fund, which contains many different stocks and bonds within the portfolio. And, just like with individual stocks and bonds, your shares increase in value when the share price of stocks within the portfolio appreciate, or when interest payments are made on the bonds. As with stocks, you can sell your shares in a mutual fund at any time.
There are many different types of funds. They vary based on composition (stocks, bonds, or fixed income securities such as money market instruments), and strategy. Some funds, as already mentioned, invest in companies that have a particular market capitalization (i.e. large cap, mid cap, small cap). Other funds invest solely in foreign companies, while some invest in certain sectors within the economy, such as the financial, technology, or industrial sectors. Also, some mutual funds may pick companies based on ideology, such as a socially responsible or environmental fund. There are also index funds that simply invest in companies that are contained within a certain index, such as the Dow Jones, or the S&P 500.
The most important thing to understand when looking for a mutual fund is the cost structure. There are four expenses you need to review before investing. The first is the management expense, which is a charge assed on your money to pay the manager of the fund. The second is the administrative fee, which is usually assessed annually to cover the costs of mailings, postage, etc. The next fee is the 12B-1 fee, which covers the cost of marketing and promotion. And finally, there are sometimes front-end loads and back-end loads. A front-end load is a sales commission charged as soon as you open the account and invest your money. A back-end load, also known as a deferred sales charge, is assessed on your money when you close the account. Back-end charges vary depending upon how long you have had the account.
I hope this information has helped you to familiarize yourself with mutual funds. Try to set aside some money for investing and start while you are still young. The earlier you begin, the more money you can potentially make down the road. Carefully examine the fee structure and investment strategy before investing and you should do fine.
About the Author
Jim Pretin is the owner of http://www.forms4free.com, a service that helps programmers make email forms.
Funds have made investing for the average investor a little less complicated. A person no longer has to sift through stocks individually in the newspaper or spend hours watching the financial news on television. You can simply select a diversified fund that contains a bunch of different stocks of companies that fit into a certain paradigm, such as a fund containing nothing but small cap stocks, mid-cap stocks, large cap stocks, technology stocks, bonds, etc.
A mutual fund is really an investment company in and of itself, with a manager and other officers who administer it. When you buy shares, you are buying a portion of the holdings of the fund, which contains many different stocks and bonds within the portfolio. And, just like with individual stocks and bonds, your shares increase in value when the share price of stocks within the portfolio appreciate, or when interest payments are made on the bonds. As with stocks, you can sell your shares in a mutual fund at any time.
There are many different types of funds. They vary based on composition (stocks, bonds, or fixed income securities such as money market instruments), and strategy. Some funds, as already mentioned, invest in companies that have a particular market capitalization (i.e. large cap, mid cap, small cap). Other funds invest solely in foreign companies, while some invest in certain sectors within the economy, such as the financial, technology, or industrial sectors. Also, some mutual funds may pick companies based on ideology, such as a socially responsible or environmental fund. There are also index funds that simply invest in companies that are contained within a certain index, such as the Dow Jones, or the S&P 500.
The most important thing to understand when looking for a mutual fund is the cost structure. There are four expenses you need to review before investing. The first is the management expense, which is a charge assed on your money to pay the manager of the fund. The second is the administrative fee, which is usually assessed annually to cover the costs of mailings, postage, etc. The next fee is the 12B-1 fee, which covers the cost of marketing and promotion. And finally, there are sometimes front-end loads and back-end loads. A front-end load is a sales commission charged as soon as you open the account and invest your money. A back-end load, also known as a deferred sales charge, is assessed on your money when you close the account. Back-end charges vary depending upon how long you have had the account.
I hope this information has helped you to familiarize yourself with mutual funds. Try to set aside some money for investing and start while you are still young. The earlier you begin, the more money you can potentially make down the road. Carefully examine the fee structure and investment strategy before investing and you should do fine.
About the Author
Jim Pretin is the owner of http://www.forms4free.com, a service that helps programmers make email forms.
No Load Mutual Funds
No Load Mutual Funds: Investment Hype vs. Investment Help by Ulli G. Niemann - 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.
About the Author
Ulli Niemann is an investment advisor and has written about methodical approaches to investing for over 10 years. He avoided the bear market of 2000 and has helped countless people make better investment decisions. Subscribe to his free newsletter: www.successful-investment.com
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.
About the Author
Ulli Niemann is an investment advisor and has written about methodical approaches to investing for over 10 years. He avoided the bear market of 2000 and has helped countless people make better investment decisions. Subscribe to his free newsletter: www.successful-investment.com
Exchange Traded Funds
What Are Exchange Traded Funds? by William Smith - Exchange Traded Funds represent the shares of ownership in either fund, unit investment trusts, or depository receipts that hold the portfolios of common stocks that closely track the performance and the dividend yields of specific indexes, either broad market, sector or international.
Exchange Funds give the investors the opportunity to buy or sell an entire selection of stocks in a single security, as easily as buying or selling a share of stock. Exchange Funds offer a wide range of investment opportunities.
Exchange Traded Funds also called, as the ETFs can also be understood as open-ended collective investment schemes, traded as shares on most of the global stock exchanges. They try to replicate a stock market index for instance the S&P 500 or Hang Seng Index, a market sector for instance energy or technology, or a commodity as an example gold or petroleum.
Understanding the Exchange Traded Funds
While it may seem to be similar to an index mutual fund, Exchange Funds differ from mutual funds in many significant ways. Unlike Index mutual funds, Exchange Funds are priced and can be bought and sold all the way through the trading day. Furthermore, Exchange Funds can be sold short and bought on margin too.
Well! Now, single securities, known as Exchange Traded Funds (ETF), can track the performance of an increasing number of diverse index funds such as the NSE Nifty. Most Exchange Funds represent a portfolio of stocks that are very well designed to track one specific catalog.
Exchange Funds can be bought and sold exactly like a stock of an individual company during the entire trading day. In addition, they can be bought on margin, sold short or bought at specific limit prices. Exchange Funds can help investors build a diversified portfolio that is easy to track.
Exchange Funds trade like shares while providing the diversification of managed funds. Their presentation closely tracks the investment returns of the shares making up for the index.
Well! Exchange Traded Funds can be the cheap and the most fairly valued ones. Perhaps the most important, although subtle, benefit of an ETF is the stock-like features that are offered.
Since Exchange Funds trade on the exceptional market, investors can carry out the same types of trades that they can with a stock. For example, investors can sell short, use a limit order, use a stop-loss order, buy on margin, and invest as much or as little money as they wish, as there is no rule of minimum investment requirement.
Many Exchange Funds have the capability for options to be written against them whereas Mutual funds do not offer such features.
As a working example, an investor in an open-ended fund can only purchase or sell at the end of the day at the mutual fund's closing price. This makes stop-loss orders much less useful for open-ended funds.
That is, if your broker even allows them. An Exchange Traded Funds is continually priced throughout the day and therefore is not subject to this disadvantage, allowing the user to react to undesirable or beneficial market condition on an intraday basis.
Another advantage is that Exchange Funds like the closed-ended funds are immune from some market timing problems that have plagued open-ended mutual funds. In these timing attacks, large investors trade in and out of an open-ended fund swiftly, exploiting minor differences in price in order to profit at the expense of the long-term unit holders.
Thus, with an Exchange Funds or say a closed-ended fund such an operation is not possible--the underlying assets of the fund are not affected by its trading on the magnificent market.
Exchange Traded Funds like any other kind of Investment Company will have a prospectus. All investors that purchase Creation Units get a prospectus.
Some Exchange Funds also deliver a prospectus to secondary market purchasers and the ones that do not deliver a prospectus are required to give investors a document known as a Product Description, which summarizes all the key information about the ETF and explains how to get a prospectus.
All Exchange Traded Funds will deliver a prospectus when asked for, as they do not use profiles. Exchange Funds are legally structured as open-end companies and must also have statements of additional information.
Open-end Exchange Traded Funds must be able to provide shareholders with annual and semi-annual reports before buying shares; you could carefully read all of Exchange Funds available information, including its prospectus.
The website of the American Stock Exchange provides more information about numerous styles of Exchange Traded Funds and how they work. You can easily Uncover detailed information about Exchange Funds resting on the website of The NASDAQ Stock market too.
About the Author
William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at Exchange Traded Funds (All is Free)
Exchange Funds give the investors the opportunity to buy or sell an entire selection of stocks in a single security, as easily as buying or selling a share of stock. Exchange Funds offer a wide range of investment opportunities.
Exchange Traded Funds also called, as the ETFs can also be understood as open-ended collective investment schemes, traded as shares on most of the global stock exchanges. They try to replicate a stock market index for instance the S&P 500 or Hang Seng Index, a market sector for instance energy or technology, or a commodity as an example gold or petroleum.
Understanding the Exchange Traded Funds
While it may seem to be similar to an index mutual fund, Exchange Funds differ from mutual funds in many significant ways. Unlike Index mutual funds, Exchange Funds are priced and can be bought and sold all the way through the trading day. Furthermore, Exchange Funds can be sold short and bought on margin too.
Well! Now, single securities, known as Exchange Traded Funds (ETF), can track the performance of an increasing number of diverse index funds such as the NSE Nifty. Most Exchange Funds represent a portfolio of stocks that are very well designed to track one specific catalog.
Exchange Funds can be bought and sold exactly like a stock of an individual company during the entire trading day. In addition, they can be bought on margin, sold short or bought at specific limit prices. Exchange Funds can help investors build a diversified portfolio that is easy to track.
Exchange Funds trade like shares while providing the diversification of managed funds. Their presentation closely tracks the investment returns of the shares making up for the index.
Well! Exchange Traded Funds can be the cheap and the most fairly valued ones. Perhaps the most important, although subtle, benefit of an ETF is the stock-like features that are offered.
Since Exchange Funds trade on the exceptional market, investors can carry out the same types of trades that they can with a stock. For example, investors can sell short, use a limit order, use a stop-loss order, buy on margin, and invest as much or as little money as they wish, as there is no rule of minimum investment requirement.
Many Exchange Funds have the capability for options to be written against them whereas Mutual funds do not offer such features.
As a working example, an investor in an open-ended fund can only purchase or sell at the end of the day at the mutual fund's closing price. This makes stop-loss orders much less useful for open-ended funds.
That is, if your broker even allows them. An Exchange Traded Funds is continually priced throughout the day and therefore is not subject to this disadvantage, allowing the user to react to undesirable or beneficial market condition on an intraday basis.
Another advantage is that Exchange Funds like the closed-ended funds are immune from some market timing problems that have plagued open-ended mutual funds. In these timing attacks, large investors trade in and out of an open-ended fund swiftly, exploiting minor differences in price in order to profit at the expense of the long-term unit holders.
Thus, with an Exchange Funds or say a closed-ended fund such an operation is not possible--the underlying assets of the fund are not affected by its trading on the magnificent market.
Exchange Traded Funds like any other kind of Investment Company will have a prospectus. All investors that purchase Creation Units get a prospectus.
Some Exchange Funds also deliver a prospectus to secondary market purchasers and the ones that do not deliver a prospectus are required to give investors a document known as a Product Description, which summarizes all the key information about the ETF and explains how to get a prospectus.
All Exchange Traded Funds will deliver a prospectus when asked for, as they do not use profiles. Exchange Funds are legally structured as open-end companies and must also have statements of additional information.
Open-end Exchange Traded Funds must be able to provide shareholders with annual and semi-annual reports before buying shares; you could carefully read all of Exchange Funds available information, including its prospectus.
The website of the American Stock Exchange provides more information about numerous styles of Exchange Traded Funds and how they work. You can easily Uncover detailed information about Exchange Funds resting on the website of The NASDAQ Stock market too.
About the Author
William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at Exchange Traded Funds (All is Free)
Money Market Funds
Money Market Funds by keith Londrie - Making cash from a money market never sounded easier. You should understand these few things before blindfully entering the caged arena. Money market funds are a popular cash management tool. Before you use money market funds, you should learn what they are, and what are your risks.
Money market funds are mutual funds that invest in the "money markets". If you imagine that people buy and sell stocks in the stock market, then you can see how people buy and sell money in the money markets. This means a legal loan shark, or other wise known as a bank.
Just like your savings account at the bank, you earn a dividend of interest on your money you have invested. However instead of a quarterly dividend being dropped into your account, you are getting a piece of the pie every EOM: or end of the month. Money Market funds invest in short term instruments that mature in less than 13 months. By doing this they reduce the amount of risk. It is basically like this, the longer you have your money lent out to someone the less chance you have of getting back.
Therefore, what risks are you taking when you invest in a Money Market Fund. Well a money market fund is technically a security. The managers of the fund try to keep the share price at $1 per share. Although, there is no guarantee that the price will stay at $1. And if the share price goes down, you can lose some or all of your principal investment. And for this risk, you earn a greater return.
Money market fund rates are never constant. In other words, you are playing with variables and you'll never know how much your getting at the end of the month. The rates could go up or down. When it goes up, you earn money. On the other hand, if it goes down you earn less than you expected or even loose capita from your principal investment.
The last you are taking with money market funds has to do with inflation. If you plan to have your investment in for a long time, inflation may slowly but surely eat away at your money. That is why it is best to keep it short and sweet.
Why should you use money market funds? It is a relatively safe investment with a descent return. The money you put in is not frozen; this means you can get your money out-a there within a few days. You can also take advantage of rising interest rates by keeping your money in an investment that will adjust to the markets. In addition, a lot of companies allow you to write checks that take from a money market fund. That means you get the advantages of a checking account while earning cash at the end of the month. It is like a savings account with out the bank haggling you about too many transactions.
Where can you get a money market fund? When it comes to money market funds, you have many choices. They are relatively easy to find at brokerages and mutual fund companies - your free cash is sometimes swept into a money market fund automatically. More over, a lot more banks are offering money market funds to their customers now.
You can learn more about money market funds is the funds prospectus. You should always read one of these before buying any fund, and you can really learn a lot by reading the prospectus from several different funds. One of the best I have used is PayPals Money market fund. I have always seen the highest percentage rates here as opposed to any local banks.
Now with this new found information you can become a loan shark and not get hunted down by the FBI. There is a lot of money to be made in Money Markets, You should go out there and get your piece of the pie before I eat it all.
About the Author
Keith Londrie II is a successful Webmaster and the owner and publisher of moneytobemadeonline.com A website that specializes in providing tips on how to REALLY make money online that you can research on the internet in your pajamas from the comfort of your own home. Visit http://moneytobemadeonline.com/ today!
Money market funds are mutual funds that invest in the "money markets". If you imagine that people buy and sell stocks in the stock market, then you can see how people buy and sell money in the money markets. This means a legal loan shark, or other wise known as a bank.
Just like your savings account at the bank, you earn a dividend of interest on your money you have invested. However instead of a quarterly dividend being dropped into your account, you are getting a piece of the pie every EOM: or end of the month. Money Market funds invest in short term instruments that mature in less than 13 months. By doing this they reduce the amount of risk. It is basically like this, the longer you have your money lent out to someone the less chance you have of getting back.
Therefore, what risks are you taking when you invest in a Money Market Fund. Well a money market fund is technically a security. The managers of the fund try to keep the share price at $1 per share. Although, there is no guarantee that the price will stay at $1. And if the share price goes down, you can lose some or all of your principal investment. And for this risk, you earn a greater return.
Money market fund rates are never constant. In other words, you are playing with variables and you'll never know how much your getting at the end of the month. The rates could go up or down. When it goes up, you earn money. On the other hand, if it goes down you earn less than you expected or even loose capita from your principal investment.
The last you are taking with money market funds has to do with inflation. If you plan to have your investment in for a long time, inflation may slowly but surely eat away at your money. That is why it is best to keep it short and sweet.
Why should you use money market funds? It is a relatively safe investment with a descent return. The money you put in is not frozen; this means you can get your money out-a there within a few days. You can also take advantage of rising interest rates by keeping your money in an investment that will adjust to the markets. In addition, a lot of companies allow you to write checks that take from a money market fund. That means you get the advantages of a checking account while earning cash at the end of the month. It is like a savings account with out the bank haggling you about too many transactions.
Where can you get a money market fund? When it comes to money market funds, you have many choices. They are relatively easy to find at brokerages and mutual fund companies - your free cash is sometimes swept into a money market fund automatically. More over, a lot more banks are offering money market funds to their customers now.
You can learn more about money market funds is the funds prospectus. You should always read one of these before buying any fund, and you can really learn a lot by reading the prospectus from several different funds. One of the best I have used is PayPals Money market fund. I have always seen the highest percentage rates here as opposed to any local banks.
Now with this new found information you can become a loan shark and not get hunted down by the FBI. There is a lot of money to be made in Money Markets, You should go out there and get your piece of the pie before I eat it all.
About the Author
Keith Londrie II is a successful Webmaster and the owner and publisher of moneytobemadeonline.com A website that specializes in providing tips on how to REALLY make money online that you can research on the internet in your pajamas from the comfort of your own home. Visit http://moneytobemadeonline.com/ today!
Mutual Funds And Retirement
Mutual Funds And Your Retirement - Will It Be Fact Or Fiction by Jim Mack - It becomes more apparent each day that inflation has crept back into our lives even though government statistics may not support this viewpoint.
Rather, it's the real world cost of food, drugs, fuel, utilities and education that indicate the inflationary trend.
If you're like most Americans, your retirement account hasn't grown much over the last 5 years. In fact, it's been pretty flat. Many of us have vivid memories of the dot.com crash and the huge plunge in our 401(k) plan and IRA valuations. For one brief year, it looked like we might be on the road to recovery. But, this simply hasn't happened to any significant extent.
About 25 years ago, if you worked for a reasonably good sized company you could expect to receive guaranteed monthly income from your employer's defined benefit plan. As you approached retirement, it was relatively easy to predict the amount of money you would receive from the plan, which, by the way, was funded totally by your employer.
When 401(k) plans were introduced to the workforce many employers saw an opportunity to shift the liability of retirement income away from the company and onto the employee.
From the employer's point of view this was sensible because the cost of funding defined benefit plans had become prohibitive. From the employee's standpoint the subtle transfer of responsibility from employer to employee was lost in the excitement of reducing their taxable income.
Today, most people who are planning to retire count on a combination of their 401(k) plan, their IRA, social security and (if they're lucky) some supplemental mutual fund accounts. Typically, little thought or effort has gone into coordinating the effectiveness of these resources. That is, until it's too late!
If you are planning to retire any time soon, make sure you understand and account for the reality of inflation. You may want to address this yourself... or maybe you will hire a financial planner. Regardless, make certain inflation is factored into your equation for future income requirements.
The combination of higher inflation plus flat stock and bond markets can devastate your standard of living. While it's true some investors will find a way to beat market indices, the average guy or gal will have a tough time.
When you reach age 62, you're entitled to receive social security. Although the amount you receive is lower than what you get at "normal retirement," nevertheless it is guaranteed income that should be part of your overall plan.
If you withdraw monthly income from your IRA or 401(k) plan, be prudent in the amount you take out. For example, not too long ago, it was reasonable to withdraw 8.0 percent because the annual investment return typically averaged 10.0 percent or more.
Those days are gone... at least in the foreseeable future. So, plan for withdrawals of only 5.00 or 6.00 percent because your account likely will not be able to average more than a total return of 7.00 or 8.00 percent annually.
Many who own real estate and took advantage of refinancing their homes have just come off a joy ride. Hundreds of millions of dollars have been regurgitated through the economy as people chose to use their home equity to pay off debt or satisfy some extravagant desire.
For those who did not refinance and have diligently managed to pay down their mortgage, an additional option for retirement income might be the reverse mortgage. Under the right circumstances, this ability to get money from your home without assuming personal liability could be an important part of your retirement resources.
When it's time for you to retire and receive income, maintain a balance between fixed (guaranteed) and that which can adjust to inflation. This might be as simple as using social security for the fixed portion (this does adjust somewhat for inflation) together with a mutual fund account that continues to grow in order to compensate for the actual increase in your cost of living.
About the Author
Jim Mack is an expert on business, health and well being. He regularly contributes articles on these subjects. The Best Investing Tips
Rather, it's the real world cost of food, drugs, fuel, utilities and education that indicate the inflationary trend.
If you're like most Americans, your retirement account hasn't grown much over the last 5 years. In fact, it's been pretty flat. Many of us have vivid memories of the dot.com crash and the huge plunge in our 401(k) plan and IRA valuations. For one brief year, it looked like we might be on the road to recovery. But, this simply hasn't happened to any significant extent.
About 25 years ago, if you worked for a reasonably good sized company you could expect to receive guaranteed monthly income from your employer's defined benefit plan. As you approached retirement, it was relatively easy to predict the amount of money you would receive from the plan, which, by the way, was funded totally by your employer.
When 401(k) plans were introduced to the workforce many employers saw an opportunity to shift the liability of retirement income away from the company and onto the employee.
From the employer's point of view this was sensible because the cost of funding defined benefit plans had become prohibitive. From the employee's standpoint the subtle transfer of responsibility from employer to employee was lost in the excitement of reducing their taxable income.
Today, most people who are planning to retire count on a combination of their 401(k) plan, their IRA, social security and (if they're lucky) some supplemental mutual fund accounts. Typically, little thought or effort has gone into coordinating the effectiveness of these resources. That is, until it's too late!
If you are planning to retire any time soon, make sure you understand and account for the reality of inflation. You may want to address this yourself... or maybe you will hire a financial planner. Regardless, make certain inflation is factored into your equation for future income requirements.
The combination of higher inflation plus flat stock and bond markets can devastate your standard of living. While it's true some investors will find a way to beat market indices, the average guy or gal will have a tough time.
When you reach age 62, you're entitled to receive social security. Although the amount you receive is lower than what you get at "normal retirement," nevertheless it is guaranteed income that should be part of your overall plan.
If you withdraw monthly income from your IRA or 401(k) plan, be prudent in the amount you take out. For example, not too long ago, it was reasonable to withdraw 8.0 percent because the annual investment return typically averaged 10.0 percent or more.
Those days are gone... at least in the foreseeable future. So, plan for withdrawals of only 5.00 or 6.00 percent because your account likely will not be able to average more than a total return of 7.00 or 8.00 percent annually.
Many who own real estate and took advantage of refinancing their homes have just come off a joy ride. Hundreds of millions of dollars have been regurgitated through the economy as people chose to use their home equity to pay off debt or satisfy some extravagant desire.
For those who did not refinance and have diligently managed to pay down their mortgage, an additional option for retirement income might be the reverse mortgage. Under the right circumstances, this ability to get money from your home without assuming personal liability could be an important part of your retirement resources.
When it's time for you to retire and receive income, maintain a balance between fixed (guaranteed) and that which can adjust to inflation. This might be as simple as using social security for the fixed portion (this does adjust somewhat for inflation) together with a mutual fund account that continues to grow in order to compensate for the actual increase in your cost of living.
About the Author
Jim Mack is an expert on business, health and well being. He regularly contributes articles on these subjects. The Best Investing Tips
Mutual Funds vs Stocks
Mutual Funds vs Stocks, What's Your Investment? by Randy Hutchings - With so many options out there for the individual investor, it is sometimes difficult to determine which investments are right for you. The key to having a long-term, stable and profitable portfolio is to diversify your investments. For many investors the process of diversification includes investing in both mutual funds and stocks. The best course is to learn all you can about both types of investments and find your ideal balance between the two.
Mutual funds are open-end funds that are not listed for trading on a stock exchange. They are created by companies who use their capital to invest in other companies. Mutual funds will sell their own new shares to investors. Capitalization is not fixed and normally shares are issued as people want them.
Mutual funds have many appealing characteristics for investors. Mutual funds are professionally managed. The mutual funds employ professional managers to operate all investing. These professional managers bring with them many years of experience. They are experts in selecting and evaluating investments for the fund. The managers make all of the buying decisions and selling decisions which relieves the individual investors from that responsibility.
Another advantage of mutual funds is that most of their portfolios are highly diversified. This means that the mutual fund is invested in a wide variety of stocks. The advantage of diversification is that if a few stocks drop in price the entire fund will not be dramatically affected.
Diversification occurs by investing in many different companies. It can also be accomplished by investing in several different industries. The advantage of diversifying through mutual funds is that the funds can reach a wider diversification than can be reached by individual investors.
Mutual funds are open-end funds that are not listed for trading on a stock exchange. They are created by companies who use their capital to invest in other companies. Mutual funds will sell their own new shares to investors. Capitalization is not fixed and normally shares are issued as people want them.
Mutual funds have many appealing characteristics for investors. Mutual funds are professionally managed. The mutual funds employ professional managers to operate all investing. These professional managers bring with them many years of experience. They are experts in selecting and evaluating investments for the fund. The managers make all of the buying decisions and selling decisions which relieves the individual investors from that responsibility.
Another advantage of mutual funds is that most of their portfolios are highly diversified. This means that the mutual fund is invested in a wide variety of stocks. The advantage of diversification is that if a few stocks drop in price the entire fund will not be dramatically affected.
Diversification occurs by investing in many different companies. It can also be accomplished by investing in several different industries. The advantage of diversifying through mutual funds is that the funds can reach a wider diversification than can be reached by individual investors.
There are thousands of mutual funds to choose from. Depending on your preferences, you can choose to invest with a mutual fund that covers the whole market or with a fund that focuses on one or two industries. There are even mutual funds available that invest only in foreign markets. Mutual funds can be very convenient for the investor since the fund does all the record keeping. Your mutual fund will provide you with all the forms you need to file your taxes.
Additionally, many may offer perks such as the ability to write checks against the money market fund.
On the other hand, purchasing individual stocks has attractive features as well. After the brokerage fee is paid, there is no ongoing fee associate with owning individual stocks. This is in contrast to mutual funds which charge a participation fee. Mutual fund fees can totally negate the mutual fund return that you are expecting.
With investing in individual stocks, an investor has the ability to be very flexible with their investing and move with market if they so desire. Mutual funds are very stable but this also keeps them slow. Individual stock investments can be traded quickly if need be, and purchased just as quickly if the investor finds an undervalued stock.
With individual stock investing, an investor has a greater level of control over their investing. Although brokerage firms are involved there is the opportunity to be more hands on with the stock purchases. This level of involvement is impossible with mutual funds. Many investors like to know exactly where their money is going and this can be hard with a mutual fund that holds shares in 50 or more companies.
Investing in individual stocks allows the investor to have a larger relationship with the company they are investing in. This can create a sense of comfort for the investor because they know where their money is being used. They can track the activities of the company they have invested in and feel like a true part of that company.
Investing a mixture of mutual funds and individual stocks seems to the best method for a majority of investors. Those who do not want to take the time to research their stocks and would rather let an expert handle things are more comfortable with mutual funds. On the other end of the spectrum, those who want a greater level of participation with their investments will find individual stock investing attractive. As part of a long-term diversification strategy it may be best to look into both in the ratio that you are comfortable with.
About the Author
Randy G. Hutchings is an Online Marketer that's been given reviews and written many articles about Online Scams in Stock Trading and Mutual Funds. Online Stock Trading News and Reviews
Finding Success with Mutual Funds
Finding Success with Mutual Funds Investing by Morgan Hamilton - You can be successful in mutual funds investing, even if you are not a brilliant financial wizard. Nevertheless, it can be helpful to know someone who is in the business. In my case, I wanted find some sound advice because I found that there is a lot to consider when dealing with this kind of investment. Fortunately, I found an advice that led me to a pretty nice portfolio that I would have never been able to create on my own.
I couldn't even balance my checkbook when I opened my mutual funds investing portfolio because I was so financially backward. Since I really don't have that much money, balancing my checkbook back then should have been really simple. I realized that I needed to start saving even though my account was thin.
If you really put time and effort into the job, working as a bartender can be a very lucrative business. However, there are also some drawbacks to this career. For example, the hours are awful and you earn the bulk of your money in cash. This can actually wreak havoc on your savings, even if this seems like a wonderful thing. I decided to look into mutual funds investing because of this situation.
I realized that I have to gain control of my finances and start putting money away for the future. I was also concerned about healthcare because bartending jobs do not come equipped with health insurance. I was making more money than most of the people I knew but I just wasn't seeing the benefits in the long run.
I discovered another have a great reason for not balancing my checkbook during my research into mutual funds investing. I found that I hate numbers and financial information in general gives me a headache. The only option that would help me plan for my future was to find a trustworthy advisor.
Fortunately, I found a wonderful financial planner who worked with me on creating a great portfolio. I know that I have mostly slow and steady investments and one or two aggressive funds as well, even if he mutual fund investing strategy goes well over my head. The diversified accounts won some and lost some, but I seem to always come out ahead.
You are mistaken if you think that you don't make enough money to even consider mutual funds investing. In fact, I started my account with just 550 dollars as capital and I added 50 dollars to my investments every month. These small amounts added up pretty quickly and the mutual funds investing have really paid off.
About the Author
Morgan Hamilton offers expert advice and great tips regarding all aspects concerning Mutual Funds Investing. Visit our site for more helpful information about Mutual Funds Investing and other similar topics.
I couldn't even balance my checkbook when I opened my mutual funds investing portfolio because I was so financially backward. Since I really don't have that much money, balancing my checkbook back then should have been really simple. I realized that I needed to start saving even though my account was thin.
If you really put time and effort into the job, working as a bartender can be a very lucrative business. However, there are also some drawbacks to this career. For example, the hours are awful and you earn the bulk of your money in cash. This can actually wreak havoc on your savings, even if this seems like a wonderful thing. I decided to look into mutual funds investing because of this situation.
I realized that I have to gain control of my finances and start putting money away for the future. I was also concerned about healthcare because bartending jobs do not come equipped with health insurance. I was making more money than most of the people I knew but I just wasn't seeing the benefits in the long run.
I discovered another have a great reason for not balancing my checkbook during my research into mutual funds investing. I found that I hate numbers and financial information in general gives me a headache. The only option that would help me plan for my future was to find a trustworthy advisor.
Fortunately, I found a wonderful financial planner who worked with me on creating a great portfolio. I know that I have mostly slow and steady investments and one or two aggressive funds as well, even if he mutual fund investing strategy goes well over my head. The diversified accounts won some and lost some, but I seem to always come out ahead.
You are mistaken if you think that you don't make enough money to even consider mutual funds investing. In fact, I started my account with just 550 dollars as capital and I added 50 dollars to my investments every month. These small amounts added up pretty quickly and the mutual funds investing have really paid off.
About the Author
Morgan Hamilton offers expert advice and great tips regarding all aspects concerning Mutual Funds Investing. Visit our site for more helpful information about Mutual Funds Investing and other similar topics.
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