Category: Mutual Funds

Absolutely nothing can destroy love quicker compared to the word prenup. But with about one in three of all first marriages ending in divorce, and 50 percent of second or third ones hitting the skids, a prenup is sensible financial planning, legal and financial experts declare.

“Think of it as being a business arrangement or perhaps just as one insurance policy that can help get rid of some of the emotions which arenaturally involved,” states Nancy Dunnan, a New York City financial author and adviser. “Marriage is not only just a physical and emotional union — additionally, it is a financial unification. A prenup and also the negotiations that go along with it can help guarantee the economic well-being of the union.”

A prenuptial contract may be a contract involving two individuals about to wed that spells out exactly how possessions will be distributed in the event of divorce or death. Not merely For The Affluent You won’t have to become a Trump or Rockefeller to desire a premarital arrangement. An individual who has been able to save $30,000 could possibly be more defensive of their little nest egg than anyone who has millions.

“Those are often one of the most jealously guarded assets because it has taken a great deal of hard work to amass a little amount of money,” states Joseph P. Zwack, an Iowa lawyer and author of a best-selling handbook “Premarital Agreements: When, Why and How to Write Them.” You should look at having a prenup in the event you belong to any of these groups:

* You possess assets say for example a home, stock or retirement funds

* Own all or part of a business

* You might be obtaining an inheritance

* You have kids and/or grandkids coming from a previous relationship

* One of you is significantly richer compared to the other

* One of you will likely be helping another through college

* You have family who need to be taken care of, for example elderly mothers and fathers

Getting close to The Subject

So, just how can you broach this touchy issue? To begin with, get it done as early as possible. The mention of a prenup shouldn’t appear as a shock should you and your sweetheart have been open with one another as the romantic relationship started to be serious.

Dunnan advises couples talk it over ahead of the engagement. “Let your intended know you believe these contracts are essential and that you would like to go over the subject.”

Secondly, the discussion has to be honest. “You need to be real honest regarding the reason why you really want the arrangement. It’s not very intimate, nevertheless, you must value precisely what the other person’s considerations are,” reveals Michael McDonough, a Palm Beach County, Fla., attorney who practices family and matrimonial law.

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Mutual Funds

Whether you’re a first-time mutual fund investor or a seasoned veteran, you should understand what differentiates single stock investments from mutual fund investing.

Investment managers are responsible for buying and selling securities according to specific investment objectives, which are identified in the prospectus. Buying shares of a mutual fund can give you built-in diversification. A single mutual fund holds many different securities. When you buy into a mutual fund, investment professionals manage your money. They carefully research, select, and supervise all the assets in the mutual fund. This frees you from having to select and track individual investments. When you invest in mutual funds, you get access to some of the finest investment minds on Wall Street.

They like having a professional manager oversee the day-to-day decisions that a changing stock investment involves and see that as a distinct advantage. A good manager, they might argue, has access to information that would cost them an exorbitant amount, even if they had the time and inclination to do the work themselves.

Mutual funds make managing your portfolio very easy. Periodic statements will fill you in on the performance of your mutual fund, transactions within your account, and more. You’ll also be kept informed about the taxability of your distributions.

Balanced funds seek to obtain the highest return consistent with a low-risk strategy. They hold a mix of common and preferred stocks, bonds and cash reserves. The mix can vary according to current market conditions. Balanced funds usually offer higher yields than pure stock funds. Balanced funds are generally the least risky of growth-oriented mutual funds.

Growth funds seek long-term appreciation by investing in the stocks of established companies that may be poised for growth. These companies typically pay low dividends yet offer the potential for long-term capital appreciation. Some growth funds limit their investments to specific sectors of the economy. Growth funds are generally less risky than aggressive growth funds.

International and global mutual funds offer diversification into international stock markets. International funds invest only in foreign securities. Global funds, on the other hand, can invest in foreign and U.S. securities. The additional risks associated with investing on a worldwide basis include differences in regulation of financial data and reporting, currency exchange differences, as well as economic and political systems that may be different that those in the United States.

Index funds are mutual funds that attempt to match the performance of any of several market indexes. For example, a stock index fund may hold stocks that mirror the S&P 500 or the Dow Jones Industrial Average. Index funds provide a broad diversification within a single type of asset class. The performance of an unmanaged index is not indicative of the performance of any specific security. Individuals cannot invest directly in any index.

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Mutual Funds

A 401k plan is the most common retirement plan that people take out. Currently you can invest up to 15% of your salary into the fund. The money you invest is pre-tax which means it lowers the amount of tax you are paying out of your salary.

Another great benefit id that your employer will usually match your payments, effectively giving you free money! Sometimes they will give you a percentage of what you are paying in, but many times they will match your contribution dollar for dollar, effectively doubling the amount you are paying in.

An IRA is another retirement plan that you can get on your own. Whatever option you choose for your retirement plan, the most important thing it to start saving as soon as possible. Whether you go for a 401(k) or a traditional or Roth IRA, you need to take the time to weigh up the pros and cons to see which plan suits your future dreams and lifestyle.

This may seem obvious but a lot of people either overlook their 401(k) entitlement or they actually refuse to sign up. This is a big mistake. At the end of the day even a bad 401 (k) is better than no entitlement. Most employers will also offer to match the funds you put in every month. So by refusing to sign up to your company scheme you might as well be throwing money way!

You’ve put tin money way every month, so if you’re facing some lean financial times, why shouldn’t you put up your 401(k) as collateral to borrow against. Well, for one, this is probably against the law. These funds are designed to only be used for their recommended purpose,. This is the reason you are given so many incentives to take out a 401(k). You should view this money as untouchable until you retire otherwise you could encounter unforeseen problems for a long time to come.

You must get a full match by making your side of contribution to the 401(k). The employer 401 (k) plans usually make contribution of 50 cents for each dollar you give, and up to six percent of the income you have. In order to get full benefits, you must make it a point to contribute as much amount as your employer is contributing.

Say for example you get $ 50,000 in one year and make a contribution of $16,500, and then you’d have to give federal income tax on $33,500 only. Income taxes in the states vary. After you cross 50 years of age, you are permitted a catch up contribution of extra $5000 every year.

If you save $200 a month beginning at age 25, with the miracle of compound interest, you will not have to do much else to be ready for retirement. There is nothing better than having 40+ years ahead of you to save money. Although some companies have dropped the match to stay financially viable, most companies still match at least the first 3% of what you contribute to your 401K. This is free money and there is no better kind. Because it is before taxes, you will most likely not even miss 3% of what you are making that will be going for your retirement. You should be contributing to your 401K at the amount that your company matches.

Many people will be working longer than individuals in the past, but we will also be living longer. Find something you enjoy doing and consider making a part time business out of it and this will give you further options during your golden years. As long as you plan for the future, you will be headed in the right direction.

We all need to save for retirement because none of us can avoid growing old. Most articles are written with the gainfully employed in mind, but what about the self-employed individual? Fortunately, there are plenty of options for you as well.

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Mutual Funds

How do you decide which are the best funds to invest into? I know they say that past performance is no guide to the future but what is the best way to analyse which are the best funds?

Instead of building something or offering insurance, the fund is meant to invest the money in a certain way. You are buying a share of the mutual fund itself, not the investment that the particular fund owns. You investment will be a mirror image of the account, minus all the overhead fees associated with the account. This leads you to understanding Net asset value of your account. If you are going to sell your mutual fund shares, you will receive the value of each share based on its current value. You can also choose to buy more and you can usually do so on a daily basis, but you will have to check with the mutual fund manager. These shares are not traded like stocks are traded. At the end of the trading day, the value of the funds in the account are tabulated. This leads to the account being revamped each day.

Funds are very common in today’s world. Many of the money managers put a lot of money in mutual funds. Most of the people who are investing that hand their money over to someone will put all of their money into these funds. This can be a good strategy, but there are many other alternatives to investing besides this one. You will need to watch out for fees associated with mutual funds.

As these instruments are are considered for long-term investments, you should be clear and knowledgeable about the market segment of your investment company. Examine in what economic segment or industry is the money being invested and what are future prospects of that industry. Many companies provide the opportunities of investment and there are several types of mutual funds. Index funds, exchange traded, balanced funds, diversified equity funds and debt funds are just few in the long list. Now which one is best for you depends on your reasons, perspective and goal of your investment.

It is also worth assessing how much risk a fund is taking to achieve an objective. If a fund returned 50% in a year by taking a risk of 8 (crude measure I know) and there was a fund that took a risk of 6 but returned 48%, which would you choose? Which is offering the best value? The downside risk is much greater yet there is little out performance. Risk is all about the potential for loss and potential for gain. They are in equal measure. A good investment IFA will be able to assess risk via a range of processes such as (bit of science now) standard deviation and Sharpe ratio for example.

How is your mutual funds manager going to be compensated? Typically there are three ways an investment advisor is paid: commissions, hourly rate charge, or a fee based on the amount of your investment fund. The first two, commissions and hourly rate charge, are probably not the best situation for you. Investment advisors that are paid on commission earn their income whenever there is a transaction in your account. You buy into a fund and they earn a commission. What if that fund does not perform well? Then you sell that fund and they get a commission. But what if that fund does do well? Then you keep that fund and they do not get paid. Pretty easy to see that maybe this is not the type of motivation you want for your advisor.

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Mutual Funds

Sometimes I am amazed that there is still a debate over investing in index mutual funds vs. actively managed mutual funds. Index funds have a proven record without the added risk.

Low load mutual funds work the same way as DSC funds. The financial advisor gets a lower commission, usually 3%, as a result the MER does not have to be increased as much and you are only locked in for 3-4 years instead of seven. A much better option for you, but not as good an option for your advisor since their commission is decreased. If you hold DSC funds you may want to ask your advisor way they did not offer you low load funds instead. Almost all funds that have a DSC option have a low load option as well.

There are short term, middle term and long term investments and in order to witness exponential growth you will need to invest your money in top mutual funds. People having excess money but no time to invest in stocks may find mutual funds to be the best option. There are lots of companies that have evolved with time and have been performing well in the market and are considered to be safe by almost all the investors. It gives you an opportunity to attain various stocks and bonds. Top mutual funds have the best fund managers who have a vast exposure in the market.

In Feb 2010 Standard & Poor’s launched its most recent Canadian Indices Versus Active Funds Scorecard with data for the five year period ending December 31, 2009. Below are a couple quotes from the report. “Over longer periods, we continue to observe indices outperforming the majority of domestic funds. In three-year and five-year periods, only 12.5% and 7.4%, respectively, of actively managed Canadian Equity funds have outperformed the S&P/TSX Composite Index.”

It is easy to figure out why actively managed investments consistently under-perform with the incredible high Management Expense Ratio (MER) that is charged on actively managed mutual funds in Canada. Having a 2%+ MER compared to an index funds MER of 0.75% or less is a lot to overcome. Overcoming these higher fees becomes an even more difficult task when you look at the holdings of a typical equity fund compared to its index. In most cases the holding are very similar.

People buy actively managed investments with a goal of beating the index. To beat the index fund by just 1% the unique assets would have to outperform by 11%. This is why most actively managed funds have underperformed the indices in the past and will most likely continue to do so in the future Since the holdings in these funds are so similar anyways just take the lower fee index option and be happy that you should do better then an actively managed fund about 90% of the time.

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Mutual Funds

Because supplemental income may be necessary, retired people can pursue a few avenues to make ends-meat. For the elderly who enjoy being out and about, obtaining a laid back part-time job that is easy to perform is one way to gain extra money.

Using a supplemental bank account, such as a CD, is also a great way to save money while waiting for retirement. By putting money into one of these types of accounts a person loses the right to touch the money for a given period of time while it is rolling over. CD’s have higher interest rates because people can generally not withdraw money from them until the time frame has elapsed

This is why it is crucial to consider great ways to invest money for the future. First and foremost, if you have not gotten started with this yet, it is time to step up and think about how you are going to start investing some money now.

One of the wonderful things about investing money in this day and age is all of the options. It is not like it was 50 years ago. You are not limited to a 401K, a few stocks, and maybe some bonds. Nowadays, you may want to consider a Roth Ira.

You must keep in mind that taxes go up as time moves forward. Therefore if you have to pay taxes on your investments down the road, you will surely be losing more money. Not to mention, with a Roth Ira, you can pull out your money as soon as five years down the road, and there are no penalties.

For many people, retirement is that light at the end of the tunnel which is worked for throughout the course of our entire lives. Many people believe that retirement is when they live on easy street for the rest of their lives, but there are many pitfalls on the way to this address.

Decide which retirement plan best suits personal needs and choose between a 401K, IRA, Roth IRA, or investment 401K options. A lot of people who work for corporations and companies are offered a 401k plan in their contract with that business. A 401K is a deduction straight out of a person’s paycheck that gets put into a company account that may or may not have a company match policy.

Retirement is supposed to be a time for you to enjoy the fruit of a long productive life. You should not be worrying over where to get the money to pay your bills. However, if you are like millions of retirees or workers about to retire who had their retirement nest egg negatively impacted by the current downturn in the economy, you may have to par down your retirement lifestyle and cut expenses to make sure your retirement income dollars don’t run out during your retirement years.

Relocate to a lower cost of living area. If you are currently living in a major city with high property tax, income tax and sales tax, consider moving to cities or urban centers, or even overseas, where the cost of living is lower to stretch a small retirement income.

Once you enter retirement, reduce further any unnecessary expenses and change your lifestyle, if you have to, to preserve your retirement money

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Mutual Funds

Ask yourself, are mutual funds too risky. Although every fund, from money market funds, income funds all the way to equity funds and specialty funds will involve some element of risk, the fact remains that virtually every fund actually reduces risk. How? Through diversification.

I sometimes tell investors that they should not be afraid to own individual stocks if they are willing to take the time to learn enough about the individual company or stock to make a rational businessman’s decision. And don’t forget about valuation. Sometimes it is just a lot easier to pick fabulous mutual funds, and let professional money managers make the individual stock selections for you. If you go this route, and for many it is the way to go, than I suggest your big decisions are what sectors you want to invest in, and what are your asset allocations. Sounds like fancy language, but really it is not. It’s just plain common sense investing. What is your aversion to risk? Do you want to embrace investment risk, or do you seek to encounter as little risk as possible.

All of these funds are simply professionally managed pools of investors’ money. You invest a dollar amount, and in return own shares in a large portfolio of securities like stocks and bonds. The financial objectives range from safety and stability of principle, to high income, to high growth or profit potential. Money market funds invest in safe short-term debt like U.S. Treasury bills, with safety and liquidity as the primary objectives. They pay competitive interest rates in the form of dividends, and the value of their shares is pegged at $1 and rarely fluctuates in value. Bond funds invest in bonds, longer-term debt, to produce higher interest income for the investors. The value of investor shares will fluctuate with changes in prevailing interest rates, so risk is moderate in bond funds.

Equity funds invest your money in common stocks with the objective of earning higher returns or profits for investors. Risk is higher here, as the price or value of shares can fluctuate significantly. The fourth category is balanced funds, which invest in a combination of money market securities, bonds, and stocks. The objective is to provide both moderate growth and dividend income at a moderate level of risk. No guide to investing in mutual funds is complete without considering the cost of investing. You can invest through a middleman and pay as much as 5% or more in sales charges called “loads” or you can invest directly in no-load funds and avoid them. While all mutual funds charge for yearly expenses, you can pay 2% a year or more, or less than % in well chosen no-load funds.

It never hurts to do a little homework, have reasonable expectations, pay a low load, or even used index funds, have a long term outlook, and you should be okay. More than that, you should be pleased with the wealth creation process that you have put together for yourself. If you insist on taking all kinds of risk, than you should do it with only about 5% of your investable assets. Most stock analyst will agree that it is a sound financial idea to diversify your stock portfolio with some type of money market investment, such as the Principal Money Market Fund. However, few will make that recommendation to you because they do not study or analyze this type of security investment.

People that buy and sell commodities say three things about them. They offer high risk and the chance for high return. And third, that commodity markets are easy to understand. I agree with the first statement. There is high risk in buying commodities direct. That is why we should leave them to the people who have the time and resources to do the needed research. The high risk outweighs the high return to me. And I feel commodity markets are difficult to understand, enough so that I do not go near them.

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Mutual Funds

So, you’ve decided to jump into the mutual fund investment game. While mutual funds have shown themselves over time to be a safer bet than normal stock trading, there’s always the possibility you could lose your shirt. However the type of fund you select will have a great deal to do with the amount of risk you take on and the kind of return you’re looking for. For starters, mutual funds are usually broken down into six main types.

Equity mutual funds enable you to invest in typical shares of common, everyday stock.

Fixed income mutual funds let you purchase corporate or even government securities that normally give a fixed rate of return on your investment.

Balanced mutual funds enable the investor to undertake a fund which includes both stock and bond options.

Maybe the most dependable type of mutual funds is the money market mutual funds. They offer a higher level of stability for your principal, as well as substantial liquidity if you need to back out.

Bond mutual funds are popular since they invest in tax-free along with taxable ones. This will give you a higher return on your investment once you factor in the actual tax savings from a municipal bond.

And finally, sector/speciality funds are used to help diversify your holdings within a specific market. This can be a fantastic choice if you feel a specific industry is going to do well. For instance, if you think the oil firms will continue with their record profits, energy mutual funds might be perfect for you. Each of these various funds can be both thriving and risky with a high level of reward possible, or they can be safer and lower risk. It all depends upon which fund you choose. Lots of people diversify their funds so that they can have the best of both worlds. If something really takes off, they can have large profits, if not they are able to hedge their investments with more risk adverse funds.

To break things down more, equity funds are usually broken up into four distinct categories: Growth and Income mutual funds, International mutual funds, growth mutual funds and aggressive growth mutual funds. Each different type of fund has a particular target in mind. For some of us, it is to ruthlessly pursue income, even in risky situations, while some seek to preserve the initial investment and only consider smaller chances.

As you can see, the mutual fund landscape is loaded with so many alternatives; it can make any newbie’s head spin. But fear not, there is practically limitless data available on which mutual fund is right for your specific investment method. Not only do most mutual funds and those that manage them have their own site, there is countless advice regarding which fund is right for you online as well. Don’t forget to utilize bulletins like the Wall Street Journal, as well as friends and family who may have had particular luck with a specific fund. Welcome to mutual fund investing!

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Mutual Funds

While you are accumulating your funds in the stock market, any number of things could affect it negatively. It is incumbent on you to take specific steps to ensure that you can preserve and accumulate your wealth for the future.

Based on the First Commandment of Investing (covered in detail in a future article) – Buy Low, Sell High – the answer is simply “buy when the price is low”. This rule is always worth following. If the market or a stock price are at a new high, it is not a good time to buy. Buy when prices drop, sell when they go up. Like following each of the Ten Commandments of Investing (and the Ten Commandments in The Bible, Torah or Koran) – It is simple, but not easy!

Deciding to borrow or withdraw from your retirement fund is not a fine idea either. Your retirement fund is a long-term endeavor. Retirement planning – and financial planning as well – would normally inform your saving toward that goal. You should not compromise a long-term goal like retirement with short-term needs if you can avoid it. Even if you borrow with the intention of repaying, this often does not happen – particularly if you do not properly plan your finances.

If your employer offers a 401k option, then you should sign up and start contributing now. This money is taken from your check prior to taxes being taken out and deposited into your 401k account. Most employers match up to a certain percentage. There is no reason not to participate in this type of plan. The other most popular types of preparation to retire are IRAs. You will need to research deposing on your needs. Or you can take the advice of your IRA custodian and decide which one or how many of different types that you should invest in. IRAs also give you the chance to play with real estate properties as a form of residual and large pay out amounts. You can generate enough income to pay bills, debts, and contribute to retirement plan savings if done right.

Anyone can begin saving and planning for the safety and financial security of their future. Retirement should not be a time of worry, yet so many end up in a situation where they struggle and fight to remain in control. Many end up destitute and in homes later with nothing to look forward to but death. This does not have to be the case. Do what you can now to get ready to enjoy the Golden Years. Take away stress and worry from yourself, your spouse, your children, and your grandchildren. Leave a legacy of fun and wisdom. Save now and you will not have to pay later. You will be able to live the lifestyle that you are accustomed to and the one you aspire too. You will be able to maintain, pay the bills, and even travel and do extras if you want.

Sir John Templeton was the person who pioneered the investment fund business in the U.S., and later the concept of global investing, before most Americans knew there were other financial markets. He lived his later years living comfortably in the Bahamas. He is one of the real gentlemen of the investing industry who invested other people’s money (and his own) very wisely. The first insight seems obvious – if you do not have money you cannot invest it. If that fits your situation, then you should make sure you do not miss an upcoming article on saving and investing. Even those who buy on margin, or sell short, need some money to do this. The other aspect of his response is more subtle – implying that if you do have money, you should be investing it. Sir John was a long-term investor who was very optimistic about the prospects for the world. I can almost hear him say, “there is no time in history where people were as well off as they are today.”

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Mutual Funds

Planning for retirement will make many aspects of your life a lot easier when the time comes. There are lots of ways that you can approach it but it’s important to be realistic in how you look at things. It’s preferable to prepare long before it’s something you need to deal with.

You main aim is to look forward to the day when you will not be working any longer. Make sure you are fully prepared for when this is going to happen. You might be excited about looking forward to this but you may also be buried under worries you have with regards to the choices to be made.

Taking a structured approach is useful in this instance and makes the process simpler. Talking things over with a professional adviser can be helpful so that you can glean any tips and advice that can help you formulate better decisions on matters of this kind.

The main plans to consider are financial. This means that a financial adviser or professional in your bank is an ideal person to talk things over with. They can help you to properly structure your finances and make things easier for you.

There are other considerations to bear in mind as well such as managing your time to make sure that you do not get bored. Retirement can be difficult for some people to deal with and it is best to be ready psychologically

You need to have an understanding of the things that you think are important. In making decisions like this you are more likely to meet the needs that you have set for yourself. This will vary depending on the individual so think long and hard about all the things that really matter to you.

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Mutual Funds