Have you ever heard the phrase "it takes money to make money"? Chances are you have, but do you know how to do it? Well, investing in mutual funds presents an excellent opportunity to invest the money that you have to create MORE! Mutual funds are perfect for people who would like to invest there money is a safe, simple way, while still maintaining a diversified portfolio.
One of the golden rules of investing states: when you diversify your investments you reduce your risks without losing your returns. This is exactly what makes mutual funds do. So, how do you go about choosing the mutual fund that's right for you? Read on and learn more about these investment gems and you'll be putting your money to work in no time!
A mutual fund is a collection of money, pooled together by all of its investors, used to purchase specific types of securities. These investments within the mutual fund are decided by investment professionals who run the mutual fund. The professional picks from a wide variety of stocks, bonds, money market instruments, or other financial instruments. The investments selected will depend on the fund's investment objectives. Because of this, it is very important to choose a fund with objectives that are compatible with yours.
There are many benefits to consider when dealing with mutual funds. One major benefit is that mutual funds cost less. Unlike many single stocks, you do not have to have a lot of capital to purchase mutual funds and you can invest small amounts of money at any time with no additional trading costs. This makes mutual funds an excellent alternative to the low interest savings accounts found at local banks. Another benefit to consider is the face that mutual funs are very liquid. If you ever need to access your money invested in a mutual fund, it is very easy to do so.
If you decide to invest in a mutual fund, you will be faced with a slight challenge; "which mutual fund do I choose?" There are over 10,000 mutual funds available at any time, so choosing which one to invest in can be an overwhelming decision. A great way to start is by researching different funds' past performance records and future goals. Along with this you should also consider what fees the mutual fund charges, it is usually a good idea to go with a fund that offers a low expense ratio and to avoid funds with additional sales charges.
Another key factor in choosing a mutual fund is RISK. If a fund shows a rocky past of instability, you should think twice before investing your hard earned cash into it. Also, always check with the US Securities and Exchange Commission (SEC) to make sure the company is legitimate and holds a good upstanding reputation.
You will also have to consider which type of mutual fund to you would like to invest in. There are many different types of funds, such as, stock funds, index funds, municipal bond funds, corporate bond funds, money market funds, U.S. Government bond funds, and mortgage-backed securities funds.
Investing in mutual funds is, without a doubt, one of the best ways to create a diversified, secure, and profitable portfolio. The best way to choose the right mutual fund is to study the market and fully understand all of your available options. If you do your homework, you will be able to pick a fund that will benefit you for years to come.
A great starting point is the website http://investing4dummies.googlepages.com/ an excellent investment resource with lots of information on mutuals funds and more!
Article Source: http://EzineArticles.com/?expert=Zach_Ford
If you own a mutual fund as a regular savings account, you may be subject to paying taxes on your mutual fund. If you had a substantial income or capital gain distribution, you may have substantial taxes.
Mutual funds that buy and then sell securities at a profit are called high turnover mutual funds. Their owners could be subject to taxes yearly. Those who do not turnover or sell the securities in their mutual fund have low turnover and their owners will not be subject to high taxes.
Most mutual funds pay the capital gains and dividends once a year in October or December, read your prospectus, because this could be different for your mutual fund. There are a few that have quarterly payouts.
The turnover of a mutual fund is listed on most mutual fund reports so you will know if you are getting a low turnover or high turnover mutual fund. Read mutual fund reports before investing in a mutual fund so you will have this information. An example of a low turnover mutual fund is 80%, an example of a high turnover mutual fund is 400%.
If you purchase a mutual fund right before the payout date and you placed a lot of money in a high turnover mutual fund, you will still be responsible for the taxes for that tax year. You must wait until after the dividend and capital gain payout to avoid the taxes.
The tax consequences on your mutual fund profit can be significant if 1. You have a lot of money in one mutual fund, and 2. You have a mutual fund manager who is engaged in high turnover of his securities. Get all of your facts before you purchase a mutual fund, read online report about the mutual fund you are interested in and then read the prospectus.
Lois Center-Shabazz is the author of the award-winning book, "Let's Get Financial Savvy" and the editor of http://www.MsFinancialSavvy.com.
Article Source: http://EzineArticles.com/?expert=Lois_Center-Shabazz
Can you make good gains in stock and mutual funds? Well the facts suggest you cant and the risk reward is against you. If you do then you don’t make much.
Mutual funds simply are a bad investment and with soaring oil prices choking economic growth the near term future is bleak.
Let's look at the facts.
1. 90% of mutual funds have performance that doesn’t even beat the index
2. Those that do, consider a mutual fund performance as 10% + good. Add in inflation and that doesn’t leave you much.
3. Downside risk is high and many mutual funds can drop by 30% and some even more
4. Mutual funds that do badly simply disappear and another with a short term track record comes in its place and that if it fails it gets replaced.
5. Mutual funds are selling organisations and the sales patter always sounds great but if you wrote to one and asked for an aggregate of all funds ever managed you wont get a reply
6. Do mutual funds go out of business of they lose money? No, they still have their fees so performing is not an issue.
So reality is over 10 years if you make double figures consistently, that’s good in terms of mutual fund performance, but not good if you are interested in building wealth.
The best mutual performance (if your lucky to get it ) wont make you rich so what are the alternatives?
Firstly, you can find better performing investments with lower downside risk and you do not have to blindly give your money to a fund manager to lose.
Do a bit of research and homework – it wont take much effort and you will find a better investment.
A better alternative
A great investment is land. You may never have considered this but its cheap, easy to do has low risk and you can make big profits quickly.
You don’t need insider information or even to do a lot of work, but you will be able to get better growth than the best mutual fund performance.
A great investment in land is
Costa Rica. Land prices has been steadily increasing year after year and many investors are doubling their investment in just a couple of years and that’s way ahead of the best mutual fund performance.
Why is it increasing in value
Well the reasons are simple and compelling
Costa Rica is just a 3 hour flight from the US and property is 70% cheaper and so to are living costs.
Americans in record numbers are buying property here to improve their lifestyle and these properties need to be built on land in fact, investment is at record highs.
Why this bull makret will continue
Land bought in the way of the influx of new buyers can be sold quickly, at big profits and this bull market is set to continue. Why?
With 70 million baby boomers retiring in the next 15 years, with most unable to maintain their existing lifestyles means they will continue to go to Costa Rica for the good life at far lower cost they can get in the US.
By land here and you can beat the best performing mutual trust and have less risk.
We don’t have room here to explain all the advantages such as tax efficiency and ease of purchase but if you look into the facts you will see why this is a much better investment to build wealth longer term than even the best performing mutual fund.
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