Archive for: ‘September 2014’

What You Need To Know About Investing In Certain Mutual Funds

September 30, 2014 Posted by admin

There are many different types of funds to invest your money in when it comes to the stock market and related activities. In this article today I want to briefly discuss several different fund options that you can invest in and I want to discuss several things that you may or may not have thought about for them that are nonetheless important for you to know about.

The first thing I want to talk about today are municipal bond funds. Municipal bond funds are a pretty good way to invest in falling interest rates if you happen to be in the over 30% marginal tax bracket, otherwise they may not be such a great deal. That’s all I want to say about them.

Next I want to talk about tax reform funds briefly. Mutual funds that are designed to benefit from different tax reforms that may or may not be coming down the pipeline are not something that most investors should mess around with. These types of funds usually concentrate on shorter term gains and massive use of leverage in the form of shortselling as well as options and futures.

Next I want talk about low-risk stock funds. These funds often market themselves as growth and income funds. One benefit is that they often offer dividends as well as the growth of principal. That may or may not be true so be sure to do your homework before you invest in them.

Next I want to talk about tax free money funds. These types of funds often offer the highest after-tax yields but often only for investors who are over the 30% tax bracket.

Finally I want to say a quick word on public futures funds. These commodity-based funds are often very bad investments. They usually offer fairly low returns and inconsistent performance. Also they contain higher risk because they often use massive amounts of leverage. At the same time they almost always charge extremely high fees, sometimes exorbitantly high fees. Your ordinary investor would do well to stay away from these sorts of funds.

There you have several tips about certain types of funds and whether or not to invest in them safely. As for any investment opportunity, it is incredibly important for you to do your own homework and your own research as well as your own future analysis to determine whether or not the investment is right for you and your portfolio needs.

Sometimes these investment opportunities will look better than they would if the current economy and in fact the stock market as a whole is in bull market mode. The real test for these funds is how well they stack up during bear markets and recessions. As of February 2010 we are still in one of the largest recessions of our country’s history which makes investing particularly treacherous at the moment, so be careful out there!

Deferred Sales Charges (DSC) Is Just Another Hidden Cost Built Into Mutual Funds

September 29, 2014 Posted by admin

If you see the letters ‘DSC’ next to a Canadian mutual fund that you own, you can rest assured that you are getting hosed…’DSC’ refers to Deferred Sales Charges or fees that an investor has to pay over and above the actual fund’s management fee.

A deferred sales charge is a “penalty” that the investor has to pay if and when the investor decides to withdraw his/her money. Often it can be as much 6% of the original amount of the investment.

For instance, take an investor who buys $10,000 of a mutual fund with a deferred sales charge. Let’s say, the market as a whole does well over the course of a year but this particular fund loses 10%. Not surprisingly, the investor wishes to withdraw his money due to the fund’s poor performance. If the investor withdraws his money, he will be hit with a penalty and his investment will be further depleted upon withdrawal. Assuming a 5% penalty on the original investment, the investor is left with $8,500 or a loss of $1,500.

Interesting enough, while the investor winds up with a loss of 15%, the fund company actually does quite well. First, over the course of the year it earns a management fee. In Canada, the average management fee for mutual funds is 2.5-3.0%. So assuming a fee at the low end of 2.5%, the fund company makes $250. It then makes another $500 from the deferred sales charge.

All in, the fund company makes $750. Not a bad pay day for a fund that just underperformed the market.

Of course, the investor could limit his losses by keeping his funds invested with the mutual fund company. In this way, he would save the $500 in deferred sales charge. That would make the fund company very, very happy. Indeed, the fund companies are counting on it. They know that most investors are unlikely to move their investments out if they are forced to pay a penalty.

It really is quite incredible that the big banks are able to get away with this kind of unethical behaviour. In fact, many funds sold by bank financial advisors fall into this category. Unfortunately, the average investor just does not know where to look for pricing information. It certainly is not well publicized by the fund companies for obvious reasons. And unfortunately, our Canadian government has no interest in exposing the mutual fund industry for what it is, unlike Australia or Britain where mutual funds are much better regulated.

The Deferred Sales Charge is just one more way for the Canadian Mutual Fund companies to keep fees hidden from their customers.

Jeff Kaminker Portfolio Manager, CFA, MBA, P.Eng

Jeff Kaminker is a licensed Portfolio Manager for Frontwater Capital based in Toronto, Ontario.

idelity Mutual Funds

September 29, 2014 Posted by admin

Finding a good return on your money is really not that easy for the majority of people these days. Not merely is the population aging, which means that these investors will be attempting to supplement their pension from interest from their capital, but the younger population is also be searching for investment opportunities in order to make up a nest egg for their retirement.

One of the most popular investment vehicles is something called mutual funds. Mutual funds have been around for well over a hundred years and have proved themselves over and over again as reliable investment options.

However, there are hundreds, if not thousands of mutual funds, so deciding which one to invest in is fairly difficult. However, it is important to decide on the right one(s) because the difference in performance between the best ones and the worst ones is quite frightening.

Mutual investment funds operate on the principal of many investors who do not have the time, inclination or knowledge to invest for themselves, hand their money to to a mutual investment fund so that they get cheaper dealing charges (economies to scale) and they also get the services of an expert stock picker to manage their nest egg for them.

The problem with mutual funds is that you still have to keep an eye on them. After all, managers move on to other businesses, so if you have faith in one particular manager, you may want to sell up and follow him or her whenever they move on.

One of the most successful mutual investment funds over the very long term is the Fidelity Mutual Fund. In fact, Fidelity manages quite a few mutual funds, so even if you make a decision to go with Fidelity, you still have to decide on which funds exactly.

You can rely on a manager or adviser to make or help you make these decisions or you can guess for yourself. For instance, you may think that Japan or the Pacific Basin is pretty cheap and ought to do well for the next ten years. Or you may think that commodities have to rise in price. You can decide on Fidelity mutual funds for these more refined investment choices.

The problem with Fidelity Mutual Investment Funds as with all mutual funds and indeed all investment vehicles is that nothing remains the same for ever, so you have to check your investments frequently (or have someone else do it for you, which is hardly ever as good).

Mutual investment funds are a long term investment which means that you should expect to leave the money in there for at least ten years. In fact, there are penalties and early get-out clauses.This is because financial advisers are paid for introducing you to Fidelity and Fidelity has to recover that money from you.

Do not join any Fidelity Mutual Fund (or any other mutual fund) without first checking out their web site and reading their latest terms and conditions. If you still feel that Fidelity could be good for your investment needs, find a broker or your bank and get their advice. At least that way, if the fund does badly you will have someone to grumble to and you will not get the fund any cheaper whether you go through a broker or not.

Managing personal finance has never been easier

September 27, 2014 Posted by admin

Managing personal finance may not be everyone’s cup of tea, especially for those who have no experience in business and management. An accurate financial plan will ease your work and guarantee a successful completion of your financial goals. Here, on our website, we provide helpful information for an accurate finance comparison that will obviously make your work easier.

Managing personal finance may not be the easiest job. If you are one of those who manage their finances themselves, you will surely not find this activity as being the most enjoyable in the whole world. It requires a lot of time and attention, but it is indispensable to your or your family’s financial well being. You can find a helping hand here, on our website, where you have the updated information you need in order to do a realistic finance comparison.

A key component for efficient management of your personal finance is financial planning. This dynamic process requires regular monitoring and reevaluation. Otherwise, you risk missing points of evaluation and this could damage your finance control. You should keep under control this circular process by repeated verifications and intelligent manipulation. The following five steps should organize and make your planning easier.

The first step is an assessment of one’s personal financial situation. You will do it by compiling, onto a piece of paper, all the personal assets, income and outcome. You should use a simplified balance sheet for listing the values of personal assets (for instance, car, house, stocks and bank account) along with the values of liabilities (such as credit card debt, bank loan and mortgage). Moreover, you should make sure you list personal income and expenses, on a personal cash flow statement form.

The second and most enjoyable step is setting the goals. With this stage, one should formulate his or her material desires in a financial language. You can set long-term goals can such as retiring at 65 years old with a significant personal net worth. You can also make short-term plans, for example: buying a house or a car by paying a monthly mortgage for 3 years but no more than 25% of monthly income. You can also establish several goals both long and short-term, in the limit of your financial resources.

After setting the goals, you must develop an efficient plan in order to accomplish them. The plan should detail the exact actions that you need to undertake. This is the third and most difficult part of your personal finance management as it asks for thorough research for the most convenient loan, investment or mortgage deals. An easy way to approach this matter is by using the services we offer here, on our site, where you will find thousands of updated offers available for adequate finance comparison. In this manner, you can avoid or diminish planned financial sacrifices such as reducing expenses or increasing your employment income.

Execution of one’s personal financial plan, monitoring and reassessment are the fourth and, correspondingly, fifth steps in efficient personal finance management. Discipline and perseverance are necessary for accomplishing this part of the plan. As time passes, conscious fulfillment of every action included in the financial plan must associate with continuous monitoring and reassessment until the fulfillment of the financial plan.

Managing your personal finance has never been easier. With access to all the pieces of information you need, you can do a realistic finance comparison and you can develop a more efficient personal financial plan. Here, we offer you the possibility to compare thousands of offers on credit card, loans, insurance and investment deals in UK and not only.

Car Consumers Should ‘Shop Around’ For Finance Deals

September 25, 2014 Posted by admin

Despite further pressure on their personal finances, demand for new cars is rising among Britons, new figures reveal.

According to the Deals on Wheels report by the AA, interest in new registration vehicles has risen by 22 per cent during the past year in spite of five base rate rises by the Bank of England since August 2006. A third (33 per cent) of drivers are looking to buy a new automobile over the next 12 months, in comparison to the 26 per cent recorded in the same time last year.

The financial services provider also pointed to statistics showing that the real cost of cars had decreased by 26 per cent over the last ten years, figures which were suggested to be “impacting people’s decisions to make an investment in new wheels”.

In comparison, the second-hand car market was shown to have fallen over recent months. Currently, just over a third (36 per cent) of respondents are planning to get a car which is less than three years old – a fall of 16 percentage points from the 44 per cent recorded in a study taken at the start of 2007.

Reliability and mechanical problems are the main factor pushing demand for new cars, accounting for 32 per cent of people surveyed. Concerns over running costs of vehicles make up 28 per cent of consumers’ reasons to get a brand new automobile, compared to environmental worries which stand at 18 per cent.

Commenting on the figures, Lloyd East, head of AA Personal Loans, said: “As interest rates rise, UK consumers are beginning to tighten their purse strings. But our research shows strong consumer demand for new registration cars ahead of September 1st. This suggests that reasons for buying a car are not only influenced by price at purchase.”

And with about a third of those planning on getting a car set to take out personal loans or showroom finance deal to fund their purchase, Mr East suggested that more people are becoming increasingly concerned about the running costs and the practicality of their cars. “With interest rates rising, the cost of buying a car on finance is increasing and it is therefore essential that people intending to buy a new or used car shop around for the best deal before heading for the forecourt,” he added.

Those in Scotland were revealed to be “keeping their foot on the accelerator” when it comes to buying a car as 41 per cent of consumers in the region are aiming on getting a new vehicle over the coming year. This compares to some 26 per cent of residents in the south of England.

Overall, older Britons are driving the new car market as 52 per cent of those over the age of 55 are set to make such a purchase. Meanwhile, a fifth of 25 to 34-year-olds are looking to do so, as younger people are reported to be much more likely to buy a used automobile.

Earlier this month, Tim Moss, head of loans for moneysupermarket, claimed that those considering buying a new 57 registration car in September could be “taken for a ride” if they choose an uncompetitive finance product. The price comparison website suggested that consumers opting for a showroom deal instead of a cheap personal loan could collectively be paying 140 million in extra interest payments.

Mutual Fund Investments

September 25, 2014 Posted by admin

It is usually observed that an investor, investing capital in mutual funds (MF) for the first time, is apprehensive about the investment all together and more so about the safety of his capital. The disclaimer that haunts the investor is ‘Mutual funds are subject to market risk, please read all scheme related documents carefully before investing’. However, the risks when compared to other market investments are substantially low. But what is a mutual fund really?

MF is a kind of trust that stands primarily on five pillars. They are: unit holders, trustees, sponsors, a custodian and an Asset Management Company (AMC). In simple words, it is an indirect investment plan. It is an investment where the primary investor does not have a clue as to where his capital has been invested. However, he is assured of a fixed amount of interest. It is a collective scheme where a big investor collects different amounts of capital from smaller investors and invests them in some bigger opportunities. It is from these big investments that big returns are received and later distributed to the smaller primary investors. The sum that is passed on to the primary level is a pre-assured one. The big investor assures the smaller investors of the minimum amount of interest or profit they would be getting, thus minimising the risks for the smaller investors. Some MFs are ‘open – ended’. It means that the investors can buy or sell the shares of the fund at any given time.

The next most important part in understanding what is a mutual fund, is to understand how it is different than the other market investments. MFs invest in securities like; bonds, convertible bonds, debentures, shares etc; depending on what is the expected result of the investment scheme. Such a fund has two clear benefits: one, the profit earned; and second, any capital appreciation realised by the sale in the process. In India, the investments in mutual funds are in consonance with the regulations of the Securities and Exchange Board of India (SEBI). Mutual funds are different from other kinds of investments as they are not individual investments.
After understanding the components of the mutual funds investments, it is necessary to understand what NAV or Net Asset Value of a scheme is. It is basically, the performance indicator of the scheme. It is the market value of the securities held by the scheme. The Net Asset Value changes each day, with the changing value of the security invested in by the scheme. The per unit value of the NAV is the market value of the securities invested in for the scheme, divided by the total number of units of the scheme at any particular point in time.

The main purpose of investing in the MF is the traditional investment idea. Collective investments always run a lesser risk, as compared to individual investments in the market. Individual investments might be able to give higher returns, but when the markets are volatile, it may result in catastrophic loss, unlike mutual funds, which always assure the primary capital to be safe.

Tips While Choosing a Mutual Fund Performance

September 23, 2014 Posted by admin

Choosing the right can be beneficial even in the long run so it is wise to check out the mutual fund performance before investing your hard earned money in them.

Many people nowadays like to invest their money in the share market. Many people make profits and earn a lot by investing their money in the share market. These funds are professionally managed companies which buy and sell shares using the money pooled in by investors. Many individuals who are not able to understand the share market or those who are not confident of buying and selling shares themselves approach a corporation to do it for them. Before choosing one should have a look at the mutual fund performance and then take a decision. Many people also invest their money because they do not have the time to closely follow the stock market and make buying or selling decisions. When you decide to invest in a fund, there are experts and professionals who are making the decisions for you. Researchers who thoroughly and meticulously analyze and study the market before buying and selling shares which is one of the main advantages.

There are many funds and wondering which one to choose among them can very often be a complex decision to make. While checking out the mutual fund performance, you can take a look at the returns which they are offering. which is performing well will be able to offer good returns to the investors and help their clients in gaining profits.

Some people have experienced that they end up paying a lot of money, but they hardly get back any returns. Avoid investing in these kinds of funds where you end up paying more and receiving lesser because this will only result in losses for you.

While choosing, you can also have a look at their past performance. You can see their profit returns and performance over the past five years or ten years to gauge their level of competence. Mutual funds also have different categories and schemes to choose from. If you are interested in investing in a specific scheme, then you can check out the performance of that particular scheme over the past few years. Consistence is the key. Fund should have consistently performed well over the years for it to be termed as one of the best or one of the good ones. In fact, a good one whose performance is improving year after year. Even when the market condition is bad, it should have been able to achieve the best. After all it is your money and you are looking at increasing your wealth. So, while selecting a these fund have a look at the mutual fund performance to decide if it is efficient and can help you to get profits. Investing in a good can be worthwhile even in the long run and will help you to earn more wealth.

Finance Companies; Tips On How To Select The Best

September 22, 2014 Posted by admin

Finance companies are designed to provide leasing or hire purchase contract to many business owners. They are there to help you achieve your business or investment opportunities. There are many things that you need to put into consideration when you are looking for one that will provide you with the services that you need. You will need to do research since there are many finance companies that have come up in the market, making it competitive. Some of them provide funding with the aim of marketing their products and/or services.

Others are part of major banks while there are those who are members of financing and leasing associations. Since there are many finance companies out there, it is only advisable that you search for one that has a reputable background. A good reputation and the fact that the company is a member of the finance and leasing association is the kind of company you want to deal with.

When you settle for a particular finance company it is also vital that you fully comprehend the contract you have with them. It should be in agreement with any verbal or written quotation. They should openly inform you of any penalties that may be incurred in every situation of the agreement. You should avoid companies that have hidden prepayment penalties. It is important that you are aware and understand the terms and conditions of the company before you sign on the dotted line.

If you are leasing equipment from the company, ensure that it is new or in superb condition. Be aware that once you select a finance company that you are in a long term agreement. It is advisable that you go for a company that can give you the flexibility to change between the fixed and floating rates without charging you extra.

Benefits of Mutual Funds

September 20, 2014 Posted by admin

Of the many different ways in which you can invest your money, mutual funds are one of the more popular choices among both individuals and financial planning firms. Unlike stocks and bonds, they offer a greater variability in terms of the amount of money you can invest and the ways in which you can withdraw and reinvest your funds. This makes them a good fit for many individuals just beginning to explore their investment options, as well as those who want to have more control over their portfolio.

What are Mutual Funds?

Mutual funds are basically an investment co-op. Several people put their money into a single investment portfolio underneath the direction of a fund manager or other investment professional. The return is set an annual fixed fee, so that most of the risk and potential for substantial returns falls on the fund manager or firm. To the consumer, this is much less like an investment in the stock market and more like a bank account with a standard interest rate, even though their money is technically invested in a number of different ventures.

Why Mutual Funds are Popular

Many people prefer mutual funds because their money is under the direction of a financial manager or investment professional who has just as much of a vested interest in the outcome as they do. This offers a great alternative to a broker, who typically takes home a commission rather than a percentage of the money you make. In fact, most brokers have no accountability for an investment gone bad.

In mutual funds, however, your financial manager makes money only if the portfolio does well. And while you typically get a fixed return rate – and therefore never see the benefits of an incredible return – you can feel safe knowing that your money is working hard with little risk.

Mutual funds also come with a greater range of options than what an individual gets with stocks or bonds. For example, because several people are investing simultaneously, many mutual funds are open for investment at as little as $50. When set against the thousands of dollars typically necessary to get started in the stock market, this means that more people can access a smart financial plan.

You can also usually withdraw your funds faster and more conveniently. Although there may be fees associated with an early withdrawal of your investment, they are usually smaller than what you can expect from a different type of investment, and you’ll see the cash in hand in as little as three business days.

Are Mutual Funds Right for You?

Still, despite these advantages, mutual funds aren’t right for everyone. They are lower risk than what many investors are looking for, and many people actually need the rigor of an investment they aren’t allowed to touch for several years in order to be successful at investing.

Before you make the decision to purchase mutual funds, it’s best to discuss your options with your financial advisor or investment firm.

Tax Saving Mutual Fund Basics

September 11, 2014 Posted by admin

There are many ways that you can use to save tax. One of the most lucrative methods though, is by using mutual funds. These are by their very nature bound to give you good returns. When you add the fact that you’ll be getting tax cuts, it’s quite a bit like hitting the jackpot. But you need to make sure that you’re choosing the right tax saving fund. Because there are quite a few tax saver mutual funds in the market. The thing to bear in mind at all times, is that you need to choose a fund that both saves you tax and performs well. This is your criteria; if this doesn’t fit – then you might as well pay the tax and get it over with, because you’ll be losing money either way. Here are something that you should look at, so that you know you can choose that particular fund.

The first thing to check is the net asset value also known as the NAV. Generally, funds have lock in periods, which vary from three to five years. You need to know that a fund has performed well and done so consistently for at least three consecutive years, before you consider actually putting money in it. This way, even though your money is inaccessible to you, you know that it is growing steadily until the lock-in period ends. Keep in mind that you have to look at both bull runs as well as bear markets. Your fund should have performed well – or at least better than its competitors – through ups and downs in the market. Generally funds that survive such ups and downs have a clear and concise investment strategy – and this can be priceless. Look for such things when you’re going through different mutual funds, whether online or in person.

You should be able to understand how much of your money is in stocks in advance. Make sure that the investment does go through as it is supposed to – raise questions if it doesn’t. You’ll know that the manager isn’t going to randomly invest random amounts of money anywhere he or she pleases. You would know the risks you would be taking with your money, and if it isn’t something you’re comfortable with, you can pull out. This is where the volatility of the fund comes in – if you’re not a risk taker, then you might want to avoid equity funds. Keep in mind that your success depends a great deal on your research about any given fund and the fund manager and his or her strategy before you invest.