Get help, advice and information on all your Finance issues. http://advice-and.info/Finance/mutual+funds.htm Mon, 04 Aug 2008 15:35:57 GMT en Investors who need quick returns and at the same time need safety from market fluctuations should consider investing in balanced mutual funds. It removes the disadvantages and difficulties that lies in investing in stocks and bonds and invests in a portfolio of bonds and stocks depending upon the investors risk profile. Hence returns as well as income can be achieved at the same time by investing in balanced mutual funds. What is a balanced mutual fund? A Balanced fund is a mutual fund which invests in a balance of common stock, bonds and preferred stock with an objective of income provision and some capital appreciation with low risk. So investing in balanced mutual funds provides the returns of stock market as well as the safety and regular income of bonds. Balanced mutual funds are also called as hybrid funds or asset allocation funds. How do you get the returns? Although mutual funds are better and safer places to invest than the stock market, they are also subject to the fluct uations of the market. But Balanced funds try to address this problem and provide a high and stable return. These funds invest about 60-65 of their money in stocks. Sometimes, it my go up to 70 also. While investing in stocks, they choose the sector that has consistently clocked high growth over the past few years and invest in securities in those sectors. oAsset allocation within the sector will also be based on fundamentals of the organizations in the sector. oThe top security in the sector may be allocated 10 of the total money and lesser the potential lesser will be the amount invested and so on. o These funds will invest in many sectors so that the portfolio will be diversified and losses minimized. Investments in bonds will typically be around 40 of the total money. More aggressive funds will allocate even lesser. oThe investment in bonds ensures some cushion for the investors money and provides safety. At the same time, investors will also get regular income by way of coupon pay http://advice-and.info/Finance/92590_Balanced_Mutual_Funds.html Fri, 01 Aug 2008 10:33:49 GMT Gold is one of the good investment avenues open for many reasons. Why one should invest in gold? The uncertainty in world markets, particularly the US economy and the weakening of US Dollar against world currencies coupled with phenomenal rise in Oil prices, cascading price rise and inflationary trends all these point to the need for strong world currency and that is the yellow metal- THE GOLD.Gold has maintained its value in terms of real purchasing power in the very long run in all the countries especially in the US, Britain, France, Germany and Japan. Gold traded mutual funds are the answer for people who want to invest in gold without the real difficulties of gold holding. For example, to buy gold for investment, one has to spend time to verify its weight, purity (particularly in third world countries) quality & other aspects. After all these, the problem of safe- keeping hovers over ones head. Now Gold Traded Mutual Funds offer all the benefits of investment in g old without any of the above physical difficulties. Golds liquidity, acceptability and portability are particularly important in times of need. In essence, all these benefits are retained & rendered by Gold Traded Mutual Funds. How these Gold Traded Mutual Funds operate? They accept funds from public and buy 100 pure assayed gold. They issue unit certificate to the public for each gram of gold invested by them. For example, if one wants to buy 100 gram of gold, one has to buy 100 units from the Mutual Fund. The price of each unit depends on the price of gold ruling on any given day. This investment can be kept in paper or in a demat account. These units can be surrendered to the fund and gold bars can be obtained in return (if required). How the Fund repays in gold bars? All the gold bought by the Fund is deposited with a custodian- usually a reputed banker- for safe keeping in their safe vaults. Once the fund units are surrendered, the Fund authorizes the banker custodian http://advice-and.info/Finance/92346_Gold_Traded_Mutual_Funds.html Thu, 31 Jul 2008 08:55:28 GMT The IMF predicts the US economy to slow down. Inflation has increased manifold in several countries across the world. There is a possibility of deeper economic downturn. The stock markets of most of the countries have tumbled during recent times. During tough times such as these, where would you put your money? One possible place is bond mutual funds. As the name suggests, these funds invest in bonds and debt securities. These funds aim to protect the invested capital and at the same time ensure regular income from interest payments. Just like any other mutual fund, these funds too have a Net Asset Value (NAV) which is the value of each share of the mutual fund. It is nothing but what one must pay to get one share of the fund or what one gets when a share of the fund is sold. 5 reasons why one should invest in bond mutual funds: 1.They are a lot less riskier than stocks 2.They provide stability 3.They are diversified the portfolio will be across many different bonds thereby reducing the risk of default and ensure regular payments. 4.Certain types of bond funds are exempt from federal andor state taxes 5.They are more liquid than bonds. Among these advantages, the last one is the most important. It is the reason why one must buy bond funds rather than individual bonds. They can be easily bought and sold in smaller units. On the other hand, it is not so easy to buy bonds and hold them. Bonds are not as liquid as bond funds. Hence it is better to buy bond funds rather than bonds. TYPES OF BOND FUNDS There are many different types of these funds. Of these, some of the major ones are Government bond funds (or Federal bond funds), Municipal bond funds, corporate bond funds etc. Government Bond Funds These funds invest in debt securities issued by the government such as the Treasury bills, Treasury bonds, Treasury notes, Mortgage-backed securities issued by government agencies etc. Some of these funds are also exempt from state andor local taxes. Municipal Bond http://advice-and.info/Finance/92345_Bond_Mutual_Funds.html Sat, 02 Aug 2008 04:43:44 GMT Youngsters, whose age is somewhere between 18 and 35 must look forward to invest in mutual funds. Retirement plans and pension plans need not be considered. They must think more aggressively. At the same time they must be careful not to lose out. Some of the possible types of funds that they can consider investing are described in this article. The Emerging Markets Funds Emerging markets funds invest in economies that grow very fast (like India, China, Brazil, Russia, Mexico etc.). These economies create wealth both at home and also for foreign investors. These funds have posted impressive returns. Many funds have given more than 50 return. However, in the current world economic scenario, such returns may not be possible consistently for a long time. But these funds tend to diversify their portfolio across different countries and mitigate several risk factors. Hence investing in emerging markets funds is a quick way to earn money. Small-cap and Mid-cap funds These funds are for tho se people who tend to take more risk than an average investor. Recent history says that the small-cap and mid-cap have consistently outperformed large-cap stocks. But there is no guarantee that it may continue to do so in the future too. These funds concentrate on growth stocks and therefore have larger returns but the major drawback in such stocks is their volatility. Therefore it is always better to invest in small-cap and mid-cap funds for a smaller period of time. Investment should be made in funds that have a diversified portfolio and smaller asset base (it means that the fund has enough flexibility). Target 20XX funds An adventurous person who wants to do a lot of things in life and at the same time save money over a period of time must consider investing in target 20XX funds. The portfolio of these funds will be biased in favour of equity to provide higher returns in the initial years. But over a period of time, it will be revised and more funds will be shifted to bonds to ensure safe re http://advice-and.info/Finance/91974_Investing_In_Mutual_Funds_For_Youngsters.html Fri, 01 Aug 2008 03:44:23 GMT Investing in mutual funds of investment companies means the investors buy shares in these companies. The ownership is proportional to the number of shares purchased by the investor and the gains are divided proportionately. Mutual Funds Mutual funds are financial intermediaries that collect funds from individual investors and invest these funds in various kinds of securities andor other assets. Investing in mutual funds provides the benefits of large-scale investing to the small investor. By investing in mutual funds of an investment company, the investor contributes to the pool of assets created by the investment company. The investor's claim in the portfolio established by the investment company is proportional to the amount invested. While all investment companies pool assets of individual investors, they also need to divide claims of those assets among those investors. The value of each share purchased by the investor is called the net asset value or NAV. Net asset value equals assets minu s liabilities expressed on a per-share basis. Open-end and Closed-end Mutual Funds By investing in open-ended mutual funds, the investors have an option to "cash out" their shares at the net asset value at any time. They can also buy new shares. Open-end funds can be redeemed or issued readily at their net asset value. Therefore, the unit capital of an open-ended mutual fund keeps varying over time. The term "mutual funds" refers to open-end mutual funds only. In contrast, by investing in closed-end mutual funds, the investors do not get to redeem their shares all the time. They can get it done only on maturity. New shares too wont be issued. The investors can, however, cash out by selling their shares to other investors. Shares of closed-end mutual funds are traded on organized exchanges and can be purchased through brokers. Their prices can differ from their net asset value. Hence the closed-end mutual funds are less popular when compared to open-ended mutual funds. Therefore, investing in http://advice-and.info/Finance/90930_Investing_In_Mutual_Funds.html Fri, 18 Jul 2008 22:13:20 GMT Every Mutual Fund has a specified investment policy which will be described in the Mutual Funds prospectus. A family of Mutual Funds will be managed by an Asset Management Company. How Funds are sold Mutual Funds primarily depend upon individual agents and distribution companies to market their schemes to the investors. Nowadays, they also market their schemes directly. The individual agents who sell schemes of various Mutual Funds also act as financial advisors to many investors. Hence they are required to clear various examinations before acting as an agent. Many Mutual Funds prefer to deal with distribution agency than individual agents as it is easier to manage. These distribution agencies, with their highly qualified executives, will be able to offer better financial advice than individual agents to the investors. Nowadays, the sales officers and other employees of the investment companies directly approach the investors (particularly the high net worth individuals and corporate cli ents) to sell different schemes. However, most of the sales of Mutual Funds happen through other distribution route than from marketing directly. Investment Policies The Asset Management Company of a Mutual Funds family will collect funds from investors and charge a management fee for operating them. They enable investors to invest across different market sectors and switch assets across funds while still benefiting from centralized record keeping. The investment policies of different types of funds are as follows: Equity Funds. They invest in stock. However, they will hold 4 to 5 of their assets in money market securities to offer liquidity. Income funds will hold shares of firms giving high dividend yield and Growth funds will hold shares of firms that enable faster capital appreciation. Sector funds focus on a particular industry. Debt Funds. These funds invest in fixed-income securities. Different funds will concentrate on Treasury bills, corporate bonds, Mortgag http://advice-and.info/Finance/90929_How_Do_Mutual_Funds_Work.html Tue, 22 Jul 2008 13:46:02 GMT Mutual Funds are a long term investment. Period. Nothing short-term about them, no day trading. They are meant for the serious investor that is willing to take the time needed to grow their wealth over a long period of time. Why are mutual funds like that? Well, a mutual fund is a collection of stocks, bonds or money market securities, which have been bundled together in one offering based on not only the goal, but the past performance of the individual components. They are taken as a whole, and as such, when some of the holdings in a fund rise, others may be falling, so the growth potential is not as extreme as, say, just one stock or bond. Over time though, mutual funds, can grow up to 8-9 a year, while the stock markets can gain anywhere from 10-11. There are a variety of mutual funds that an investor can hold. Some examples are Bond Mutual Funds, which are mutual funds that are comprised of bonds that are offered by a company, State or Federal Government, or Mortgage and Asset-backed bonds. Another type of mutual fund is the Stock Mutual Fund, or Equity Fund, as some have coined it. These funds are comprised of holdings in various stock companies, and as such, can be a bit riskier due to the volatility of the stock market. You can even invest in a Precious Metals Funds that invest in Gold, Silver, Platinum, Palladium, and even Rhodium. When an investor contributes to a Precious Metal Funds, they will receive a certificate that represents the holding. There are some terms associated with Mutual Funds that the investor should be aware of. The first is the Net Asset Value, or NAV, for short. The NAV is a calculation that takes the Funds total assets and minuses the total liabilities. This calculation is done daily, at the end of trading, to reflect the true value of the Fund. Another term is liquidity, which is used to describe the amount of time it takes to convert the investment to its cash equivalent with the minimal amount of fees or price discount. Mutual Funds are not kno http://advice-and.info/Finance/90493_Mutual_Funds_As_A_Long_Term_Investment.html Sat, 12 Jul 2008 15:16:19 GMT