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Friday, September 25, 2009

Best Mutual Fund - Finding Your Investment Success

There are thousands of different mutual fund combinations out there. Finding the best mutual fund, therefore, might prove to be a challenging task in your eyes. What if I told you right now that I have the answer to that question? What if I could tell you the exact best mutual fund to invest in this second? Well I can, but I guarantee the answer will surprise you.

The best mutual fund to invest in is the one that suits your needs. That's right. There's no magic answer, no 'secret fund' that all the millionaires are using. The great thing about mutual funds is that they're fully customizable, and they offer instant diversification. Having a mutual fund allows you to invest a little bit of money into a lot of things, giving you better options for success all around. If you invest $2,000 in one or two stocks, you're taking a huge risk. While the reward might be worth it, the crash definitely will not. Invest that $2,000 in a mutual fund and you'll have your pick of investments. What exactly is in a mutual fund? I'm glad you asked.

A mutual fund can consist of many of the following investments:

-Stocks
-Bonds
-Commodities
-Real Estate
-Currency

In addition to these things, mutual funds can also include other investments. With your $2,000, you'll get a little slice of any of these that you want, depending on which mutual funds you consider, and how you choose to diversify your money. This might all seem like a lot to take in, and you might very well be wondering how in the world you're supposed to keep track of all this information. You need to take in what you can on your own, and then see a financial professional to help you choose the best mutual fund and learn how to best invest your money.

Mutual funds are easy to invest in, and you can choose from two different types so that if you don't want to pay heavy fees like you would with stock investments, you don't have to. You can even get professional picks on the stocks in your mutual fund for FREE, when it would cost you hundreds or thousands to research before you invest in stocks alone. You're certainly not going to prove to be 100% successful every single time, but having free professional picks certainly can't help. If you want to learn more about mutual funds, find a financial advisor near you today.

courtesy of http://EzineArticles.com/?expert=Asav_Patel

Tuesday, September 15, 2009

Power Investing in Commodity Mutual Funds

Unless you have the time to do the proper research, one of the best and safest ways to invest in commodities is through a commodity mutual fund.

Commodity mutual funds are a great way to diversify your investment portfolio, in a way that complements stocks and bonds.

You can not only make a significant amount of money by doing this, but you can also hedge against losses because commodities tend to move in the opposite direction of stocks. Not always, but it is a general rule you can count on most of the time.

There are a variety of commodity mutual funds to invest in, and here are a few to understand and consider.

First of all there is the fund that holds the actual physical commodity it has invested in.

These types of funds will take ownership of things like gold and silver, and then issue units against them.

Another type of commodity mutual fund is one that buys futures contracts, where owning the specific commodity isn't a part of the picture.

These funds are operationally tracking funds, which track an underlying index, which of course is tracking the actual price movement of the commodities themselves.

Another thing to understand with these types of funds are they hold debt like US Treasury bonds, with which they can use to pay expenses if they choose to.

Another way of investing in a commodity mutual fund is through a fund set up specifically to invest in the stock of a company producing a commodity. They could be mining or agricultural companies, etc. Most investors understand this, but it is still a very good way of partaking in the commodity market.

So it's really not that difficult to understand, and if you follow the markets or choose a fund with a quality fund manager to manage the fund, you have really good chances at beating the stock market.

One must be able to live with the wide swings at times though, which is why I talked earlier about it not being for the weak at heart.

Even commodity mutual funds can move in large swings, and that should be understood so we don't just move in and out of commodities at a whim, and lose the value of sticking with it.

We always must remember to include a stop when we're investing in commodities, and need to put a stop loss in place to manage the risk we're taking on.

It's important to understand the basic way investing in commodities is done, as it helps us to ask the right questions of fund managers, which can put a healthy check and balance in place, so they don't think they can do anything they want without you checking up on them.

People across all professions admit that those taking the most interest in what they're involved in get the most attention, and it does counter the idea of just doing whatever they want. That's a good thing when its your money and future at stake

courtesy of http://EzineArticles.com/?expert=Taylor_Raimee

Wednesday, September 2, 2009

The Truth About Mutual Fund Fees

Have you ever been "fee'd" to death? It's probably happening to you right now by the mutual fund industry, and you don't even know it. The worst part: the fees are deceptive, and you probably wouldn't pay them if you knew the truth.

The fee game involves getting "fee'd" to death by the mutual fund industry, what I like to call the "industrial-investment complex."

Here's some background: The fee that is charged is always presented as a percentage of assets under management. It's really smart for the mutual fund industry to do this. If they're managing a thousand dollars and their fee is 1 %, they're going to get $10. But if they're managing a billion dollars, the fee for assets under management is still the same percentage. It's still that small 1%. So the investor is thinking "Oh, wow, that's only 1%, that's small for all that service."

As the mutual fund industry has grown over the past 20 years, they manage more and more money; $10 trillion today, which comes to $500 billion in potential fees each year. That small fee that's shown as a percent of assets under management never looks that large. That's a main reason why investors think, "Oh wow, this is cheap and not that much" when, in fact, it's very expensive. Seemingly small percentages, added up and compounded over time, make a huge difference for your investments. Every unnecessary investment expense that recurs time and time again cuts deeply into your returns.

A much more equitable fee would be a percentage of income, or a percentage of performance. So if the fund grows its client's money 10%, it would charge the fee to performance and not the fee for assets under management. If it loses 40%, there would be a negative fee to performance. This would give a very accurate, absolute fee structure; however, the mutual fund industry would never do this because it would cut into their profits and show clients the truth, which is that fees are very, very expensive, and they are not good at growing your money.

There are also fees that you probably don't even see or know about. One of these is called the direct brokerage fee. This is how mutual fund companies pay inflated trading costs to their "preferred brokers." These preferred brokers are organizations that help the mutual fund industry sell and market their funds. So the mutual funds turn around and do business with them at an inflated rate. Basically, they're paying a higher rate than they have to.

Then there's what's called the principal-agent problem. This means the agent's attention is not on what is best for their client, but on what is best for the agent. What applies here is that they're not getting the best price for you. Instead of getting the best trading price that the public could get, they're giving business to a company based on how well they succeed at marketing to you, the investor.

Here's an example: In 2001, when the mutual fund industry was a lot smaller than it is today, America Funds, one of the largest fund companies in the world, paid out $34 dollars in direct brokerage fees. The brokers receiving these fees were selected purely because of "excellence" at marketing their funds to investors. That's an extra $34 million they paid out to organizations that helped sell their funds. That's a hidden fee that the mutual fund companies absolutely do not have to disclose for what it truly is: a sales commission.

It's completely bogus to pay these sums as brokerage commissions, but they do because it puts their funds at the top of a list, a list that your 'financial advisor' will promote to you. While this shows up on the books in such a way that it looks like the cost of conducting stock transactions, it's really a form of sales incentive that the clients end up paying for so that the mutual funds get sold to them. The brokers who sell the most mutual funds get a disproportionately large percentage.

The mutual fund industry calls this a brokerage commission, but it's really a sales commission. These are not investment companies; these are sales organizations masquerading as investment companies. What they are selling and trading is your future. You have to do something about it so your future isn't another pawn on a chess table. The first step in taking control of your financial future is to begin to understand the myths that are holding you back.

courtesy of http://EzineArticles.com/?expert=Ronald_Peck