Posts Tagged ‘funds’

What Are Index Tracking Funds?

Monday, January 23rd, 2012

If you have decided to invest some money in a portfolio mutual funds, then you should be aware that there are different types of mutual funds.

The standard investment firm fund will leave the choice of stocks and shares to the discretion of the investment manager and you, as the investor, have no contribution into the determination of where your money goes. This is a passive investment.

If you want to have a more active role in the choice of investments, but do not have the time or knowledge to make the necessary decisions, you should look into the option of index funds.

Index funds are an attractive variant on traditional, managed funds in that you get to tell the investment management of your particular fund, which general region of the global market that you would like to invest in.

For instance, the asset manager of a general mutual fund will invest wherever in the world the manager of that fund thinks fit, but with index funds, you can specify fields like the Pacific Basin or mining stocks.

This permits you, the investor, the chance to narrow the field of investment if you have a hunch that money is moving in a definite direction, but do not have enough information to manage your investments yourself.

With some of these index funds, you can stipulate that they track an index as well. In our example, the tracking fund would invest in proportion to, say, the top 50 stocks in our given sector,say, the Pacific Basin.

Index tracking funds empower the investor who has a gut feeling, but who does not have the time or even perhaps the ability to track investments in a selected field. The down side is that some of these index funds are expensive to be in. On the other hand, these actively managed mutual funds often outperform the goals of the investment industry.

There is a reason for this extra expense in some kinds of funds but not in others. For instance, if you go into a general performance fund dealing just in green companies, there will probably be a lot of investors with you; but if you specify Chinese green products, you may be practically on your own and so charges for the fund manager’s time will increase.

This is simple to understand, but can be quite difficult to put up with, unless you choose your niche market well Herein lies the key of opting for index tracking funds – you are going for niche markets that you think that you know.

Many of these index tracking funds are no-load funds, so you have to take that into account before arriving at your decision to invest or not.

Index funds are best suited to those who read the papers and who pride themselves that they have an notion of what is going on in the markets, although they do not know the nitty-gritty about which company does what and where.

This does not mean, however, that index funds are passive financial products – all investment vehicles need reviewing at least once a year. Instead, if you ‘bet’ on the Pacific Basin and your investment pays off (or not), you may want to switch to a different sphere of interest at a later date.

Owen Jones, the writer of this piece, writes on a variety of topics, but is now involved with Index Mutual Funds. If you would like to know more, please go to our web site at Mutual Funds

Subscribe to My Newsletter
You will learn some of the things even the Gurus don't want you to know!
Name:
Email:
 
Powered by Optin Form Adder

So You Are Thinking Of Fidelity Mutual Funds …

Tuesday, May 10th, 2011

Acquiring a decent return on your money is actually not that simple for the majority of investors these days. Not just 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 build 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 more than 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 choosing which one to invest in is fairly hard. However, it is important to decide on the correct one(s) because the difference in performance between the best ones and the worst ones is quite frightening.

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

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

One of the most successful mutual funds over the very long term is the Fidelity Mutual Fund. In fact, Fidelity manages quite a number of mutual funds, so even if you make a decision to go with Fidelity, you still need to choose which funds precisely.

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

The problem with Fidelity Mutual 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 regularly (or have someone else do it for you, which is never as good).

Mutual funds are a long term investment which means that you ought to 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 complain to and you will not get the fund any cheaper whether you go through a broker or not.

If you are interested in the Fidelity Mutual Funds or saving at all, please go along to our website called Saving in Mutual Funds

Be Careful With Credit Cards

Saturday, May 1st, 2010

Ask yourself: does the credit card work for you or do you work for your credit card? Most people’s response to that question will depend on how they use their “plastic friend” as credit cards are often known. As many people with burned fingers will tell you, they didn’t realize that things had gotten so bad until too late, because most credit card offers try so much to sound like they are actually running a charity. Well, they aren’t.

However, this is not an anti credit card campaign. They have their benefits – in the USA, for example, if you want to hire a vehicle, you must have a (major) credit card. But, consider this situation:

You receive an offer in the mail that sounds great, maybe it’s a new TV or fridge. But it costs $2,000. You have a credit card with a $5,000 limit so you immediately purchase the product. Typically, here is how your repayment schedule will play out. Most credit cards charge a minimum percentage of the total balance (usually 2 percent) per month. Assuming the interest rate is 18 percent and you choose to repay the minimum amount of $40, $30 of that will go towards interest and only $10 towards the principle!

Sounds scary? It doesn’t have to be. The moral of the illustration is to use the credit card very, very carefully.

Credit Cards Dos and Don’ts

There is a great deal of truth in the advice that credit cards are not a substitute for not having money. Every time you use a credit card this should be the theme song playing in your head. Furthermore, you would do good to remember the following too:

Dos.

1] Always plan for the purchases that you have to have and those that you just want. You need the essentials, but you only want everything else. The ability to make a distinction might assist you plan more wisely.

2] If caught up in financial difficulties, it’s always good to talk to the credit card issuer who might re-schedule your payments. If you just default, that only helps to build up a bad credit history and you might find yourself being denied credit next time.

3] Unless it is an emergency, remaining within your credit limits will assist you a great deal. If you have to spend over the credit card limit, keep within manageable levels, say within 30 percent.

4] If your mailbox is full of information on credit cards with more favourable deals than you currently are enjoying, you may approach your issuer for a better deal. They want to keep you as their customer, so they will listen.

Don’ts

1] Do not use your credit card to purchase household goods. It is too expensive in the long run.

2] Do not only pay the minimum amount necessary. You will end up paying exorbitant amounts of interest. The quicker you can clear the debt the better.

3] Never use the credit card to purchase items you can’t afford.

If you are thinking aboutchanging or applying for a Credit Card, have a look at the free advice on our website about using Credit Cards wisely.