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Mutual Funds

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Selecting a Mutual Fund

When you first get into investing, you have to have a clear idea of what it is
you want to accomplish. Most people have long term financial goals like saving
for retirement or saving for a second home or maybe to put the kids through
college. You also have a time frame. You have 20 years to make this money, or
if you get into investing at a younger age, you could have 40 or 50 years to
spend investing before your goal comes due. These are all vitally important
questions that you need to have answered before you start investing. They will
tell you what sort of fund to select for your portfolio. Here are a few general
tips for selecting a fund that's right for you.

If your goal is to have the most growth to your capital that you can get, than
an aggressive growth mutual fund or an international growth mutual fund is for
you. These kind of mutual funds invest in stocks that are hot and have a great
potential for hitting it big. The chance for your capital to increase is very
high, but the risk involved in these stocks is also extremely high. They are
only recommended for long-term investors who can afford to take a hit if need

If you're looking for a high amount of capital growth, but you aren't ready for
that degree of risk, try growth mutual funds, specialty or sector mutual funds
or international mutual funds. They tend to look more towards long-term success
in common stock, not a quick hit. The risk is still considered high with these
mutual funds, but it's not as high as the previous option.

If your goals are a bit different and creating current income is a big part of
what you want to do, than growth and income mutual funds are right for you. The
risk level with these mutual funds are ranked high to moderate and they invest
in common stocks with a good possibility for dividends and appreciation of your

If your main goal is to create a high amount of current income and capital
appreciation isn't a concern, then fixed income mutual funds and equity income
mutual funds would be the right choice. The risk is considered moderate to low,
but the potential for current income is very high.

Selecting the right mutual fund for you is a very important decision. You must
have a clear idea of your goals to make the right choice. Once you know your
position, you can be well on your way to enjoying success in mutual fund

Types of mutual funds

So, you've decided to jump into the mutual fund investment game. While mutual
funds have shown themselves over time to be a safer bet than regular stock
trading, there is always the chance you could lose your shirt. But the type of
fund you choose will have a lot to do with the amount of risk you take on and
the kind of return you're looking for. For starters, mutual funds are usually
broken down into six main categories:

- Equity Mutual Funds allow you to invest in typical shares of common, everyday

- Fixed Income Mutual Funds allow you to invest in corporate or government
securities that usually offer a set rate of return on your investment.

- Balanced Mutual Funds allow the investor to take on a fund that includes both
stock and bond options.

- Money Market Mutual Funds are perhaps the safest form of mutual funds. They 
offer a high degree of stability for your principal, as well as high liquidity 
if you need to back out.

- Bond Mutual Funds are popular since they invest in tax free as well as taxable

- And finally, Sector/Speciality Funds are used to help diversify your holdings
within a particular industry.

Each of these types of funds can be both aggressive and risky with a high level
of reward possible, or they can be safer and lower risk. It all depends on which
fund you choose.

To break things down further, equity funds are usually divided up into four
different categories: Growth and Income mutual funds, International mutual
funds, growth mutual funds and aggressive growth mutual funds. Each different
type of fund has a particular goal in mind. For some, it's to aggressively
pursue income, even in risky situations, while others seek to preserve the
initial investment and only take smaller chances.

As you can see, the mutual fund landscape is filled with so many options, it
can make a newbie's head spin. But fear not, there is almost limitless
information available on which mutual fund is right for your particular
investment strategy. Not only do most mutual funds and those that run them have
their own website, there is endless advice as to which fund is right for you on
the Internet, as well. Don't forget to utilize publications like the Wall
Street Journal, as well as friends and family who might have had particular
luck with a specific fund. Welcome to mutual fund investing!

Mutual Funds Benefits

Every kind of investing has its ups and downs. Those that deal in stocks enjoy
the way that stock ownership works and that it meets their investing goals. The
same can be said for those that invest in mutual funds. There are both positives
and negatives to investing in mutual funds, and we'll take a look at some of
those positives right now.

Maybe the most reassuring aspect of investing in mutual funds is the knowledge
that your fund is being managed and taken care of by a professional. With stock
and bond trading, your best weapon is your gut instinct and a dog-eared copy of
the Wall Street Journal. With mutual funds, you're trusting your investment to
someone who probably has the Journal memorized and also has an entire
corporation's brain trust at his disposal.

For those that are working on a tight budget and may not have much wiggle room,
mutual funds are a great choice because they have maximum liquidity. Liquidity
is the ability to get your cash back on your investment if you need to. With
some investments, your money is tied up for extended periods of time with no
way for you to access it without huge penalties. Mutual funds allow you to sell
back what you've bought at the end of every trading day so you can have instant
access to your money.

A common buzzword associated with investing is diversification. It's based on
the premise that you don't want all of your investments on the same thing.
Since mutual funds invest in stocks, commodities, bonds and other things, you
can help to diversity your investment portfolio instantly with mutual fund

A big plus for those that are new to investing is how easy mutual fund
investing is. Most investors don't even have to worry about paying the proper
tax and keeping the right records because mutual fund companies provide these
services as part of managing your money. They are a fantastic way for first
time investors to experiment in the market.

Finally, mutual funds provide a huge amount of choice when it comes to
investing. No matter how much you want to invest, how much risk you want to
take or what your short and long term goals are, there is a mutual fund that is
right for you.

While no form of investing is risk-free, mutual funds provide a broad set of
choices that are perfect for first time investors and seasoned vets, alike. For
a growing number of people, mutual funds are the best investment deal out there.

Mutual Funds and Fees

While mutual funds have become one of the most popular and accessible forms of
investing, they do come with a few strings attached. It doesn't matter what
sort of investing you are trying, stocks, bonds, securities and even mutual
funds come with fees. But how can you tell what kind of fund has what kind of
fee and what are the different kinds of fees out there?

A common fee connected to mutual funds that are bought through a broker or a
third party is a sales charge. One of the major advantages of buying your
mutual funds directly through the company that sells them is that you can
usually avoid the sales charge fee.

One of the most important lessons you can learn about mutual fund investing is
to always look for no-load mutual funds. A no-load fund has no fees attached.
But what if you see a load fund that you really want to try? Load funds are
broken down into thee classes: A, B and C. Each letter carries a different set
of fee rules. For A load funds, you can expect to have a 4-6% chunk of your
investment taken once you buy the fund. There is an additional annual fee of
about .25% that is also taken out. For B funds, there is no fee taken out at
the beginning, but there is a fee once you want to take your money out of the
mutual funds. This fee does go away after six years of having the fund, but you
will get dinged if you try to take your money out any sooner. For C funds, they
are free of both the beginning and ending fee, but they do have an annual fee
that can fluctuate depending on the fund contract you signed.

All mutual funds, regardless if they are load or no load, do come with a
management fee. This is like a commission that is paid to the folks that manage
your fund and help it make money. This fee is usually fairly small and almost
never crosses 1 percent. While it always stinks to have to pay fees, at least
with this one you're rewarding the people that are helping you make money.

While fees are a fact of life when dealing with mutual funds, the best thing
you can do as an investor is to stay away from load funds at all costs. Keep
your money working for you and not in the pocket of a broker.

Where can you buy mutual funds?

For those that are new to investing and have decided that mutual funds are the
way to go, the next logical question is how do you go about purchasing them?
There are many different ways to go about investing in mutual funds, and you
have several different options to choose from.

One of the most popular ways to buy mutual funds is directly from the
companies. The type of fund you want to look for is a no-load mutual fund.
No-load funds are free from fees and additional costs that load funds tend to
have. Since you're going directly through to the fund company, you will save a
transaction fee that you would normally have to pay through a broker, and since
you aren't paying any fees, all of your money goes towards investing.

Going about investing directly is easy. Once you've chosen the company you want
to deal with, you simply fill out an application, enclose a check for the amount
you want to invest and mail it in. It couldn't be easier.

Another popular way to buy mutual funds is online through a broker or through a
mutual fund superstore. Most of these online superstores like T. Rowe Price or
Wells Fargo (there are many others, as well) don't charge any transaction fees
for their services because the fund you end up buying will reimburse them. Be
careful though, these online superstores often sell funds that do carry
transaction fees or they carry load mutual funds that can come with some steep
fees of their own. Make sure you read all the fine print and know what you're
investing in before you buy it.

Maybe the most common way of buying mutual funds is through your work's
retirement program. Your 401(k) account is most likely tied to mutual funds so
you may already be a seasoned mutual fund investor and not even know it. To
find out more about the funds your retirement plan invests in, you can visit
the website of the fund that your 401(k) invests in.

If you have signed up for a 529 College Saving Plan, than you've bought into
mutual funds. These brand new plans are made for families who are trying to
help their kids through college. Their main benefit is the tax laws that are
used for withdrawals from the plan. In most cases, if money is taken out for
education expenses, it's tax free. This is an ideal plan for most families who
are worrying about paying for college.

A final way that you can invest in mutual funds is with a financial advisor.
While this way would be a bit more costly since you would have to pay the
advisor, you are bound to make the best mutual fund investment choice for you.

Buying mutual funds in this day and age of the Internet is easier than it has
ever been. But be careful, make sure you crunch the numbers and make an
educated choice and you can be well on your way to financial freedom with
mutual funds!

What is a prospectus and how do I read it?

When you first buy into a mutual fund, most people have a thousand questions.
How has the fund performed in the past year? How do the fees work and which
ones do I have to pay? Are there any penalties for withdrawing my money early?
What happens if the fund goes out of business? All the answers to these
questions are listed in what is known as a prospectus.

A prospectus is simply a book or pamphlet that lists all the information about
a fund. Every mutual fund company gives out a prospectus, and sometimes, if the
performance for a particular fund hasn't done well recently, it will even come
with bad news about that fund. A prospectus must be accurate. The United States
Securities & Exchange Commission checks on the validity of the statements in all
financial documents released by investment firms to make sure they are honestly
showing people what the fund has done and what they think it will do.

When you open the front cover to a prospectus, they usually hit on three
different topics right off the bat: the fees that this fund charges, the
objectives of the fund and the performance of the fund. While there are other
concerns when you look at a prospectus, these three things are the most

Most companies will present the fee schedule in an easy to read graph.
Remember, the fund must disclose all fees, there can't be any surprises.

A mutual fund prospectus is also required by the SEC to list their performance.
They must list this information, even if it's not up to the expectations of the
fund. It can usually be found within the first few pages of the prospectus.
Most of this data is presented in the form of a table so that reading it and
understating it is simple. Also, there is no shame whatsoever in asking
questions. Every investor had to start somewhere and if you don't ask questions
about a particular mutual fund before investing in it, you might just be
throwing your money away.

There will likely be more information in your prospectus as well, including
profiles of the managers that handle the fund, as well as the founders of the
investment company and so on.

A prospectus is like a bible for whatever mutual fund you choose to invest in.
With oversight provided by the SEC, a prospectus must be a honest document that
shows you exactly what you're getting yourself into with every mutual fund.

What is a Roth IRA?

The choice of mutual funds and investment opportunities available that you can
out your money in is mind boggling. There are literally hundreds of funds, all
with different goals and different amounts of risk. One of the most well known
and popular investment choices is known as the Roth IRA. But what is it and how
do you invest in it?

The Roth IRA is a retirement account that uses stocks, mutual funds and
securities to help people earn money for their retirement. They are open to
invest in, but there are guidelines that you would have to meet that are set by
the Internal Revenue Service.

One of the major plusses to having a Roth IRA is the way the taxes involved
with the account work. When people deposit money into their Roth IRA, it is
from money that has already been taxed, usually from income earned, and when
you need to take money out, anything up to the amount that was contributed, is
tax free. If you need to take out more money than you put in (money that was
earned in the IRA), it is tax free in most situations.

If you chose to use a regular IRA, there is no guarantee that the money you
deposit into the account will be tax deductible (some of it is, some of it
isn't, it depends), and when you choose to take money out, it will be taxed. An
additional bonus to a Roth IRA over a normal one is that there are fewer
barriers stopping you from taking the money out of the account once you've put
it in.

The biggest negative to using a Roth IRA to help with retirement is that the
money you contribute into your account is not tax deductible. Another downside
to the Roth IRA is that there can be major penalties associated with
withdrawing your earnings too early. There are, however, many, many exceptions
to these penalties, like buying a home for the first time, or withdrawing money
to pay for college or even your children's college expenses.

Overall, a Roth IRA is a fantastic choice for those looking to retire and
shield a vast majority of their retirement savings from taxes. While there are
fees for early withdrawal, the benefits of the Roth IRA far outweigh the
potential costs as seen by the soaring popularity of this investment choice.

What is automatic investing?

For many, the idea of investing in mutual funds, stocks and bonds is appealing,
but it all seems too complicated. Too much jargon, too much danger, too much
hassle. Thankfully, the companies that run mutual funds know this and have come
up with a way for new investors who may not have a big wad of cash to invest
right off the bat.

It's called automatic investing and it is highly recommended for those new to
mutual funds and for those that want to invest but don't have a lot of up-front

Automatic investing is done through a mutual fund company, and what happens is,
you sign up to purchase a set amount of funds either every month or every few
months (usually quarterly). You buy a bit at a time, whatever you feel you can
afford, and your shares are managed by the mutual fund company. It is a great
way to watch a nest egg form from money you didn't even know you had.

A great part about automatic investing is that most mutual fund companies are
so excited to get new investors in, they will waive most if not all transaction
and investment fees for those that are signing up for automatic investing. They
understand you may not have a lot of extra cash to throw away on fees and they
want you to get your feet wet with mutual funds.

Maybe the best part about automatic investing is that it is a very disciplined
form of investing. Instead of opening up an E-Trade account and investing from
your home computer, an investment expert at the mutual fund company that you
invest in will handle your shares and in this case, it is probably best to let
the experts handle it. It's extremely tempting to chase mutual funds when
investing yourself. You hear the latest news about funds that may be surging
and its tempting to take your money and jump on the hottest fund, but
disciplined, long-term investing is a much more beneficial way to go.

Whichever company you choose to use for automatic investing will supply you
with a prospectus that will outline all of the fees that may or may not be
associated with your account. This is key since you'll need to know what any
possible cost might be for things like early withdrawals.

For many, automatic investing takes the guesswork and the fear out of mutual
fund investing by allowing a large amount of money to build up over time.
Contact a mutual fund company to see if automatic investing is right for you!

What is your risk tolerance?

One of the biggest parts of investing is determining your own risk tolerance.
When most people think of risk tolerance, they think, "How much can I stand to
lose before I start to struggle." Risk is a huge part of investing because it
dictates what sort of mutual funds you can put your money into, how much money
you can invest and for how long. Knowing your risk tolerance is one of the
biggest keys to successful investing.

Risk is usually defined as short term volatility in prices or variability in
prices. But there is a whole other kind of risk at the other end of the
spectrum. The risk of not meeting your goals by investing. The main reason why
anyone begins to invest is to meet goals that they have set for themselves. The
most common goal in investing is saving money for retirement or for that second
home. Risk goes both ways, there is the chance you could lose your shirt with
an investment, and the chance that if you don't take enough risks, you won't
meet the goals you've set for yourself.

The first thing you need to do is to take a personal assessment of your own
risk and develop what is known as an investment personality. Everyone's
personality will be different, they are unique like fingerprints. Some
investors can stand to take some big chances now with the lure of a potential
payoff down the road, while others who may not have much time between the time
they start investing and the point where their financial goals need to be
realized and can't take big risks. A good barometer to judge what your risk
will be is how will you feel in your capital goes up, down or stays the same?
Are you willing to be patient and accept small increases, or do you want to see
the most possible movement? If you're sitting at your computer right now ringing
your hands in fear that you might lose money on your investment, you should
already be able to tell exactly what sort of investor you are.

Assessing both ends of your risk tolerance is quite possibly the most important
single financial decision you can make. Knowing how much money you can invest,
how long you need to invest it for and what kind of mutual funds you want to
buy into is very important. Once you determine your own risk tolerance, you
will be ready to take the next step and start investing.

List of mistakes investors make

In the rush to be a part of the exciting and profitable world of mutual fund
investing, many investors make mistakes. It's human nature and nothing to be
ashamed of, but they can and should be avoided. Here are a few helpful tips in
avoiding the common mistakes that many other new investors make.

First off, a cardinal sin that many new investors make is that they only look
at a mutual funds previous performance and not at the possible future. Sure, a
stock or mutual funds performance in the past is a good sign of how its been
managed and it always is a good sign to surround yourself with people who know
what their doing, but you have to take the current state of the market into
account. For example, funds that may have been heavy on's did great in
1998 and 1999, but if you had a fund that was heavy in tech stocks in 2000, you
probably lost your shirt. Past performance doesn't mean as much as people think
it does, and you would be wise to not put as much emphasis on it when you go to

While the percentages listed in the prospectus might seem low, operating
expenses for mutual funds really do matter. If you're looking at a fund that
might have a higher than average percent fee for running the fund, you might
want to look at other funds, instead. Most market experts think that the
percentage of returns over the next few years will be down, and so that fee for
running the fund takes a bigger and bigger bite out of your profit. It may not
seem like much, but it can really add up over time, especially if profits are

A small but important part of investing is checking out what your fund manager
has on his plate. This can be done by checking the prospectus the fund company
sent you. Remember, if your fund is doing bang up business, it's likely that
the fund manager who is overseeing it is going to get more funds to manage or a
promotion to look over an entire group of funds. This could likely take away
from the time he has to look over YOUR fund, and while we wish fund managers
all the luck in the world in their career, you want someone who is going to be
focused on making money for you.

As long as there are people investing in mutual funds, there will be mistakes
made. While they can't be avoided completely, a few common sense tips can help
you avoid the biggies and keep your money working for you.

Determining Reward vs. Risk

The concept of risk versus reward is the basis for not only mutual fund
investing, but investing altogether. The same system of risk versus reward can
be translated to almost every part of life. When you analyze a situation, you
can determine the possible risks of doing something and then the possible
rewards of doing something and decide what the best course of action is for
you. Determining your risk versus reward strategy for mutual fund investing is

The first thing investors of all stripes need to learn is that while mutual
funds are a fun, exciting and easy way to invest, there is always a chance, no
matter how slim, that you could lose every single penny you invest. That is one
kind of risk. The other kind is the risk of not meeting your investing goals
that you have set for yourself. This is a tightrope that every investor must
walk, determining your risk while trying to earn the reward.

The risk associated with investing can be caused by many different factors.
Things like general economic conditions, the rising or falling of interest
rates and inflation are just a few factors that can cause a stock or a mutual
fund to rise or fall. One of the best parts about mutual funds is that the risk
involved in each fund is clearly stated BEFORE you invest. If you're just
looking to make a few dollars for holiday shopping, you can do that and keep
your risk very low. If you are 25 and have a whole lifetime to invest for your
retirement, there are mutual funds that can help you take big chances with even
bigger rewards. If you lose your money, it's not as big of a deal since you have
your whole life to make it back.

Maybe the best advice you can take when analyzing risk versus reward is the
fact that every stock, every bond and, yes, every mutual fund will fluctuate.
This is an inarguable truism in the world of investing. There may be a few
times when you sit down with your morning paper and you need two antacids with
your morning coffee because your fund lost a few points. But with smart
investing and good advice, you'll have far more mornings where you leave for
work with a smile on your face because your fund is doing well.

Analyzing risk versus reward is a huge part of investing and if you are having
trouble figuring out how much risk to take, ask for help. You don't want to
enter into investing with a blurry picture of your risk vs. reward. The more
you know about your personal situation, the better off you'll be.

Tax and distributions

Most investors would agree that mutual funds are a great way to help create a
nest egg, save for retirement or for your kids' college education. There are,
however, an entire series of taxes that are levied against investments of all
kinds, including mutual fund investments. While they may not always seem fair,
they are a fact of life and the more you know about all the various forms of
taxes, the better prepared you'll be to deal with them.

While there are fees associated with some mutual funds when you open the
account, and taxes for capital gains as the money appreciates within the mutual
fund, there are also a series of taxes associated with the distribution of
earnings from the mutual fund back to you. These distributions can take on
several different forms, such as capital gains, income dividends and interest.
A mutual fund is legally obligated to give out all of the investors income and
the money that the fund made. But what exactly is an income dividend?

Income dividends usually include dividends, capital gains and interest that is
earned by the mutual fund company minus the expenses and fees are taken out.
The distribution associated with capital gains is usually made once per year to
the shareholders. These capital gains come from a year of good performance by
the mutual fund. When a mutual fund company pays out dividends to their
shareholders, the NAV or net asset value of your mutual fund will go down, but
you can also take that dividend pay out and buy more shares if you're happy
with the performance.

There are ways to help avoid the tax liability of reinvesting your dividends
back into your mutual fund. Most distributions done by mutual fund companies is
done near the end of the year. If you don't want to spend the payout on
Christmas presents, you can reinvest the money, but you should do it after the
record date. This will help you avoid extra tax liability on your dividends.

Paying taxes on your distribution is a pain. But if your mutual fund is
performing well, a small tax on your earning won't hurt so bad. This is another
reason why intelligent, well managed investing is so important. Not only do you
have to worry about your fund going up and down in price, but also tax
liability. That's why it pays to invest wisely and use a disciplined approach.

Understanding mutual funds in the newspaper

We've all seen the financial pages in the newspaper. Usually we flip past it on
the way to the comics, the horoscope, of if you're like me, to the sports
section. But what do all those squiggles and arrows mean anyway, and now that
you're thinking about investing in mutual funds, can you see how your fund is
doing every day in the morning paper?

The answer is, of course, yes. And not only that but mutual fund listing are a
bit easier to read with less complicated jargon that reading the stock prices
next to it. Most major daily newspapers have the mutual fund section separate
form the rest of the stock and bond information. There is usually a large, bold
headline showing where the fund are listed.

Now that you've found where the mutual funds are listed, let's try to decode
all this information. Your fund will be listed alphabetically in the column
under the name of the company that manages it. You'll see three column next to
each fund name. In the first column, you'll see "NAV". This is short for "Net
Asses Value." Don't panic, this is just a simple mathematical formula that
shows what each share in that mutual fund is worth. To determine how much your
shares in that mutual fund are worth, just multiply the amount of shares in
that fund that you own by the NAV.

The second column says Offer Price. This is what you would pay right now if you
wanted to buy more shares. Often, you'll see a NL in this column instead of a
price. I bet you can figure out what that means. Yep! It means it's a no-load
fund and you would pay what the NAV is if you wanted to buy more shares. Not so
scary anymore, is it?

The final column is the change column. This information is the same essential
thing that you would see if you were reading the stock page: a + in this column
shows that the value of your fund has gone up since the last day's close, and a
- shows that it's gone down.

And that's it! While the mutual fund page in your newspaper may look bizarre,
once you break it all down you can see that it's all pretty basic. So start
checking your funds today and you can watch your money grow!

College vs. Retirement

For most people, investing in mutual funds is pretty straight forward. You have
specific goals that need to be met. You and your partner are approaching mutual
fund investing with your eyes open and you're both on the same page. Granted,
she may want that pretty cottage down by the lake and you want that new
speedboat, but both your goals involve water, and that's close enough for you.
But what if you're in a completely different boat? What if you know you need to
invest, but you have two equally important goals pulling you two different ways?
This is the case with thousands of parents who see the need to save for
retirement but also want to save for the kids' college education. How can you
do both at the same time? Here are a few tips.

One of the biggest factors in the college vs. retirement battle is the fact
that people are putting off having kids until later in life these days. Fifty
years ago, this wasn't the case, and saving for both college and retirement
usually happened during two distinctly different phases in one's life. These
days, now that we realize that saving for retirement is something that should
be started when you're 18, not 48, the two overlap more than ever.

The gut instinct of most parents is to put the kids' future ahead of their own
and cut back on retirement savings in favour of college. While this is a
popular choice, it really only should be a last resort. A technique that is
becoming more and more popular with parents who face saving for both at once is
offering your prospective college student the chance to get matching funds from
you. This is simply the idea that for every dollar they pay for, you'll match
it. If your not sure how junior will pay for half, remember, there are many
ways for teenagers to save for college themselves. Almost everyone qualifies
for student loans, there are scholarships for good grades as well as an after
school and summertime job. Most college students work while they are attending
classes, as well.

While walking the tightrope of saving for two goals at once can be stressful, a
logical and determined approach to the situation is really the only way to go.
Choosing retirement over your kids' education isn't a "wrong" choice, and
neither is choosing college over retirement. Everyone's situation is different
and you need to make the right choice for your situation.

Tips to invest for retirement

People choose mutual funds for investing for many different reasons. Some
people start very early (the smart ones) with dreams of a second house in the
German Alps or a thatched roof pub in the English countryside. For some, mutual
funds are a practical and easy way to save for the college education of their
kids, or even grandkids. But without a doubt, the most popular reason for
mutual fund investing is saving for retirement. With social security looking
less and less helpful, many realize that investing to save for retirement isn't
a choice anymore, but a must. Here are some tips for those that are looking
ahead to their golden years with mutual fund investing.

First off, the earlier you start saving for retirement, the better. Convincing
a 25 year old recent college graduate that they need to put some of their
income away to save for college can be almost impossible, but trust us, the
sooner you start, the better off you'll be.

Take a financial inventory of your life. If you have several retirement
accounts from jobs you've had since you were 30, you can easily combine them
now into one savings account. You can also figure in the value of your home,
your possessions and your savings to get an idea of how much net worth you have
and how that can relate to your ability to save for retirement.

While this may sound like a basic idea, setting goals in a big part of saving
for retirement. Get together with a financial expert and decide what age you
want to retire at and how much money you'll need per year and how long you
expect to be retired for. Knowing all this will help you plan long term for
your retirement.

Try to open an emergency account. This account, which should be all cash, can
be for emergencies that you may face while you're trying to save for your
retirement. The main purpose is that in case something goes wrong, you won't
take the money you've been saving for your retirement out and use it. That
money needs to be kept where it is so you can keep marching towards your
retirement goals.

While saving for retirement can be difficult, using various investment tools
including mutual funds can really help. Combine that with solid advice from
your broker and you will be well on your way to celebrating your retirement
years in style.

Retirement budget

For many, retirement seems like a far-away stage of their lives, filled with
carefree days with nothing to do but travel, sip wine and watch the sun set.
While this may be the reality for some, for most people who don't budget
properly for retirement, their golden years are filled with work and penny
pinching, not relaxing. Planning a budget for retiring is extremely important
and a vital tool to properly saving.

A commonly used mathematical approach is to say that you need, on average 70 or
80 percent of what you make now per year to live on once you retire. A big part
of what you need to figure in is how you plan on spending your retirement
years. If you're looking to travel the world and stay at 5-star hotels, you
might want to budget on the high side. If you're happy staying at home and
relaxing, you can budget on the lower end.

To figure out your retirement budget, there a few things you need to do. First,
figure out where your retirement income is going to come from and how much of it
there will be. Most people get retirement income from a variety of sources like
the 401(k) plan they had at various jobs they worked over the years, social
security payments, retirement investments and savings as well as any possible
income from a job that you would work after retirement. To figure how much you
would be getting from social security, check the statements they send you in
the mail and the amount you would be getting is broken down there.

The next logical step is to try to estimate your list of expenses. While this
can be extremely difficult for those that are looking decades ahead, it's best
to try to put together some kind of plan. The best way to approach it is to
itemize your expenses and break them down by category, such as living expenses,
utilities, health care and so on.

A few final tips that can help you in the long run is to try to take care of
all of your debt before you retire. Paying off the credit cards or your
mortgage in one lump sum will help you out in the long run.

Don't forget any possible dependants. If you are responsible for the expenses
of others, you must figure them in, too.

Retirement can either be a wonderful time filled with happiness or it can be a
scary time filled with uncertainty. The road you walk down is up to you. The
choices you make now will influence how you spend the best years of your life.

Retirement investing for women

The idea that investing for retirement would be different for women than it
would be for men may seem silly and even slightly insulting at first glance.
The idea isn't meant to be sexist in any way, but there are a number of factors
that tend to be different in lives of women that make this topic vitally

The first is the fact that women are paid less for the same job in the modern
workforce. While this margin has been getting smaller and smaller over time,
it's still significant. In a recent study by the United States Department of
Labour, women were shown to earn 24 percent less than men for doing the exact
same job. This can have serious implications when it comes to investing for

The same study by the Department of Labour also showed that women, on average,
spend less time working than men. A gap of seven years was present in the study
due to time that some women take off to have children, raise a family or care
for elderly or sick parents. While the obvious impact to the amount of money
earned in a lifetime is obvious, there is also the impact on any sort of
savings plan through work, as well as less social security.

As if that wasn't bad enough, the last United States Census showed that women
are living an average of seven years longer than men. So, not only are women
earning less and in fewer years in the workforce, they also live longer which
means they need to save more for retirement.

What does all this mean? It means that women might need to take a slightly more
aggressive path toward investing for their retirement. It also means that women
need to start even earlier than men to start saving and investing. Other good
tips are to set different goals than your husband, since your set of
circumstances are different. You might also want to have even more
diversification in your portfolio than most so that if some of your investments
go sour, you won't be left with nothing. It's also a good idea to stay on top of
your investments. Reviewing them on a regular basis lets you know where your
doing well and where you might need to make changes.

While it's unfortunate that a woman may need a completely different investing
plan for retirement than her husband, the fact remains that there are forces
conspiring against women in the workplace. But with the right strategy and the
proper goals, everyone can enjoy a healthy and prosperous retirement.

Criticism of mutual funds

While mutual fund investing has exploded over the past 50 years to become one
of the most popular forms of investing anywhere, there are still possible
pitfalls that you can fall into if you're not careful. Investing is still a
risky business, even if everyone is doing it. Here are some tips to help you
through any problems you might have.

One common criticism of mutual fund investing is that they don't have a high
enough return on their investment and that index funds, which aren't as popular
have historically returned a higher investment than the much more popular
actively managed mutual funds.

A second common problem that some have with mutual fund investing is the use of
load funds. You have probably seen the phrase "no-load mutual fund" in the
newspaper or on television. The reason the no-load type of fund is preferred is
because load funds come loaded with fees. These fees can run anywhere between
half a percent, all the way up to 8.5 percent of however much you chose to
invest. It's thought that these fees are a clear conflict of interest as they
clearly benefit the people making the sale and hurt the person making the
investment. Load mutual funds are also thought to make your broker recommend
funds that will maximize his fee, and not your investment portfolio.

Some investors also point to a perceived conflict of interest in regards to the
size of the mutual fund. Most companies that manage the mutual fund charge a fee
of between half a percent up to two and a half percent of the total amount of
the funds assets. It's thought that this fee could cause a fund to spend more
on advertising than is actually needed so that they can get more people to
invest in the fund and maximize their fee as much as possible.

The mutual fund market isn't immune to scandals, either. In 2003, a scandal
involving the practice of unethical and dishonest trading practices. Many funds
were found to have participated in late trading and market trimming, both of
which are illegal practices. You obviously don't want to invest in a mutual
fund that is engaged in illegal activities.

Mutual fund investing is gaining in popularity on an almost weekly basis, and a
few bad eggs in the business won't ruin it for everyone. However, it is always
good advice to enter into any kind of investing with your eyes open, and if you
feel your mutual fund is behaving improperly, there are authorities you can
report them to.

History of mutual funds

For many investors, the choice of possible investments can be overwhelming.
There are stocks, bonds, commodities, securities and lots of other choices. One
of the most popular choices is mutual funds. These diverse and complex
investments have become one of the most popular ways to invest and Americans
have been taking part in mutual fund investing for many, many years.

The first ever mutual fund, known as the Massachusetts Investors Trust was born
in 1924, but the idea of a group of investors pooling their money together for
one big investment goes back even farther. Evidence of this style of investing
can be traced back to Europe in the mid-1800s. The staff and faculty at Harvard
University were the first group to do it in the United States in 1893. It was
this group investment that went on to become the very first mutual fund in US

To say that this first mutual fund was successful would be an understatement.
The fund, which started out with 200 investors and a starting point of $50,000
dollars, grew to a value of almost $400,000 in the matter of a single year. If
only every investor could get that kind of return!

To compare those numbers to today, there are approximately 10,000 different
mutual funds available right now, representing 83 million investors inside the
United States, making mutual fund investing one of the most popular and
wide-spread forms of investing in the US.

The rules of investing in mutual funds changed dramatically after the great
stock market crash of 1929. The Securities & Exchange Commission (SEC) was
born, and with the help of two key pieces of legislation, the Securities Act of
1933 as well as The Securities Exchange Act of 1934,the government would take a
pivotal role in trying to protect potential investors from getting ripped off.
The SEC requires that companies file their financial information with them, so
that investors can see which companies are healthy and are ready to grow, and
which companies to stay away from.

The creation of the SEC did wonders for consumer confidence in mutual funds,
and by the 1960's the mutual fund market had exploded. There were an estimated
270 different mutual funds that anyone could invest in with a value of about
$48 million dollars.

As you can see, mutual fund investing has had its ups and downs, and while a
well run mutual fund is likely to make money, remember, there are no sure
things in the investment world and you should always be careful when trusting
someone with your hard earned money.

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