When you think back, the days of sitting in your dorm room debating the merits of your schools football team don’t seem that far away. But before you know it, little Billy and Sally are going to be headed off to the same hallowed halls that you once ran amuck in.
Of all the goals that people save and invest to meet, the college education of their children is near the top of the list. While you may still be paying off your college loans, getting an idea of how much school will cost for them is a valid concern.
Taking a look at the cost over the last few years, prices are continuing to go up. While the average increase per year is about 5 percent, from 2003 to 2004, public universities and colleges raised their tuition by a staggering 14 percent in one year. That is more than four times the current rate of inflation.
Assuming you didn’t choke reading that last paragraph, what can you do to try to figure out what college will cost for your kids? Well, the first step is trying to figure out which kind of school little Billy or Sally will want to attend. The least expensive choice would be an in-state, public university. The average cost of these in 2005 was around $67,000 for four years. And that is assuming that your child graduates in four years, most students these days do not.
The next choice up the ladder is attending a public school out of state. This can be a good choice if your child shows an aptitude for a major that another school out of state is highly regarded in. The average cost in 2005 for four years at an out of state public school is around $100,000 dollars.
The most expensive but some believe the best option would be a private university. These schools don’t figure in residency into their tuition numbers. For four years at a private school in 2005, the cost was around $137,000. Also, you should take into consideration majors, such as medicine or law, which take more than four years.
A final tip to consider is that these days, a bachelor’s degree is worth less and less. Graduate school is becoming more and more common just to be able to get a good job. And the tuition rates charged for grad school are usually much higher.
Paying for college isn’t easy. But with sound financial planning and a good knowledge of what it will cost in the future, saving for school doesn’t have to be as nightmarish as you think.
Thursday, 20 January 2011
Tuesday, 18 January 2011
Rebates – Reward or Rip Off?
Rebates have become increasingly popular in the last few years on a lot of items and certainly on electronic items and computers. Rebates of $20, $50 or $100 are not uncommon.
I’ve even seen items advertised as “free after rebate”. Do these rebates come under the heading of “too good to be true”? Some of them do and there are “catches” to watch out for but if you are careful, rebates can help you get some really good deals.
The way a rebate works is that you pay the listed price for an item then mail in a form and the bar code to the manufacturer and they send you a refund thus reducing the price of what you paid for the item except with a time delay of several weeks.
Rule #1. Rebates from reputable companies are usually just fine.
You can be pretty sure you will get the promised rebate from Best Buy, Amazon or Dell but you should probably not count on getting one from a company you’ve never heard of. If you really want the product and are OK with paying the price listed then buy it but don’t count on actually getting the refund.
Rule #2. Check rebate expiration dates.
Many times products will stay on the shelf of a retailer after the date for sending in the rebate offer has expired so check that date carefully.
Rule #3. Be sure you have all the forms required to file for the rebate before you leave the store.
Rebates will almost always require a form to be filled out, a receipt for the purchase and a bar code.
Rule #4. Back up your rebate claim.
Make copies of everything you send in to get your rebate including the bar code. Stuff gets lost in the mail all the time and if the rebate is for $50 it’s worth the trouble to back up your claim.
I’ve even seen items advertised as “free after rebate”. Do these rebates come under the heading of “too good to be true”? Some of them do and there are “catches” to watch out for but if you are careful, rebates can help you get some really good deals.
The way a rebate works is that you pay the listed price for an item then mail in a form and the bar code to the manufacturer and they send you a refund thus reducing the price of what you paid for the item except with a time delay of several weeks.
Rule #1. Rebates from reputable companies are usually just fine.
You can be pretty sure you will get the promised rebate from Best Buy, Amazon or Dell but you should probably not count on getting one from a company you’ve never heard of. If you really want the product and are OK with paying the price listed then buy it but don’t count on actually getting the refund.
Rule #2. Check rebate expiration dates.
Many times products will stay on the shelf of a retailer after the date for sending in the rebate offer has expired so check that date carefully.
Rule #3. Be sure you have all the forms required to file for the rebate before you leave the store.
Rebates will almost always require a form to be filled out, a receipt for the purchase and a bar code.
Rule #4. Back up your rebate claim.
Make copies of everything you send in to get your rebate including the bar code. Stuff gets lost in the mail all the time and if the rebate is for $50 it’s worth the trouble to back up your claim.
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.
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.
How to Cash in Your Funds
Well, you’ve played the market like an expert, researched exactly the right mutual fund for you, and the fund that you’ve taken under your wing is showing a big, fat profit and you want to use a little of that money to go buy something nice. But how do you get your money back that is in the fund? And what sort of fees will be associated with that? Let’s take a look.
One of the best aspects of mutual funds is that they are “liquid”. That means that you can change your cash into mutual funds and back to cash right away with no delays. For many investors, especially first time investors who may not have a lot of extra income, liquidity is extremely important in an investment. If you need quick access to your money, you get it with mutual funds.
In some cases, you won’t even have to cash in your funds to use the money that is in them. A few different types of mutual funds, such as some fixed-income mutual funds and most types of money market mutual funds come with the ability to write checks against the money in your mutual fund. These are exactly like the checks your credit card company sends you. You’re writing a check that will be withdrawn from the amount you have invested in your mutual funds.
Many different mutual funds offer a program where you can contact the fund either over the Internet or by phone and let them know that you want to cash in a percentage of your holdings. While this transaction can take a few days, the mutual fund company will immediately transfer the cash value of your transaction into an account that you’ll have checks for. So while it may take a few days to cash in your shares, you will have instant access to the money in your account.
A final way that people usually withdraw money from their mutual fund is by a bank wire transfer. You simply tell the fund that you want to take some money out and they will wire it to your savings or checking account. Many funds, however, do require this request in writing and you will have to get an authorized form through your bank that can be sent to your mutual fund. This is done mainly to prevent fraud.
As you can see, taking money out of a mutual fund is quick and easy. The liquidity of mutual funds may be their strongest point since you know your money won’t even be out of reach when you need it.
One of the best aspects of mutual funds is that they are “liquid”. That means that you can change your cash into mutual funds and back to cash right away with no delays. For many investors, especially first time investors who may not have a lot of extra income, liquidity is extremely important in an investment. If you need quick access to your money, you get it with mutual funds.
In some cases, you won’t even have to cash in your funds to use the money that is in them. A few different types of mutual funds, such as some fixed-income mutual funds and most types of money market mutual funds come with the ability to write checks against the money in your mutual fund. These are exactly like the checks your credit card company sends you. You’re writing a check that will be withdrawn from the amount you have invested in your mutual funds.
Many different mutual funds offer a program where you can contact the fund either over the Internet or by phone and let them know that you want to cash in a percentage of your holdings. While this transaction can take a few days, the mutual fund company will immediately transfer the cash value of your transaction into an account that you’ll have checks for. So while it may take a few days to cash in your shares, you will have instant access to the money in your account.
A final way that people usually withdraw money from their mutual fund is by a bank wire transfer. You simply tell the fund that you want to take some money out and they will wire it to your savings or checking account. Many funds, however, do require this request in writing and you will have to get an authorized form through your bank that can be sent to your mutual fund. This is done mainly to prevent fraud.
As you can see, taking money out of a mutual fund is quick and easy. The liquidity of mutual funds may be their strongest point since you know your money won’t even be out of reach when you need it.
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 funds.
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!
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 funds.
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!
Sunday, 9 January 2011
Online Trading
The invention of the Internet has brought about many changes in the way that we conduct our lives and our personal business. We can pay our bills online, shop online, bank online, and even date online!
We can even buy and sell stocks online. Traders love having the ability to look at their accounts whenever they want to, and brokers like having the ability to take orders over the Internet, as opposed to the telephone.
Most brokers and brokerage houses now offer online trading to their clients. Another great thing about trading online is that fees and commissions are often lower. While online trading is great, there are some drawbacks.
If you are new to investing, having the ability to actually speak with a broker can be quite beneficial. If you aren’t stock market savvy, online trading may be a dangerous thing for you. If this is the case, make sure that you learn as much as you can about trading stocks before you start trading online.
You should also be aware that you don’t have a computer with Internet access attached to you. You won’t always have the ability to get online to make a trade. You need to be sure that you can call and speak with a broker if this is the case, using the online broker. This is true whether you are an advanced trader or a beginner.
It is also a good idea to go with an online brokerage company that has been around for a while. You won’t find one that has been in business for fifty years of course, but you can find a company that has been in business that long and now offers online trading.
Again, online trading is a beautiful thing – but it isn’t for everyone. Think carefully before you decide to do your trading online, and make sure that you really know what you are doing!
We can even buy and sell stocks online. Traders love having the ability to look at their accounts whenever they want to, and brokers like having the ability to take orders over the Internet, as opposed to the telephone.
Most brokers and brokerage houses now offer online trading to their clients. Another great thing about trading online is that fees and commissions are often lower. While online trading is great, there are some drawbacks.
If you are new to investing, having the ability to actually speak with a broker can be quite beneficial. If you aren’t stock market savvy, online trading may be a dangerous thing for you. If this is the case, make sure that you learn as much as you can about trading stocks before you start trading online.
You should also be aware that you don’t have a computer with Internet access attached to you. You won’t always have the ability to get online to make a trade. You need to be sure that you can call and speak with a broker if this is the case, using the online broker. This is true whether you are an advanced trader or a beginner.
It is also a good idea to go with an online brokerage company that has been around for a while. You won’t find one that has been in business for fifty years of course, but you can find a company that has been in business that long and now offers online trading.
Again, online trading is a beautiful thing – but it isn’t for everyone. Think carefully before you decide to do your trading online, and make sure that you really know what you are doing!
Investing in Unstable Market
There are many buzzwords associated with investing, words that, as an investor, you’ll probably get sick of after a while. You can only listen to so much advice telling you to be disciplined when you just got a hot tip that Fidelity Investment’s mutual fund is about to explode. One of those buzzwords that people hate to hear is market volatility. Volatility is a part of investing, plain and simple. If that concept makes you feel queasy, join the club. There have been patterns over the years in the Dow and the Nasdaq where a slow and steady climb happened. Most of the mid to late 1990s saw a slow and steady rise in the markets. The only real blemish on the market during that time was the mini-crash of 1997. Even then, the market showed a gain for the year.
So, how do you cope with market volatility? There are many different strategies that are used, and most of them include investing discipline. Studies have shown that during periods of extreme market volatility, like after the attacks of September 11, the market has rebounded and gone on a bit of a run. A great way to deal with volatility like that is to move some of your money into funds or stocks that might be a little lower risk and focus on blue chip stocks. When you and your broker feel that the market is at or near the bottom, you can invest in technologies or companies that you feel will be in high demand in the near future. Just because the market is doing its best yo-yo impersonation, is no reason to take your money and go home.
Another common practice is known as dollar-cost averaging. This is the practice of waiting until a particular stock that’s going through a rough period and waiting for it to bottom out. While the exact time of a stock bottoming out is unknown, most wait until the stock sets a record low, and then they pour thousands of dollars into that stock. The same technique can be used with the market as a whole. If the Dow is experiencing a series of bad days, some investors with withdraw all their money, wait for the Dow to set a 30 or 60 day low, and then shove everything back in at once. While there is no guarantee of this working, it’s been a common practice recommended by brokers the world over for generations.
Dealing with market volatility isn’t easy, but it is part of investing. If you’re a smart investor, however, market volatility won’t mean the end of your investment.
So, how do you cope with market volatility? There are many different strategies that are used, and most of them include investing discipline. Studies have shown that during periods of extreme market volatility, like after the attacks of September 11, the market has rebounded and gone on a bit of a run. A great way to deal with volatility like that is to move some of your money into funds or stocks that might be a little lower risk and focus on blue chip stocks. When you and your broker feel that the market is at or near the bottom, you can invest in technologies or companies that you feel will be in high demand in the near future. Just because the market is doing its best yo-yo impersonation, is no reason to take your money and go home.
Another common practice is known as dollar-cost averaging. This is the practice of waiting until a particular stock that’s going through a rough period and waiting for it to bottom out. While the exact time of a stock bottoming out is unknown, most wait until the stock sets a record low, and then they pour thousands of dollars into that stock. The same technique can be used with the market as a whole. If the Dow is experiencing a series of bad days, some investors with withdraw all their money, wait for the Dow to set a 30 or 60 day low, and then shove everything back in at once. While there is no guarantee of this working, it’s been a common practice recommended by brokers the world over for generations.
Dealing with market volatility isn’t easy, but it is part of investing. If you’re a smart investor, however, market volatility won’t mean the end of your investment.
The Usual Mistakes
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 dot.com’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 invest.
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 down.
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.
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 dot.com’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 invest.
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 down.
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.
Where You Can Buy Mutual Fund
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!
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!
Mutual Fund 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.
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.
Why Mutual Fund?
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 investing.
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.
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 investing.
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.
How to Start Mutual Fund
For all investors, both new and old, getting a leg up is a big deal. While there is no magic formula to guarantee that you’ll never lose your money in investing, there are a series of common sense tips that will help you avoid common traps in mutual funds that can lead to you meeting both your short and long term investing goals.
A good first tip is to watch the fees and expenses. While 1 percent here and 2 percent there may not seem like much, those fees are coming right out of your profit, so keeping them at a minimum is very important. Try to stick to no-load mutual funds, they have fewer fees than load funds. Also, watch the management fees that a company charges on their funds. These vary a lot from company to company.
Have a good idea what the tax implications are on your mutual funds. There is more than just capital gains tax out there, and the amount of tax, when your fund is taxed and how it’s taxed can vary. The amount of tax you have to pay also depends on what tax bracket your income falls into. Make sure you understand all the ins and outs of taxes before you choose a fund to invest in.
Take a look at how large the mutual fund is and how long it’s been around for. The size of the fund matters because the bigger the fund, the less impact one individual stock has. If the fund has grown from the previous year, take that into consideration when checking last year’s performance reports. It’s possible that last year’s results were because the fund was smaller and the performance of one stock, either up or down, had a much larger impact on the fund.
Finally, make sure you understand the volatility of the fund. While the old adage rings true that you can’t win the game unless you play, you can still invest in mutual funds and seriously limit your risk. It all depends on what your financial goals are and how much risk you feel comfortable taking. If your goals are close, than you might want to invest in lower risk funds. If your goals are far off into the future, you can afford to take more chances.
The world of mutual funds can be exciting and fun for new investors. But no matter how much money you’re making, you must remember that it can all go sour. But with the proper knowledge and preparation, you can have a long and successful career in mutual fund investing.
A good first tip is to watch the fees and expenses. While 1 percent here and 2 percent there may not seem like much, those fees are coming right out of your profit, so keeping them at a minimum is very important. Try to stick to no-load mutual funds, they have fewer fees than load funds. Also, watch the management fees that a company charges on their funds. These vary a lot from company to company.
Have a good idea what the tax implications are on your mutual funds. There is more than just capital gains tax out there, and the amount of tax, when your fund is taxed and how it’s taxed can vary. The amount of tax you have to pay also depends on what tax bracket your income falls into. Make sure you understand all the ins and outs of taxes before you choose a fund to invest in.
Take a look at how large the mutual fund is and how long it’s been around for. The size of the fund matters because the bigger the fund, the less impact one individual stock has. If the fund has grown from the previous year, take that into consideration when checking last year’s performance reports. It’s possible that last year’s results were because the fund was smaller and the performance of one stock, either up or down, had a much larger impact on the fund.
Finally, make sure you understand the volatility of the fund. While the old adage rings true that you can’t win the game unless you play, you can still invest in mutual funds and seriously limit your risk. It all depends on what your financial goals are and how much risk you feel comfortable taking. If your goals are close, than you might want to invest in lower risk funds. If your goals are far off into the future, you can afford to take more chances.
The world of mutual funds can be exciting and fun for new investors. But no matter how much money you’re making, you must remember that it can all go sour. But with the proper knowledge and preparation, you can have a long and successful career in mutual fund investing.
Avoiding Impulse Spending
Answer these questions truthfully:
1.) Does your spouse or partner complain that you spend too much money?
2.)Are you surprised each month when your credit card bill arrives at how much more you charged than you thought you had?
3.) Do you have more shoes and clothes in your closet than you could ever possibly wear?
4.) Do you own every new gadget before it has time to collect dust on a retailer’s shelf?
5.) Do you buy things you didn’t know you wanted until you saw them on display in a store?
If you answered “yes” to any two of the above questions, you are an impulse spender and indulge yourself in retail therapy.
This is not a good thing. It will prevent you from saving for the important things like a house, a new car, a vacation or retirement. You must set some financial goals and resist spending money on items that really don’t matter in the long run.
Impulse spending will not only put a strain on your finances but your relationships, as well. To overcome the problem, the first thing to do is learn to separate your needs from your wants.
Advertisers blitz us hawking their products at us 24/7. The trick is to give yourself a cooling-off period before you buy anything that you have not planned for.
When you go shopping, make a list and take only enough cash to pay for what you have planned to buy. Leave your credit cards at home.
If you see something you think you really need, give yourself two weeks to decide if it is really something you need or something you can easily do without. By following this simple solution, you will mend your financial fences and your relationships.
1.) Does your spouse or partner complain that you spend too much money?
2.)Are you surprised each month when your credit card bill arrives at how much more you charged than you thought you had?
3.) Do you have more shoes and clothes in your closet than you could ever possibly wear?
4.) Do you own every new gadget before it has time to collect dust on a retailer’s shelf?
5.) Do you buy things you didn’t know you wanted until you saw them on display in a store?
If you answered “yes” to any two of the above questions, you are an impulse spender and indulge yourself in retail therapy.
This is not a good thing. It will prevent you from saving for the important things like a house, a new car, a vacation or retirement. You must set some financial goals and resist spending money on items that really don’t matter in the long run.
Impulse spending will not only put a strain on your finances but your relationships, as well. To overcome the problem, the first thing to do is learn to separate your needs from your wants.
Advertisers blitz us hawking their products at us 24/7. The trick is to give yourself a cooling-off period before you buy anything that you have not planned for.
When you go shopping, make a list and take only enough cash to pay for what you have planned to buy. Leave your credit cards at home.
If you see something you think you really need, give yourself two weeks to decide if it is really something you need or something you can easily do without. By following this simple solution, you will mend your financial fences and your relationships.
The Budget
A carpenter uses a set of house plans to build a house. If he didn’t the bathroom might get overlooked altogether.
Rocket Scientists would never begin construction on a new booster rocket without a detailed set of design specifications. Yet most of us go blindly out into the world without an inkling of an idea about finances and without any plan at all.
Not very smart of us, is it?
A money plan is called a budget and it is crucial to get us to our desired financial goals.
Without a plan we will drift without direction and end up marooned on a distant financial reef.
If you have a spouse or a significant other, you should make this budget together. Sit down and figure out what your joint financial goals are…long term and short term.
Then plan your route to get to those goals. Every journey begins with one step and the first step to attaining your goals is to make a realistic budget that both of you can live with.
A budget should never be a financial starvation diet. That won’t work for the long haul. Make reasonable allocations for food, clothing, shelter, utilities and insurance and set aside a reasonable amount for entertainment and the occasional luxury item. Savings should always come first before any spending.
Even a small amount saved will help you reach your long term and short term financial goals. You can find many budget forms on the internet. Just use any search engine you choose and type in “free budget forms”.
You’ll get lots of hits. Print one out and work on it with your spouse or significant other. Both of you will need to be happy with the final result and feel like it’s something you can stick to.
Rocket Scientists would never begin construction on a new booster rocket without a detailed set of design specifications. Yet most of us go blindly out into the world without an inkling of an idea about finances and without any plan at all.
Not very smart of us, is it?
A money plan is called a budget and it is crucial to get us to our desired financial goals.
Without a plan we will drift without direction and end up marooned on a distant financial reef.
If you have a spouse or a significant other, you should make this budget together. Sit down and figure out what your joint financial goals are…long term and short term.
Then plan your route to get to those goals. Every journey begins with one step and the first step to attaining your goals is to make a realistic budget that both of you can live with.
A budget should never be a financial starvation diet. That won’t work for the long haul. Make reasonable allocations for food, clothing, shelter, utilities and insurance and set aside a reasonable amount for entertainment and the occasional luxury item. Savings should always come first before any spending.
Even a small amount saved will help you reach your long term and short term financial goals. You can find many budget forms on the internet. Just use any search engine you choose and type in “free budget forms”.
You’ll get lots of hits. Print one out and work on it with your spouse or significant other. Both of you will need to be happy with the final result and feel like it’s something you can stick to.
Spend Wisely
Have you ever noticed that the things you buy every week at the grocery and hardware stores go up a few cents between shopping trips? Not by much…just by a little each week but they continue to creep up and up.
All it takes for the price to jump up by a lot is a little hiccup in the world wide market, note the price of gasoline as it relates to world affairs.
There is a way that we can keep these price increases from impacting our personal finances so much and that is by buying in quantity and finding the best possible prices for the things we use and will continue to use everyday… things that will keep just as well on the shelves in our homes as it does on the shelves at the grocery store or hardware store.
For instance, dog food and cat food costs about 10% less when bought by the case than it does when bought at the single can price and if you wait for close out prices you save a lot more than that.
Set aside some space in your home and make a list of things that you use regularly which will not spoil. Any grain or grain products will need to be stored in airtight containers that rats can’t get into so keep that in mind.
Then set out to find the best prices you can get on quantity purchases of such things as bathroom items and dry and canned food.
You will be surprised at how much you can save by buying a twenty pound bag of rice as opposed to a one pound bag but don’t forget that it must be kept in a rat proof container.
You can buy some clothing items such as men’s socks and underwear because those styles don’t change, avoid buying children’s and women’s clothing, those styles change and sizes change too drastically.
Try to acquire and keep a two year supply of these items and you can save hundreds of dollars.
All it takes for the price to jump up by a lot is a little hiccup in the world wide market, note the price of gasoline as it relates to world affairs.
There is a way that we can keep these price increases from impacting our personal finances so much and that is by buying in quantity and finding the best possible prices for the things we use and will continue to use everyday… things that will keep just as well on the shelves in our homes as it does on the shelves at the grocery store or hardware store.
For instance, dog food and cat food costs about 10% less when bought by the case than it does when bought at the single can price and if you wait for close out prices you save a lot more than that.
Set aside some space in your home and make a list of things that you use regularly which will not spoil. Any grain or grain products will need to be stored in airtight containers that rats can’t get into so keep that in mind.
Then set out to find the best prices you can get on quantity purchases of such things as bathroom items and dry and canned food.
You will be surprised at how much you can save by buying a twenty pound bag of rice as opposed to a one pound bag but don’t forget that it must be kept in a rat proof container.
You can buy some clothing items such as men’s socks and underwear because those styles don’t change, avoid buying children’s and women’s clothing, those styles change and sizes change too drastically.
Try to acquire and keep a two year supply of these items and you can save hundreds of dollars.
Why You Should Make a Budget
You say you know where your money goes and you don't need it all written down to keep up with it? I issue you this challenge. Keep track of every penny you spend for one month and I do mean ever penny.
You will be shocked at what the itty-bitty expenses add up to.Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.
That is how much you could have saved AND drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.
If we can get control of the small expenses that really don’t matter to the overall scheme of our lives, we can enjoy financial success.
The little things really do count. Cutting what you spend on lunch from five dollars a day to three dollars a day on every work day in a five day work week saves $10 a week… $40 a month… $480 a year… $2400 in five years….plus interest.
See what I mean… it really IS the little things and you still eat lunch everyday AND that was only one place to save money in your daily living without doing without one thing you really need. There are a lot of places to cut expenses if you look for them.
Set some specific long term and short term goals. There are no wrong answers here. If it’s important to you, then it’s important period.
If you want to be able to make a down payment on a house, start a college fund for your kids, buy a sports car, take a vacation to Aruba… anything… then that is your goal and your reason to get a handle on your financial situation now.
You will be shocked at what the itty-bitty expenses add up to.Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.
That is how much you could have saved AND drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.
If we can get control of the small expenses that really don’t matter to the overall scheme of our lives, we can enjoy financial success.
The little things really do count. Cutting what you spend on lunch from five dollars a day to three dollars a day on every work day in a five day work week saves $10 a week… $40 a month… $480 a year… $2400 in five years….plus interest.
See what I mean… it really IS the little things and you still eat lunch everyday AND that was only one place to save money in your daily living without doing without one thing you really need. There are a lot of places to cut expenses if you look for them.
Set some specific long term and short term goals. There are no wrong answers here. If it’s important to you, then it’s important period.
If you want to be able to make a down payment on a house, start a college fund for your kids, buy a sports car, take a vacation to Aruba… anything… then that is your goal and your reason to get a handle on your financial situation now.
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