Mutual Fund Fees

As you might expect, fees and expenses vary from fund to fund. A fund with high costs must perform better than a low-cost fund to generate the same returns for you. Even small differences in fees can translate into large differences in returns over time.

For example, if you invested $10,000 in a fund that produced a 10% annual return before expenses and had annual operating expenses of 1.5%, then after 20 years you would have roughly $49,725. But if the fund had expenses of only 0.5%, then you would end up with $60,858.

These fees and charges are identified in a fee table, located near the front of a fund’s prospectusShareholder Fees

Sales LoadsFunds that use brokers to sell their shares typically compensate the brokers. Funds may do this by imposing a fee on investors, known as a "sales load" (or "sales charge (load)"), which is paid to the selling brokers. In this respect, a sales load is like a commission investors pay when they purchase any type of security from a broker.

There are two general types of sales loads—
a front-end

a back-end or deferred sales

Sales Charge (Load) on PurchasesA front-end sales load investors pay when they purchase fund shares .The key point to keep in mind about a front-end sales load is it reduces the amount available to purchase fund shares.

Deferred Sales Charge (Load)A back-end or deferred sales load investors pay when they redeem their shares.When an investor purchases shares that are subject to a back-end sales load rather than a front-end sales load, no sales load is deducted at purchase, and all of the investors’ money is immediately used to purchase fund shares (assuming that no other fees or charges apply at the time of purchase)

No-Load FundsAs the name implies, this means that the fund does not charge any type of sales load. As described above, however, not every type of shareholder fee is a "sales load," and a no-load fund may charge fees that are not sales loads. For example, a no-load fund is permitted to charge purchase fees, redemption fees, exchange fees, and account fees, none of which is considered to be a "sales load."

Redemption Fee A redemption fee is another type of fee that some funds charge their shareholders when the shareholders redeem their shares. Redemption fee is not considered to be a sales load. Unlike a sales load, which is used to pay brokers, a redemption fee is typically used to defray fund costs associated with a shareholder’s redemption and is paid directly to the fund, not to a broker.

Exchange Fee An exchange fee is a fee that some funds impose on shareholders if they exchange (transfer) to another fund within the same fund group.

Account Fee An account fee is a fee that some funds separately impose on investors in connection with the maintenance of their accounts

Purchase FeeA purchase fee is another type of fee that some funds charge their shareholders when the shareholders purchase their shares. A purchase fee is not considered to be, a front-end sales load because a purchase fee is paid to the fund (not to a broker)

Management FeesManagement fees are fees that are paid out of fund assets to the fund’s investment adviser (or its affiliates) for managing the fund’s investment portfolio , and administrative fees payable to the investment adviser that are not included in the "Other Expenses" category (discussed below).

Total Annual Fund Operating Expenses

This line of the fee table is the total of a fund’s annual fund operating expenses, expressed as a percentage of the fund’s average net assets.

TaxTaxesWhen a fund manager sells a stock for a gain, the law says it becomes a taxable event. That transaction may be offset by any losses the manager incurs when he sells a doggy stock. But if the sum of all the transactions during the year equals an overall gain, somebody has to pay the tax billThese gains are paid out in the form of taxable distributions. There's nothing worse than ending the year with a fat one you weren't expecting. It's even more bitter when the gain falls into the short-term category -- a big problem with fund managers who trade often. Short-term gains are taxed as regular income instead of at the lower 20% tax rate levied on long-term capital gains

Before investing in any mutual fund be sure to review the prospectus carefully. If you have any questions about the fund, be sure to consult your financial or investment advisor

Types of Mutual Funds and some basic terminlogies

1) Open-end mutual fundAn open-end mutual fund is a collective investment which can issue and redeem shares at any time. An investor can purchase shares in such funds directly from the mutual fund company, or through a brokerage house. An open-end fund issues new shares as new investors invest in the fund

2) Closed-end FundsA pooled investments fund that has a fixed capitalization after the initial issue. Fund shares are bought from or sold to other investors in the over-the-counter market or traded on an exchangeA closed-end fund limits the number of shares available


Mutual fund categories

aggressive growth fund,asset allocation fund,balanced fund,blend fund,bond fund,capital appreciation fund,clone fund,closed fund,crossover fund,equity fund,fund of funds,global fund,growth fund,growth and income fund ,hedge fund,income fund,index fund,international fund,moneymarket fund,municipal bond fund,prime rate fund,regional fund,sector fund,speciality fund ,stock fund and tax-free bond fund.

Net asset valueThis is the total value of assets the investment company holds, minus the total value of liabilities. This total is then divided by the total number of shares outstanding. This value reflects the ups and downs of the value of the underlying securities held by the fund.

Example, if a mutual fund has an NAV of $100 million, and investors own 10,000,000 of the fund’s shares, the fund’s per share NAV will be $10. Because per share NAV is based on NAV, which changes daily, and on the number of shares held by investors, which also changes daily, per share NAV also will change daily.

NAV) represents a fund's per share market value. This is the price at which investors buy ("bid price") fund shares from a fund company and sell them ("redemption price") to a fund companyBecause mutual funds distribute virtually all their income and realized capital gains to fund shareholders, a mutual fund's NAV is relatively unimportant in gauging a fund's performance, which is best judged by its total return.

An investment company calculates the NAV of a single share (or the "per share NAV") by dividing its NAV by the number of shares that are outstanding.

what is mutual funds

Definition of mutual funds

A mutual fund is a professionally-managed form of collective investments that pools money from many investors and invests it in stocks,bonds, short-termmoney market instruments, and/or other securities

In a mutual fund, the fund manager, who is also known as the portfolio manager, trades the fund's underlying securities, realizing capital gains or losses, and collects the dividend or intrest income The investment proceeds are then passed along to the individual investors.

The value of a share of the mutual fund, known as the net asset value per share (NAV), is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding


Advantages of Mutual Funds
1) A professional skilled in choosing stocks does all of your work for you.
2) A mutual fund gives you instant diversification.
3) A fund exists for every financial goal and risk tolerance level.
4) Mutual funds are also quite liquid. A mutual fund investment can be converted into cash upon your request.

Disadvantages of Mutual Funds

As with any type of investment, there are drawbacks associated with mutual funds.

1) Mutual fund investors have no control over what to invest in. Unlike picking your own individual stocks, a mutual fund puts you at the mercy of the manager.

2) Mutual funds generally have only small holdings of so many different stocks. When a fund’s top holdings jump to high numbers, this doesn’t make much of a difference in a mutual fund’s total performance. There is really just small gain realized from even top the top performing stocks. This is caused by over diversification.

3) There are fees and expenses associated with investing in mutual funds that do not usually occur when purchasing individual securities directly.Funds will typically have a range of different fees that reduce the overall payout. Often, these fees are not well explained to investors

4) Changing market conditions can create fluctuations in the value of a mutual fund investment.


5) Misleading AdvertisementsThe misleading advertisements of different mutual funds can guide investors down the wrong path. Some funds may be incorrectly labeled as growth funds, while others are classified as small-cap or income.


6) Evaluating Funds Another disadvantage of mutual funds is the difficulty they pose for investors interested in researching and evaluating the different funds. Unlike stocks, mutual funds do not offer investors the opportunity to compare the P/E ratio, sales growth, earnings per share, etc.Past performance doesn’t provide exact information for future performances, it can only assist you appraising fund’s volatility over time.


Prospectuses will not contain all the costs that affect the net return on your investment. This is why it is important to compare net returns whether or not the fund in a no-load or load fund.

3 Questions to ask yourself before you consider consolidate debt loans.

The first place to look before you get a debt consolidation loan is quite simply at your self.

Do you see a person with very little self discipline and control over their money?


The second thing to do is ask your self why I have too much debt. Did something unfortunate and unexpected really happen or is because you just bought too many things on credit and you are not likely to stop!

The third thing to do is be bluntly honest with your self and consider the reason for taking out a debt consolidation loan. Is the real core of the problem your own poor financial knowledge and money management skills and a tendency to overspend no matter what?


7 disturbing facts about consolidate debt loans. Debt consolidation loans do not get you out of debt. They still remain your debts but consolidated into one loan. You will find the monthly payments are lower. This is because the interest rate is lower and the term of the loan extended over a longer period of time.


You do not owe any less; you just take more time to pay off the money. The longer the time, the greater the interest. This interest will cost you a lot more of your money. For example £10,000 over 10 years will accumulate £6000 in interest alone. £10,000 over 25 years will cost you a massive £18,000. These are the only a mid range of the interest rates charges at time of printing and have been rounded to the nearest thousand. They are only available if you have an existing good credit rating and you are a home owner.

The debt consolidation company that has consolidated your loan is not a charity but a profit making concern. They make their money from the interest you pay them. It is in their interest to have you paying interest for as many monthly payments as possible.


If the loan is secured against your house and you cannot keep up with the payments you could loose your home.


I am sure we have all seen Debt consolidation companies make promises like "you will have money left over to treat yourself to a new car or that holiday you have always dreamed about". Stay clear of these 'hooks' for they will lead you into even more debt

When you sign up for a debt consolidation loan you will be signing a binding contract. This contract will have an impact on you and your financial life style for many yeas to come. You may make things seem a little easier to pay but that loan will be your financial burden for anywhere between 10 or 30 years! With a bit of effort to learn about personal finance, budgeting, frugal living and getting truly independent advice from the likes of Citizens Advice Bureau - www.citizensadvice.org.uk or National Debtline - www.nationaldebtline.co.uk you could be getting clear of the same debt in around 5 years but still remain debt consolidation free. You will have also learned valuable monetary skills along the way that will help you steer clear of more debt in the future.

As soon as you are clear of debt you will be able to consider investing your money so that it makes you even more money rather than spending money you have not got and then resorting to expensive consolidate debt loans.

Remember the questions at the start of the article? If you answered them honestly and you are now aware of those valuable facts you will know if you are going to be the person who can live debt consolidation free by addressing the actual problems of why you got into so many bad debts in the first place rather than that person who falls for that delusory feeling of freedom that comes from having what seems to be more money but remains in debt for most of their life.

This article is free for republishing

Source: http://www.articlealley.com/article_462747_63.html

Mortgage Loans - Issues You Will Run Into

Finance is one of those areas where the details matter. Small tweaks can save or cost you a boatload of money. This is never more the case then when we talk about mortgage loans where a small tip can save you tens of thousands of dollars.

Everyone who gripes about the fees charged by lenders. Some lenders are now trying to charge administration fees through the life of the loan. Think about that. You pay a fee every month! Avoid these lenders like the plague.

Honeymoons are great things, right? Well, not in mortgages. Many lenders will offer honeymoon interest rates on loans to get you as a customer. The rates are often very low. Six months to a year later, they go up. They often go above normal rates.

The mortgage industry is based on markets, which means the rates on loans change each day. This can cause a problem. If you get pre-approved for a loan on the first day of the month, but don't close to the end of the month, the rate on your loan can change!

The interest rate is the cost to borrow the money from the entity financing you. The APR is that cost plus all other fees. The APR represents a better picture of what you are paying out, but represented as a percentage.

A great way to get sellers to give you a better deal is to have them pay down the interest rate on your mortgage. The trick to this approach is to agree to a price close to what they are asking for the home, but with the pay down included in it.

Most people realize that there are plenty of lenders that want there business, but few realize how many. There are thousands of lenders who want to talk with you. Yes, thousands. Shop your loan for the best deal!

Lenders will look at your last two years on loan applications. They are also looking at credit card payment and installment payment histories. Check your credit report for problems in these areas and fix them.

The interest rate on an adjustable mortgage can fluctuate, but how high the rate can go and how often can it be adjusted? If a loan can only be adjusted once a year, you run a lot less risk of having problems than if it can be adjusted every quarter.

The lender has indicated that you will qualify for a bigger loan with bigger payments than you're comfortable with. Listen to your inner voice. Buy something you feel you can afford. Don't overspend and sweat monthly payments.

Adjustable mortgages are tied to something called indexes. These indexes deal with the cost of borrowing money. There are five different indexes. Make sure you understand which index you are tied to and how it works.

Searching for your perfect home is rewarding. Nobody has ever said the same thing about searching for the perfect mortgage. That being said, a person that understands the process is going to suffer less than one that does not.


Article Source: http://www.kalifanayla.com/niche_art

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How To Surely Avoid Debt

What I’m about to share with you are strategies you should use to get your self out of dept and stay there. It’s really hard to move on with your life financially free and succeed knowing that you are on dept with every person and company all over the country. The smallest penny you get which can help you start your business just pays your dept.

Debt, the dreaded burden of paying back what you borrowed, is becoming the major contributor to worry and stress in today’s living and brings a sense of hopelessness about the future. You should avoid a borrowing and useless spending mentality. Don’t associate your self. Run away.

The quickest and most sustainable way to get out of debt is to put into practice “self-control.” We live in a world, which promotes spending. We are subjected to an almost constant shower of TV, radio and magazine advertisements influencing us to spend, spend and spend. We need to become more aware of how we are tempted by advertisers to want things that we do not really need. We need to remember other expenses that may become a priority in the near future e.g. school fees, bond repayments and a car. We simply cannot buy everything our hearts desire.

Some low and middle-income earners are able to satisfy their needs but the challenge is to avoid getting locked in unnecessary wants and become heavily indebted. Good money management is about understanding the difference between needs and wants and spending your money wisely and not incurring debt unnecessarily.

As long as we live from hand to mouth, we need to take even more control over our money. So the secret in money management starts from drawing a budget and demarcating between needs and wants, which is called discipline. The people who cannot determine their needs end up spending all their money on wants (things you can do without). This spending is made easy by the availability of credit and we are tempted into borrowing when we should not

The money we earn should be spent on the family’s essential needs before we satisfy wants, which are just nice to have. We should aim to save the money we have once we have done all the essentials. The solution is to prepare a budget for your income and expenses. All of us are capable of managing our affairs well by using a budget.

Staying out of dept is very easy when you tell yourself. Apply all these tips and you see a big change in your financial life and become financially free. Plan all of your money movements and implement these steps.

Makabongwe Maseko offers advice on the business industry on his weblog "Online Marketing Business Opportunity". To get more information and tips on business matters visit: http://online-marketing-business-opportunity.traders-online.net/


Refernce : http://www.articles-hub.com/Article/138259.html
How To Surely Avoid Debt
By Makabongwe Maseko

Mortgage Rates - How Low Can We Go?

Well, surely it can't drop much lower? If you haven't locked a mortgage rate in by now, or haven't got yourself pre-approved, you had better hurry up. All those people who can remember the 11% mortgage interest rate will be trampling over each other to try and re-new at these rates.
Both the thirty year fixed rate mortgage and the fifteen year fixed rate mortgage have dropped by almost another half a point. Rates are really competitive for those who want to be able to budget and feel secure about their future. You can lock in the mortgage rate for fifteen years at an average 5.21% at the moment. This means that you will know exactly what your mortgage repayment will be for the next fifteen years. That's security!

A survey taken this last week on mortgages, reports that the fifteen year fixed rate mortgages are at their lowest rate since July 2005 and that for the first time in seven years the rate is lower than the average rate offered on a one year adjustable rate mortgage.

These results were published by Freddie Mac in the Primary Mortgage Market Survey. An announcement from Freddie Mac vice president stated that the further mortgage decreases were in large part a reaction to the drop in consumer spending.

Figures have been published which show that December's consumer spending was down by 0.4%. He added that sales of garden equipment and building materials were particularly hit, with the loss of sales in these areas dipping to an almost 3% loss from the previous month.


This explains why mortgage interest rates keep dropping. It doesn't explain why everyone is fairly cautious about re-financing or getting a mortgage - even a fixed rate! Is it possible that people are not buying their dream home until they have seen the lowest edge of the mortgage rates?

Just how much money is involved for the average member of the public here? Well, for every one eighth point on a conforming loan, you will pay an extra $25.00 per month. This week the rate for a fifteen year fixed is averaging out at 5.21%. A 15 year fixed rate mortgage last week averaged 5.43% which was down from the week before when it averaged 5.68%.

In real money, you could have saved yourself around $50 per month in repayments by just one week's difference in time. This means that the home you are hanging out for may be snapped up by someone else. A buyer who is who is prepared to pay the extra $50.00 per month; a buyer who has decided not to gamble on the ultimate lowest of the low rates, but rather to snap up the property that they want now.

It is anyone's guess whether the mortgage rate will go up or down. Unemployment figures rose last month compared to the month before, but the inflation and economic data has already been calculated to reflect long term lending risks. Lenders anticipate the news and indications are pointing to the fact that rises in the rates are more likely than drops in the rate.

First time buyers must be encouraged to at least try to get approval at this rate. Approval is not a contract, and it does not need to be taken up and used, but at least this low-return mortgage rate will be available to them for a few weeks, if they wish to buy a home - before the rate inevitably creeps up!

About the author:Eileen specializes in Upstate New York real estate. To learn about buying property in the Kingston NY real estate market, be sure to visit Eileen at www.VillageGreenRealty.com.

Article Source: http://www.Free-Articles-Zone.com

Pros and Cons of Reverse Mortgage Payment

California Reverse Mortgage is a loan where the lender either pays you a lump sum at one go, makes regular monthly payments, extends a line of credit, or a combination of the three. You continue to own your home and pay property taxes, operating expenses and maintenance. But because you make no regular pay outs on the loan, the balance owed rises each month with the interest applied to it. In the event of your death, your heirs would be responsible for paying the total debt, which is often done by selling or refinancing the house. There are a number of pros and cons for the various California Reverse Mortgage Payment Options.

A.Line of Credit: This is when the access funds are at your discretion. The Pros and Cons of this type of California Reverse Mortgage payment are as follows

Pros: Flexibility - One of the Pros of this Reverse Mortgage Payment is that you can access funds anytime, whenever you need them.


Potential - Another Pro of this Reverse Mortgage Payment is its growth feature. The unused balance grows. This does not mean you are earning interest. The growth factor takes into consideration that your home has appreciated in value over the past 12 months and that you are one year older.

Extra Income - You can use your equity to supplement your retirement income. You can take a lump sum of cash and a monthly check. You can also take a monthly payment and have a line of credit you can write checks on as you need.

Cons: Spending lure - One of the Cons of this Reverse Mortgage Payment is that is that the funds can be easily exhausted.

Red tape - To access your funds, you must submit a written request to the loan servicer managing your account. It includes several rounds of official documents and meetings to get the amount approved.

B. Term: here you receive fixed monthly payments for a set period of time. The Pros and Cons of this type of California Reverse Mortgage payment are as follows:

Pros Instant transfer - Funds are instantly and automatically deposited to your bank account meeting your instant finance or emergency needs.

Regular money generated - You can receive large monthly advances helping in planning out your regular expenses.

Cons Fixed amount - The amount of funds you receive each month is fixed, so if you need additional funds, you will have to request a payment plan change which is a time consuming process.

A major disadvantage of this Reverse Mortgage Payment is that monthly advances are not indexed for inflation.

C. Tenure: here you receive fixed monthly payments for as long as you live in your home. The Pros and Cons of this California Reverse Mortgage Payment are as follows:

Pros

Worth it - The monthly advances continue for as long as you live in your home, even if the total amount you receive exceeds the value of your home. Despite this, you will never owe more than what your home is worth.

No money worry - You can keep receiving payments for as long as you live. Your spouse will keep receiving the payments if he or she is still alive. You never have to sell your home even if you outlive the equity. The income you receive is tax-free.

Cons The amount of funds you receive each month is fixed, so if you need additional funds, you will have to request a payment plan change.

You leave less equity for your children if you choose the wrong program.

Article Source:
Pros and Cons of Reverse Mortgage Payment By: rateempire
http://keywordbeast.com

The Best Kept Secrets To Reducing Your Debt And Becoming Debt-Free

Growing debt can be very harmful and it can spread to unimaginable amounts. So if you have accumulated debt to a size you’re beginning to loose control over it, it is time to think about eliminating debt. This is a process that cannot be completed in a short amount of time; sometimes it will take years to become debt free. However if you take the time to follow this basic tips it will turn up to be a process that will not affect your daily life.

Taking Control Over Spending

Eliminating debt requires a bit of sacrifice, you need to understand that you have to take control over your spending. The first step would be to reduce inefficient expenditure, avoid buying things you will not need. In fact, do not buy anything other than what is strictly necessary. Tag your needs with labels such as “urgent”, “highly necessary”, “slightly necessary”, “unnecessary”, etc. Once you have established and committed to a strict budget you will be able to save money for leisure but till then avoid careless expenditure.

Budgeting

Design a budget where you will state your income and your spending, do not conceal anything. Do not forget to add any non regular expenses as your overall spending is not only made of everyday expenses. If you prepare it consciously you will see that you have expenses on a daily basis, weekly, monthly, bimonthly, yearly, twice a year, etc. You must be very careful in the process of making a budget since it will determine how much money you will be able to destine to eliminating debt.

Debt Settlement Agencies

You can contact a debt settlement agency. This agencies are specialized in providing assistance to those in debt and are known to reduce peoples debt up to 70% in some cases, do not expect such a high reduction however since it is only achieved in special circumstances. But you can expect a consistent reduction on the amount of interests that you pay and sometimes a modification in the length of the outstanding loans. Getting a cut on the principal of loans and credit card debts can sometimes be achieved but is more unlikely. Ironically there are more chances to get a higher reduction when your accumulated debt is out of control and your ability to repay is poorer.

Consolidation Loans

You can also apply for a consolidation loan; these loans are specially designed to be used to pay off any outstanding debt. The overall interest rate will be considerably reduced and so will be the monthly payments. More importantly you will end up with a single fixed monthly installment that will let you foresee your financial future with some certainty. Bear in mind though, that when this happens, you may be tempted to incur in additional expenses you have been postponing due to the lack of money. Refrain from doing so for you may reenter the vicious circle of debt you have just abandoned, your debt will rise again to higher amounts, you will not be able to consolidate again and all your efforts will be useless.

Melissa Kellett is an expert loan consultant who has worked for twenty years in the financial industry and helps people to repair their credit and get approved for home loans, unsecured personal loans, student loans, consolidation loans, car loans and many other types of loans and financial products.financial products. If you want to learn more about Debt Consolidation and Credit Card Consolidation you can visit her site http://www.speedybadcreditloans.com/

Debt-Consolidation Article Source: http://www.eArticlesOnline.com

Corporate bond

Corporate bond is a bond issued by a corporation. The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issue date. (The term "commercial paper" is sometimes used for instruments with a shorter maturity.)
Sometimes, the term "corporate bonds" is used to include all bonds except those issued by governments in their own currencies. Strictly speaking, however, it only applies to those issued by corporations. The bonds of local authorities and supranational organizations do not fit in either category.
Corporate bonds are often listed on major exchanges (bonds there are called "listed" bonds) and ECNs like MarketAxess, and the coupon (i.e. interest payment) is usually taxable. Sometimes this coupon can be zero with a high redemption value. However, despite being listed on exchanges, the vast majority of trading volume in corporate bonds in most developed markets takes place in decentralized, dealer-based, over-the-counter markets.
Some corporate bonds have an embedded call option that allows the issuer to redeem the debt before its maturity date. Other bonds, known as convertible bonds, allow investors to convert the bond into equity.
One can obtain an unfunded synthetic exposure to corporate bonds via credit default swaps.

Risk analysis
Compared to government bonds, they generally have a higher risk of default. This risk depends, of course, upon the particular corporations, the current market conditions and governments being compared and the rating of the company.
The risk can be quantified using spread analysis, which seeks to determine the difference in yield between a given corporate bond


Refernce : http://en.wikipedia.org/wiki/Corporate_bond