The UNfounded Hype surrounding Mutual Funds is fantastic, millions and millions of Google searches per month indicate how many people consider this a simple way to quickly diversify, hedge and profit. But is it true? Let’s take a look.

It is widely accepted that “Mutual Funds are a simple way to diversify your assets.” -Don’t kid yourself, most of them are sector driven, in other words, instead of owning some stock in a coal company you own shares in a company that owns stock in ten coal companies. This is hardly diversified.

But then, investing in a massive Mutual fund that owns other smaller ones is the answer, right? No. You are still not diversified. Even the massive ones are not usually international, they are confined to one market or Country. If the market tanks or the Country’s currency tanks, you will feel very inadequately diversified.

“Hedging”, is not another way for the fund to turn a profit, It is a form insurance against losses, and costs the fund profits, if it makes any. If you are only looking to protect your money, bury it. But I thought the goal was profits?

Profits, what profits? Even top performing ones do not usually beat the rate of inflation. Do a search on MSN or Yahoo for “top performing Mutual Funds”.. blech!

The strategy is inherently difficult to produce substantial profits:

* The manager must follow the rules of the fund, imagine Warren Buffet Following rules, instead, Berkshire is just his portfolio, he makes his own rules (as a trader should), and follows them strictly.
* Mutual Funds are “Buy and Hold” structured, which is difficult when the economy or market or market sector is imploding and money is constantly deflating.
* Mutual Funds have fees that have nothing to do with performance. This is a huge factor in the small returns on your investment. You are essentially paying their wages and mortgages before profits are calculated, the fund may have seen a profit before it had to pay it’s own expenses. And now, paid, is showing a loss. Performance fees are the answer, but none work on that basis.

In most mutual funds you have no idea of the manager -what his track record is like, not the fund’s track record, HIS track record. Again, Don’t kid yourself, in any fund you are essentially investing in the manager. He is at the helm. But in this case, the cards are stacked heavily against him, that is why it so miraculous that a few of them make it through a crisis. And rightly so, they become famous and influential.

Now “Hedge Funds” are much better suited to the investor, but they are usually exclusive and require very large deposits.

Basically, they are the answer for high net worth individuals. But again, they have a downside too, they are not liquid in that, you are not buying shares in a fund, you actually own a piece of the pie. Many of the investments they specialize in are creative and illiquid. Like long term Real Estate Ventures. 5 years is a short term investment in a Hedge Fund.

I hope I have helped a little in the riddle of where to put your money. -Look elsewhere.

I do not want to give you answer to the question, “Where do I put my money” Just like I do not want to give you many quotes from respected individuals so you will take my word without inspection. I would much rather you did your own research and came up with your own answers.

Start your research at: http://the88plan.com

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This was especially intriguing to the individual who has thus far failed to benefit from this excellent form of cheap insurance. What you must watch out for, however, is this: Not all “group insurance” is alike. Always insist on a sample policy. Read it and see what you’re getting. Always become educated on any investment.

Never let the dollar value of your insurance gain oversell you on a mutual fund that may not be going anywhere. Make sure you’re buying into a good long-term investment. Some funds may not be any safer than individual stocks. What’s more, your input may not be readily available to you in emergency for some time to come, inasmuch as most of the mutual-fund “plans” take the salesman’s commission out of your payments in the beginning – like a life insurance agent’s commission.

As in all “plans” and “packages” it’s up to you, the buyer, to total up the worth of the individual components and decide whether you want to buy in that fashion. This is not to imply that mutual funds are not a good buy. I like mutual funds but not in an insurance policy and have a good basic rule. If a mutual fund is not old enough to be potty trained I do not waste my time looking at it. I look for mutual funds with a 10-15 years performance at a minimum.

Some have very fine potential. But they are by no means all alike. If you are going to put several thousand dollars into one over a period of time, give that big investment your utmost attention add care. Don’t be misled by the insignificance of the “down payment.”

Uncover for yourself why so many people are interested in 3 free credit report. Visit everlife.com for more on the world of credit management.

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What are the reasons for this? It theory it is they who should be more keen to take advantage of the scheme as they could do with more government assistance. The Tories claim that many are unaware of the existence of the scheme, therefore suggesting that the government has done a poor job of publicizing it and educating people to its benefits.

It is possible, though, that it purely comes down to the fact that wealthier people tend to have more money available to them to invest. For the Child Trust Fund to be really beneficial it is necessary to invest further, with family and friends allowed to invest up to £1,200 per year. The original £250 voucher from the government shortly after a child is born, plus a further £250 voucher seven years later will not have a huge impact once a child turns eighteen. Therefore it is possible that many parents who cannot afford to further invest, don’t think it has any value, although it could be argued that £500 plus interest is better than nothing.

Many are in the situation of simply being unable to further invest. Feeding and clothing children now is more important than saving for their futures; many have no choice but to think about the present. By the time today’s children turn eighteen they may be earning themselves so providing for them now is more important. In a way not taking advantage of the child trust fund could be a missed opportunity. It is possible that taking full advantages could mean an eighteen year old could receive £24,000. But in reality the majority of parents are unable to invest anywhere near the £1,200 each year.

There is much debate as to the future of the child trust fund. The Conservatives have said that they will make the child trust fund only available to the poorest third of families, as they are the ones who need the help most. But considering the statistics that they have highlighted, would this be a positive solution? Although almost 70% of the poorest families do open a CTF account, many of these will not be regularly investing, therefore making the scheme relatively ineffective. It is the wealthier families who take full advantage, so it is likely better to either leave the scheme as it is or withdraw it altogether.

Andrew Marshall ©

Child Trust Fund

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An ETF Investment is an exchange-traded fund, a type of investment vehicle traded on stock exchanges. ETF stocks are traded like single shares, with the prices moving throughout the day.

An ETF typically holds assets such as stocks (typically a mixture of investments in unit trusts and investment trusts) or bonds. Many ETFs in fact track an overall index, such as the S&P 500 or MSCI EAFE. An ETF’s overall value is usually around the same price as the net value of the asset value of its underlying assets; if it is tracking an overall index, its value typically moves in line with changes in that index. Only “authorized participants” (typically large investors) are actually permitted to deal directly with the ETF in terms of buying or selling shares from or to the fund manager. Such transactions usually involve the purchase or sale of “creation units” (i.e. groups of tens of thousands of ETF shares. Individual investors then go through these “authorised participants” to buy ETF stocks and to formulate their ETF trading strategies.

How long have ETFs been around?

ETF’s are a comparatively recent product, having been available in the US only since 1993. In 1992, the American Stock Exchange (AMEX) made use of the SEC’s “SuperTrust Order” to request use of the first authorized ETF. The SEC approved that petition, and granted the SPDR Order in October, 1992, enabling the AMEX to subsequently list the S&P Depositary Receipts, Trust Series 1 (aka “Spider”) (which was benchmarked to the Standard & Poors’ 500 Index) the following year. ETFs came to Europe a few years later, in 1999. (In the US, in addition to “Spiders”, new ETFs followed benchmarks like the Dow Jones Industrial Average (DIAMONDS Trust Series 1 (“Diamonds”), and the NASDAQ (NASDAQ 100 Index Tracking Stock (“Cubes”) followed in 1998 and 1999 respectively..)

As such, ETF’s have to date been mainly what might be called “index funds” which track entire indexes (as above). While, during their short history to date, ETFs have traditionally been the domain of large and/or offshore investors, with private investors reluctant to trade in them, this trend is changing. Now private investors account for approximately 40 percent of ETF trades in the US, a proportion that seems set to rise. One reason that private investors have become more interested in ETFs is that they provide access to funds that track assets and sectors that were previously only available to larger investors.

Types of ETF Investments available

Since their initial launch, a number of different types of ETF have developed in the market place. These include Open-end index funds (products include iShares, Select Sector SPDRs, PowerShares, Vanguard, and WisdomTree), Unit Investment Trusts (UITs) (products include BLDRs, Diamonds, SPDRs, and PowerShares QQQ Trust ), Grantor Trusts (products include Currency Shares, streetTRACKS Gold Shares, iShares Silver Trust, and Merrill Lynch HOLDRs), Exchange-traded Notes (ETNs) (products include iPath ETNs, ELEMENTS ETNs) and Partnerships (products include U.S. Oil). (Source: EFTGuide.com). In 2003 assets held by ETFs in the US alone exceeded US$155 Billion.

To understand whether ETF investment is suitable for you and in choosing which particular vehicle to include in your portfolio, it is imperative that you understand, among other things, its advantages and disadvantages.

Visit my blog at http://www.savvyfinancialtraders.com for more information, tips and advices on exchange traded funds and grab some free ebooks and e-courses along the way.

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The most common way to determine how much money you’ll have is to use a pension calculator. Based on information you input about such things as your current salary, your savings and how long you have left until you retire, such a tool will be able to calculate how much money you can expect to receive when you do finally call time on your working life. Not only that, but it’s also a great tool for allowing you to see if you need to adjust the amount you’re saving towards your pension now, in order to have an adequate sum for your retirement.

When considering how you’d like to receive your money, there are a few factors you need to be aware of. For example, if you’ve been paying money into some form of pension scheme, such as a money purchase plan, you’ll need to turn that money into an income once you retire.

According to the experts, the best way to do this is to purchase an annuity. This basically means you pay a sum of money from your pension fund to an annuities provider, who in turn will transfer it into an income for you. This will continue for the remainder of your life. There are several types of annuities available -conventional annuity with a level or changing income, with-profits annuity, or unit-linked annuity – which can provide you with various different advantages. Which one you opt for is dependent on your individual circumstances and will affect how much cash you receive. It’s absolutely essential however, that before you jump straight into buying an annuity you consider each option carefully, as once selected it cannot be changed.

Another option you can choose is to take out a tax-free cash lump sum. Generally speaking, you’re able to extract a maximum of 25 percent from your pension plan, which will not be tax deductible. Although this option means your overall pension will be lowered, you’re then able to invest the lump sum in other schemes.

Another way to secure cash once you’ve retired is to take out an Equity Release scheme. This involves taking out a loan on your property or selling all or part of your home in return for a regular income or a lump sum. They can be great for obtaining a lump sum of cash from your home, but are not always the best option for everyone. Consequently, make sure you do your homework before agreeing to sign up for one.

This is a lifetime mortgage. To understand the features and risks, talk to a financial adviser. Taking out a lifetime mortgage could affect your tax position, your eligibility for means tested benefits and ability to move or sell your property. A lifetime mortgage will reduce, possibly to nothing, any inheritance you decide to leave.

So, before you retire, make sure you’re up to speed with your financial situation. By spending just a little bit of time researching your options now, you will save yourself from a potential hardship come your retirement, meaning you can fully enjoy your new found freedom!

This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.

Victoria Cochrane writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.

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As an alternative to target retirement date or risk based mutual funds, many open architecture 401(k) providers allow retirement plan advisors to create their own managed models for inclusion within a plan’s investment menu. One of the reasons for doing so is the ability to create an asset allocation strategy that utilizes investments from multiple investment managers. A number of these advisor-managed models often include a passive investment component, i.e., index mutual funds. The popularity of these ‘passively managed’ offerings–beyond their ability to consistently generate market-like returns–lies in their relatively low cost.

Whereas retirement plan advisors have historically only had the option of using index mutual funds as the passive component of their managed models, many retirement plan providers have recently made exchange-traded funds (ETFs) available for inclusion in a 401(k) plan’s investment lineup. Like index mutual funds, passively managed ETFs effectively track their benchmark and have low expense ratios.

One of the primary differences between ETFs and index mutual funds is that ETFs in taxable accounts can be traded intraday like stocks. However, most retirement plan platforms only price ETFs once a day. In this regard, they trade exactly like mutual funds. The primary benefit, then, of choosing an ETF over an index mutual fund in a retirement plan would seem to be its lower expense ratio. But while one might assume that, all things being equal, the option with the lower expense ratio would be the better investment choice, all things in this situation are not equal. We can’t forget that an ETF in a retirement plan is likely to charge a commission for both the purchase and the sale of the ETF whereas a majority of index mutual funds are “no load” and do not charge a purchase commission. That is not to say the ETF may not be the better choice–it very well could be depending on the advisor’s investment management strategy for the model.

If you are evaluating whether an ETF or an index mutual fund is better suited for your managed models, you should consider the following:

* ETF commissions charged by the plan provider: A $1000 investment into an index mutual fund will result in a $1000 balance. However, if your plan provider charges a commission to purchase an ETF, a $1000 purchase will result in less than a $1000 balance since the commission amount will reduce the amount of the proceeds. There will also be a subsequent commission charge to sell the ETF.

* ETF share price: If your open architecture 401(k) plan recordkeeper charges a commission to buy and sell an ETF, the ETF with the higher share price will result in a lower commission charge. For example, assume there are two S&P 500 ETFs that you are considering with identical expense ratios, you are seeking to purchase $1000 worth of ETFs for your plan, and your retirement plan provider charges a $0.05 per share commission. If one of the ETFs is trading at $100 and the other is trading at $50, your commission amount will be double for the $50 per share ETF since you will be purchasing twice as many shares. Whereas the share price of a mutual fund is rarely a factor used in evaluating an option, the same cannot be said for an ETF.

* Expense ratios of both products: Assuming the ETF has a lower expense ratio, but also charges a commission, it is likely that you will have to hold the ETF a longer time period for its superior performance (due to the lower expense ratio) to compensate for the purchase and sale commissions. The time period will be a direct result of how much lower the expense ratio of the ETF is than that of the index mutual fund.

* Availability of the product to track the desired index: Whereas both index mutual funds and ETFs have products that track common market indexes like the S&P 500, Russell 2000, and the Dow Jones Industrial Index, ETFs typically have more specialized funds available. Some examples include funds that invest solely in the China Small Cap, Consumer Stables, Biotechnology, and Malaysia indices.

One of the primary benefits of using an open architecture 401(k) plan provider is the ability to include either ETFs or index mutual funds in the plan’s core investment lineup or within a managed model. You will not be limited to proprietary products or to those that only pay revenue sharing. If your plan’s investment menu is not limited in this regard, a plan advisor should be able to implement strategies similar to those used in non retirement accounts to best achieve the stated investment goal of the model.

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Throughout the years, folks have selected mutual funds as the primary vehicle when saving for college costs. Although there are many variations of mutual fund based plans-from the traditional brokerage account to the newer 529 plans; there is even a Education IRA that is popular as well. The latter plans were developed so that a person could save for college, using after tax money and based upon the underlying mutual funds, the person could enjoy tax-deferred savings

A lot of the financial press has been dedicated to promoting the virtues of these savings vehicles from the standpoint that college costs are rising faster than inflation and a family needs to accelerate their savings using these types of plans. However, hidden in the fine print was the unfortunate realization that these types of vehicles could, in fact, lose money! How many families were shocked when their hard-earned money evaporated when the stock market declined 35% decline in the S&P 500 Index from 2000-2002-only to have it go down another 46% decline from October 2007- October 2008?

The problem with a lot of college planning techniques is that money is typically invested in mutual funds inside these plans and those funds are 100% at risk to loss due to stock market downturns thereby subjecting the invested money to the 46% and 35% declines listed above.

So if you can lose money in mutual funds, how do you save for college? That’s a good question and the simple answer is that “it depends”. This is a simple answer that many quality financial advisors use to determine the right solution for your needs. It is also a way to do a proper job for any potential investor-thereby not throwing the “latest and greatest” product or plan at a potential client!

Generally speaking you could have put money into a tin can for the last 18 years and had more money than investing in the market! Hmmm, let’s say that again-more money in a tin can than the market-whatever do you mean? First off, you need to start with some kind of deposit, let’s say $50,000 or the amount necessary to accumulate $50,000 in 18-years which in this case would be $231.48 per month (assumes no interest or taxes paid). Now, let’s think about your own situation, if you had put away that money-knowing full well that it’s not earning a penny-would you be happy with that? “It depends”. There he goes again with that simple phrase! If you started with $50,000 and because of the market it is now worth $25,000-then the answer is an emphatic YES! If you had $50,002.50-maybe. If it was worth $101,290.83-definitely NO! What about $79,938.88, again definitely NO!

But, how would you guarantee< $79,938 or $101,290 to be there in 18-years? Certainly not from a tin can-right? Correct! These numbers represent investing $231.48 per month for 18-years at an interest rate of 4% or depositing $50,000 into an account that pays 4% for 18-years. But where could one find a steady 4% interest rate? One place is a fixed, deferred annuity. A fixed annuity is a safe savings vehicle brought about by an insurance company. Your money earns a fixed interest rate declared by the insurance company, using not less than 3% annually. Some annuities pay a multi-year guaranteed rate of interest, which can be 4% or higher depending on the term of the plan.

Now are you ready for the good part? Wait, you are telling me that having invested $50,000 18-years ago is now worth $101,290 is not the good part? Yes. It is a very good part, but let’s get back to our original discussion about college savings. If you are a parent whose son or daughter is approaching college and much like your peer group, you have saved money in (my opinion) the wrong places-ie. Mutual funds, you are now going to be faced with another problem: Financial Aid eligibility! Without getting too much into detail, all the money that you’ve invested for their college may now go against you for financial aid purposes! However, if you had invested in a fixed annuity, do not worry because those monies are sheltered from the financial aid formulas. Now, your family (depending upon many other factors) can reasonably expect to receive some financial aid that you may not have received due to money that is open to discussion on your balance sheet!

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SBI contra fund is a open ended equity scheme which invests in equities which are out of favour in the market. This fund was launched in 1999, with a minimum application amount of Rs 3000. There is no entry load for investing in this fund. But if you withdraw your fund within one year of investment, then you will be charged 1% of the amount as exit load. If you withdraw your amount after one year, then you will not be charged any exit load.

SBI mutual fund systematic investment plan is available for this scheme also. Under the recently launched “SBI Chota SIP” scheme, you can invest a minimum amount of Rs 100 per month or under systematic investment plan scheme you can invest a minimum amount of Rs 500 per month. These investments can be made either monthly or quarterly in advance. You can also choose sip auto debit facility for making monthly payments. For availing auto debit facility, you have to sign the bank authorization form along with the mutual fund application form. Once your application form is processed, your will get your updated statement. Once the monthly payment starts, you will get an updated statement every month with the updated units purchased in the folio.

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State Bank of India is one of the most trusted public sector banks in India. If you are a beginner in investment then SBI SIP plans may be good option for you. Here are some SBI SIP mutual funds available.

Magnum Equity Fund – Minimum application of thousand rupees is needed and SIP is Rs. 500/month for 12 months.
Magnum Tax Gain – Minimum application amount is Rs 500 and minimum SIP amount is Rs.500/month for12 months
Magnum Index Fund – Minimum SIP amount is Rs.500/month for12 months
Magnum Sector Funds Umbrella – Minimum investment amount is Rs. 2000 per sector and minimum SIP amount is Rs.500/month for12 months
Magnum Global Fund – Minimum SIP amount is Rs.500/month for12 months
Magnum Midcap Fund – Minimum SIP amount is Rs.500/month for12 months
Magnum Mutlicap Fund – Minimum SIP amount is Rs.500/month for12 months
Blue Chip Fund – Minimum investment – Rs. 5000 and in multiples of Rs. 1000

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The most common way to determine how much money you’ll have is to use a pension calculator. Based on information you input about such things as your current salary, your savings and how long you have left until you retire, such a tool will be able to calculate how much money you can expect to receive when you do finally call time on your working life. Not only that, but it’s also a great tool for allowing you to see if you need to adjust the amount you’re saving towards your pension now, in order to have an adequate sum for your retirement.

When considering how you’d like to receive your money, there are a few factors you need to be aware of. For example, if you’ve been paying money into some form of pension scheme, such as a money purchase plan, you’ll need to turn that money into an income once you retire.

According to the experts, the best way to do this is to purchase an annuity. This basically means you pay a sum of money from your pension fund to an annuities provider, who in turn will transfer it into an income for you. This will continue for the remainder of your life. There are several types of annuities available -conventional annuity with a level or changing income, with-profits annuity, or unit-linked annuity – which can provide you with various different advantages. Which one you opt for is dependent on your individual circumstances and will affect how much cash you receive. It’s absolutely essential however, that before you jump straight into buying an annuity you consider each option carefully, as once selected it cannot be changed.

Another option you can choose is to take out a tax-free cash lump sum. Generally speaking, you’re able to extract a maximum of 25 percent from your pension plan, which will not be tax deductible. Although this option means your overall pension will be lowered, you’re then able to invest the lump sum in other schemes.

Another way to secure cash once you’ve retired is to take out an Equity Release scheme. This involves taking out a loan on your property or selling all or part of your home in return for a regular income or a lump sum. They can be great for obtaining a lump sum of cash from your home, but are not always the best option for everyone. Consequently, make sure you do your homework before agreeing to sign up for one.

This is a lifetime mortgage. To understand the features and risks, talk to a financial adviser. Taking out a lifetime mortgage could affect your tax position, your eligibility for means tested benefits and ability to move or sell your property. A lifetime mortgage will reduce, possibly to nothing, any inheritance you decide to leave.

So, before you retire, make sure you’re up to speed with your financial situation. By spending just a little bit of time researching your options now, you will save yourself from a potential hardship come your retirement, meaning you can fully enjoy your new found freedom!

This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.

Victoria Cochrane writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.

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