Mutual fund fees drop, saving investors money
NEW YORK -- It hasn’t been this cheap to invest in mutual funds for decades, possibly ever. Expenses dropped again last year for both stock and bond funds, and they’re at their lowest levels since at least 1996, as a percentage of their total assets … Continue reading at nwitimes.com
HDFC Mutual Fund compensates investors of front-running losses
New Delhi: Nearly nine years after a major front-running case at HDFC Mutual Fund, the leading fund house has begun compensating those investors who had suffered losses due to the manipulative activity of its then equities dealer. While the dealer was … Continue reading at zeenews.india.com
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Can Foreign Investors Buy U.S. Mutual Funds?
U.S. securities laws don’t put prohibitions on investments by foreign investors, according the same protections that U.S. citizens get. However, from a practical standpoint, many companies that sell proprietary mutual funds to investors have internal … Continue reading at nasdaq.com
Top 5 Mutual Fund Holders of United Technologies (UTX, VTSMX)
United Technologies Corporation (NYSE: UTX) is an industrial manufacturer of products for aerospace, defense and building systems. It is well known for Otis elevators and Pratt & Whitney aircraft engines. As of March 2016, Honeywell International Inc … Continue reading at investopedia.com
The Motley Fool: Choosing mutual funds no guarantee of wise investing
The E-Edition includes all of the news, comics, classifieds and advertisements of the newspaper. And it’s available to subscribers before 6 a.m. every day. Q: Can I avoid making dumb investing mistakes if I stick with mutual funds instead of stocks? Continue reading at dispatch.com
Position your portfolio for growth with one of America’s bestselling mutual fund books Are you looking for a trusted resource to h…
Learn How to Master Mutual Funds and Continuously Receive Passive Income
“I HIGHLY RECOMMEND this book if you want to get a quick grasp on investing in Mutual Funds”– Markey D.”excellent job of breaking…
Investment in mutual funds, single fund: SECP identifies limits
The Securities and Exchange Commission of Pakistan (SECP) has said that the Rules and S.R.O. 261(1)/2002 (S.R.O.) provide that investment in mutual funds shall not exceed the 50 percent of the fund and investment in single fund not to exceed the 20 percent … Continue reading at brecorder.com
Sebi asks mutual fund houses to mention commission given to distributors in account statement
MUMBAI: Investors will soon get to know how much portion of their amount is used by mutual funds to pay distributors commission. The Securities and Exchange Board of India (Sebi) has asked mutual fund houses to clearly mention the actual commission … Continue reading at economictimes.indiatimes.com
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SBI Mutual Fund to conduct awareness programme
To create awareness on safe investment options SBI Mutual Fund will conduct an awareness programme on investment formula in Dakshina Kannada district. The campaign is in line with the Union government’s vision of financial inclusion, said Jayesh Shraff … Continue reading at nyoooz.com
Hidden Mutual Fund Fees That Are Robbing Your Returns
So you’ve accumulated a nest egg by investing in mutual funds. Congratulations! That puts you ahead of the game. But to grow an even bigger stash, try squeezing out the fees. “Make sure you pay as little of that gross return in fees as you can,” says Mitch … Continue reading at msn.com
* Dollar cost averaging
In addition to diversifying into different assets, you also should diversify your investments over time using dollar cost averaging.
Dollar cost averaging is a simple technique, and if you’re investing on a monthly basis, you’re already taking advantage of it.
Suppose over the course of a year you want to invest ,600 into a stock fund in your 401(k) account. To make saving easy and regular, you have your company withhold 0 from your paycheck each month.
Under your plan you’d invest 0 in January. Let’s also assume that the market hit an all-time high in January. The next month the market goes down by 10 percent.
So you’ve lost 10 percent on the money you invested in January, but if you continue with your regular investments, your 0 will buy more shares in February than it did in January because of the drop.
By investing regularly, I hope you see that dollar cost averaging forces you to buy fewer shares when securities are expensive, and lets you buy more shares when they’re cheaper. It’s not exactly market timing, but it has a similar effect.
Dollar-cost averaging can’t guarantee you’ll make a profit, but it can reduce your risk significantly. To see the power of dollar cost averaging, consider investing in stocks during the Great Depression.
From 1929 to 1932 stock prices fell 90 percent. However, if you had used dollar cost averaging from 1928 to 1938 you would have shown a profit of about 7 percent per year.
Bad way to select mutual funds
Before we get into the topic of selecting specific mutual funds, I’d like to say a few words about using funds to beat the market.
Unfortunately, many people don’t pick funds very well. They just grab the most recent copy of Money magazine and open to the page titled “Best Performing Mutual Funds”. They look to the top of the list, and send their money to the number one fund because, after all, everyone wants to invest with a winner.
Although there are worse ways to select a mutual fund, this is not the best method. The problem with this method is that you’re investing based on past performance. If you send in money to the fund today, you don’t care what the fund did yesterday, you care about what it will do for you tomorrow.
Investing in yesterday’s winners
Often, when you follow the “invest in yesterday’s winners” strategy, yesterday’s winner’s become tomorrow’s losers. With over 6,000 mutual funds available, to get to the top of the list the number one fund may have had to invest in risky securities.
When these risky securities came into fashion, the fund did well. The fund rose to the top of the fund rankings and money is now pouring into the fund.
But the fund managers don’t know what do with all this new money, so they invest in securities that they don’t understand. Soon, the market will switch away from the securities that made the fund a hit in the first place, and the new investors will wind up taking losses.
Another problem with the “invest in yesterday’s winners” strategy is that you’ll probably pay more in expenses than necessary. When a fund has done well, fund managers know that many people will pay for yesterday’s performance, so they place heavy sales commissions on the fund or raise the fund’s management fees. After paying all these extra expenses, it’ll be even tougher for you to beat the market.
Copyright 1997 by David Luhman
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