Mutual Funds for First Time Investors

For those new to investing, a mutual fund can be an excellent option. The fund is built from a collection of stocks, which are hand-picked and overseen by a money manager. Often, these funds are available to multiple purchasers, and this group of investors help keep the costs associated with the fund down. This on its own sounds like a pretty great deal to me, because it offers so many possibilities, but it also, unfortunately has some drawbacks.

Perks

Personally, I think mutual funds are the bee's knees. For one thing, I like money, but I'm not interested in following the stock market daily. For another, I know a great money manager. And finally, I like to spread my money around a bit. Let me explain each of these in more depth.

I like money. I don't know anyone who doesn't like it. But most people I know do not enjoy reading the financial pages with a fine-toothed comb. However, there are people in the world who love to follow stocks, and we'll call them money managers. These finance wizards enjoy predicting the stock market and will hand-pick stocks for you to place in your mutual fund basket - win-win, in my opinion

Fortunately, I know a great money guy. He works at a small local bank and is one of those financial wizards...and someone I can trust with my money. These two very important principals can work for you as well. Seeking out these fellows at your bank can help you get to know an excellent manager you can trust.

Diversifying is also an extremely important financial principal, and luck be had, mutual funds offer diversification as is. By picking a variety of stocks, your money manager diversifies your stocks - and reduces your risk -without too much effort on your part.

Drawbacks

Of course, I know there are risks involved in every investment, so before I get too gung-ho, I must weigh the risks. The drawbacks to the mutual fund include finding a good money manager and watching fees.

I find these risks to be a combination factor. If you don't have a good money manager, you will most likely also have trouble with fees. If you find a good, honest manager, you will have little trouble with fees.

Therefore, your most important task in setting up a mutual fund is finding a good money manager. Most banks have an in-house money manager or two, but it may be difficult to determine the risk. Often, it is best to start is by asking your friends or family for references, then meet with the manager. If you hit it off, your money is managed...by a trust-worthy and capable individual.

Mutual funds may be a first-time investor's dream, but it is always important to find your best money-ally in an excellent money manager. So be cautious, have fun and reap the reward!

For more information about mutual funds and index funds visit MomVesting.

Simple Mutual Fund Strategy For New Investors

If you are new to investing, you probably want to find a simple, easy to use strategy that will get you started without having to do a lot of research, learn complicated trading methods or start with a lot of money. The good news is that there are plenty of great ways to do this and I will share one here.

Before you get started, you need to understand what a mutual fund is. These popular investments are professionally managed, diversified pools of capital that invest your money based on the individual funds objective. Your dollars are combined with all other investors and the funds management team purchases stocks, bonds or other securities that meet its objective.

You receive shares in the fund and the funds assets are priced every day at the close of market trading. When dividends, interest and capital gains are generated by the fund, they are distributed back to every investor in the fund based on the number of shares that you own.

Your Investment Strategy: Keep it simple. Sometimes the best strategies are also the easiest to understand and implement. Start by selecting ONE high quality, no-load conservative, moderate or world allocation fund. These funds will buy a mixture of stocks, bonds and other securities that will provide a nice diversified portfolio to participate in the equity markets and provide downside risk protection. Many of these can be purchased for $100 to $250 and then you can make additional deposits whenever you chose.

Systematic Investing: If you are going to build your net worth and personal wealth, you should also make an effort to invest on a regular basis. This can be done by using a systematic investing approach that helps you to structure your investments on a quarterly, monthly or even a weekly basis. Try to establish an annual contribution goal and then divide it by your desired time frame. This will help you to structure a plan that will keep your investment program moving forward.

Automatic Accumulation: Your next step should be to find a way to make your systematic investments... automatic. This can be done through a payroll deduction, an automatic electronic transfer, a pre-authorized bank draft or by making a direct deposit manually. If you are serious, you should establish an automatic electronic deposit, because you will not need to take any further action and your investment program will be on auto-pilot.

Asset Allocation Strategy: As a final step, you will need to look at your strategy on a regular basis. I recommend quarterly. As your investments, net worth and personal wealth grow, you should eventually add some additional diversification to your program by adding one or more no-load funds to your portfolio. By adding a great bond fund and some international exposure can help your overall returns. When you add funds, you should also set up an automatic regular investment into each of the new funds as well. This will force you to keep savings and systematically expand your personal wealth.

Summary: Getting started in the investment world doesn't have to be complicated, expensive or take a lot of your valuable time. Just follow this short outline and you will be up and running quickly. Once your program is on auto-pilot, sit back and let it work. You will be pleasantly surprised by your progress when you sit down to review your investments 12 and 24 months from now. Small, simple steps can make a big impact on your bottom line.

To discover additional investment, financial and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here. The first step to creating wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.

About the Author:

Keith Maderer is a financial expert and has been a investment and tax adviser in the Western New York area for over 30 years. He is the owner of SENIOR Financial and Tax Associates and the founder of the Maderer Foundation, a private scholarship program.

Keith is also the author of "How To Get Your College Education For Less". Available on Amazon.com - ISBN No: 978-1-4538-2053-7.

You can get your FREE Wealth Expansion Kit, or check out his blog by visiting http://www.sftaweb.com/

Avoid The Five Worst Mistakes For Mutual Fund Investors

If you are looking to start investing, mutual funds may be your safest and easiest way to begin building wealth and an investment portfolio. But you should be aware of some of the most common mistakes that are made before investing your hard-earned dollars.

As with any type of investment, certain risks are unavoidable. You must be comfortable with the fact that the markets move up and down and unless you have a crystal ball, picking the highs and lows is not an easy task. But everyone can avoid the following mistakes, just by taking the time to ask some questions and doing a little research.

Five Common Mutual Fund Mistakes That Will Cost You:

1. Buying Heavy Commissioned Funds: With all the fund choices out there, you should be looking for No-Load funds first. These have no commissions. If you are looking at funds that are A, B, C or Adviser class funds, you are probably going to pay too much for the fund. A-class are front load commissions, B-class are back loaded with commissions, C-class funds carry a much higher annual expense charge every year and Adviser-class funds are usually one or more of the above.

2. Placing Everything One Aggressive Stock Fund: One of the biggest mistakes that is made by many fund investors is to think that just because a mutual fund is a diversified investment, that having only one aggressive fund is all they need. There are many different types of funds and each invests in its own way. Aggressive funds are risky, money market funds are safe, bond funds have more risk than money markets and international funds can actually reduce risk if properly selected. If you only want one fund, it should be a broad-based fund that invests in stocks, bond, international and maybe some real estate or even precious metals and natural resources.

3. Delaying Your First Purchase: A problem that many new mutual fund investors run into is not getting started. They feel uncomfortable with moving their money out of cash into a fund because they may not believe they have researched enough or learned enough about the fund's management. Procrastination can cost plenty over time. Pick a nice balanced or moderate allocation fund and start adding money on a regular basis. As your savings grow, you can continue to research other funds and eventually add another to the mix as your account gets larger. Just Do It!

4. Market Noise Scares You: A big problem that I see every year is people who over react to "market noise". Market noise is the day-to-day fluctuations in the markets and the economy. If you have selected a good quality fund, let them do their job. Markets go up and markets go down, they change nearly every day. But if you watch it daily and it goes down for a week or two, don't panic and sell everything. It will probably change direction right after you do and then you will lose those gains. A 5% to 10% pullback every now and then is normal. Keep investing regularly and you will make more in the long run.

5. Listening To Others Advice: Friends, neighbors or co-workers may offer advice on which stocks or funds to invest in. Unless they are specifically qualified in some way, why would you want to use their advice. If they are an investment adviser, stock broker or financial planner it would be different. Hot tips from a friend usually end up losing money. If you do your research and find a quality fund, you will be better off than taking advice from your auto mechanic or office secretary.

Summary: Investing can be fun and rewarding for those that make it a regular part of their life. Start small and expand as your wealth and investment portfolio grow. If you avoid these mistakes, you should have a pleasant experience and learn more as you go. As with anything, experience builds expertise and the only way to get investment experience is to start investing. Make the most of your money and be patient. Time is a great tool in the investment world.

To discover additional investment, financial and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here. The first step to creating wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.

About the Author:

Keith Maderer is a financial expert and has been a investment and tax adviser in the Western New York area for over 30 years. He is the owner of SENIOR Financial and Tax Associates and the founder of the Maderer Foundation, a private scholarship program.

Keith is also the author of "How To Get Your College Education For Less". Available on Amazon.com - ISBN No: 978-1-4538-2053-7.

You can get your FREE Wealth Expansion Kit, or check out his blog by visiting http://www.sftaweb.com/

Regular Savings - Essential Investors Guide

How to open a regular saving account

A regular savings account is just like any other type of investment account, in that all a person needs to do is approach any of the banks, building societies or other financial organisations that offer them.

The best possible way to decide on which type of account to open is to look at not only the interest rate paid, but to also examine the amount of bonuses the specific institution will pay to its regular investors. Nearly all of the accounts will have a tax free allowance of £25 per month, with anything over being taxed by the Government depending on your tax bracket - meaning that this issue does not need considering by the consumer.

There are no real restrictions regarding who can open a regular savings plan, although many places often have a minimum and maximum age limit, with 16-55 being the most popular. Although it is partially tax free, it also will not affect the standing of any Individual Savings Accounts or ISAs that the customer already has.

Paying money in to a regular saving account

With most regular saving plans there is a minimum amount to be invested per month, although this is usually only around £15. Although this is only a small amount, failure to pay it will have significant impacts on the amount of bonuses the account may receive. While there is a minimum, there is no maximum amount that can be paid in per month, although only the first £25 will be tax free.

The advantages of a regular saving account

The main advantage of this type of savings and investments is that there is a guaranteed lump sum payable at the time at which the account matures, which is set when the account is created. This provides the insurance that should the institution invest the money poorly, it will not be lost - meaning that there is virtually no risk associated with this type of account.

Another advantage is when saving for children, child savings accounts can provide an excellent kick start to their adult life. If a parent starts saving just £40 per month for ten years, they can expect a minimum return of £5,220, with most actually coming in at more than that. Aside from Government sponsored schemes, there is no more effective way that a parent can save for their child.

If you are interested in reading more information about regular savings and investment plans then please visit the following links:

Scottish Friendly - mutual societies such as Scottish Friendly supply financial services products. Mutual societies are owned by customers, or members. As a result they have no shareholders to pay dividends to, or to account to, so they can concentrate on delivering products and services that meet the needs of their customers.