Claudia Eggers January 16, 2020 Mutual Fund
The four-letter word that no business can live with out and is referred to as the lifeblood of any business is CASH. Accordingly, the individual investor is better served when they think like a business and create cash flows to deploy with leverage into arbitrages. What did he just say? If these terms are foreign to you and you claim to be an investor you better go look them up because they are as old as salt in the financial world and are the best investment advice three self-made billionaires on Forbes 400 ever heard. If you do not know how to enlist cash flow, arbitrage and leverage into your investment plan then seek out a firm that does before it is too late.
Before you invest in a fund, look at the fees the company charges. You will notice these fees in the prospectus. If you are ambitious, you will be able to find the fee structure online. Always go with a fund that has a low expense ratio and stay away from 12b-fees. When buying mutual funds you will have various types of choose from. There are money market funds, municipal bond funds, corporate bond funds, mortgage-backed securities funds, U.S. Government bond funds, stock funds, and index funds.
Many investors try to play the game of picking individual stocks rather than picking solid mutual funds and then often wonder why they experience both difficulty and stress making money in the stock market. I tell investors that they should not be afraid to own individual stocks if they are willing to take the time to learn enough about the individual company or stock to make a rational businessman`s decision. And do not forget about valuation.
Unless you have a crystal ball or a time machine, accurately predicting the future gyrations of a stock or the markets is nearly impossible. It may be slightly easier to follow the trend and reallocate your assets close to bottoms and close to tops, but if you are an average investor, you do not have the time, temperament or training to do it well. Most financial and investment advisers do not either.
READ CLOSELY: How do all these fund costs affect you? Well, with the expense ratio which averages 1.6% per year, sales charges 0.5%, turnover generated portfolio transactions costs 0.7%, and opportunity costs - when funds hold cash rather than remain fully invested in stocks - 0.3%. The average mutual fund investor loses 3.1% of their investment returns to these costs each and every year. While this might not seem like much on the surface, costs would consume 31% of a 10% market return. Add in the 1.5% capital gains tax bill that the average fund investor pays each year, and that figure shoots up to 46%, nearly half of a potential 10% return. Do you feel like you are taking one or two steps back while trying to go forward yet?
No one offers the idea of buying investment properties which appreciate and allow you to harvest dollars out of them by way of refinance and adjust the rents to cover your cash harvest. Once you harvest it is time to deploy and like the seasons, you can do the same cycle over and over again increasing your wealth.
Tag Cloudmuthoot mutual fund calculator