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How to Maximize Your 401k Mutual Fund Returns
When it comes to 401k's there is an overabundance of sad stories. Here is one that at least has a happy ending—and it's getting happier all the time.
Last year (in 2002) a friend of mine—let’s call him Jack—phoned and asked if I could help...
Investing In The Stock Market – 9 Power Packed Tips
1. Do not spread your money too thin.
My friend has a little over $200,000 invested in the stock market through 27 different Mutual funds. In my opinion, 27 Mutual funds is 27 too many collecting load fees, management fees, commission fees,...
Money Making Ways - Smart Thinking and Investing
Common sense is the most important but least used while
investing. It's not always the case that we need a huge lump-sum
and have to invest it. Remember this whenever you think of money
making ways. Investment is something that has to be done on...
PARACHUTE INVESTING
PARACHUTE INVESTING by AL THOMAS Ever jumped out of an airplane? It’s OK if you have on a parachute. Pretty dumb if you don’t. Every buy any stocks, mutual funds or Exchange Traded Funds? It’s OK if you know how much you are willing to...
The Overlooked Stock Market Miracle
Are you chasing stock returns that just haven't materialized? Don't forget the easily overooked index funds. Not as glamorous, but a money maker overall. Do you know which one out performs 80% of the market?
Would you like to beat 80% of the...
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Mutual Fund Versus Stocks
If you have money to invest, you might contemplate investing in
mutual fund. What is mutual fund? Mutual fund is simply a
collection of stocks that are bought using money pooled from
various individual investors. Historically, average mutual fund
returns 2% less annually than a stock market index.
While the return is less than stellar, there are several
advantages of investing in mutual fund. They provide
diversification, economies of scale and liquidity. So, the
question you want to ask yourself is whether you want to have a
smaller return for the advantages mentioned previously.
While two percent difference looks small, it is not pocket
change. Investors who set aside $ 1 a day, would have $ 562,000
of savings in fifty years if he invests in stock index fund
growing at 10.5% per annum. The same investors would collect
'only' $ 271,000 if he invests in average mutual fund that grow
at 8.5% per annum.
There are also disadvantages investing in mutual funds. There is
a problem on how to choose the 'right' mutual fund. If average
mutual fund returns 8.5% annually, the below-average fund will
give you less than that. Just like picking a stock, you would
find some stocks that outperform the average and other stocks
that do not perform well.
The next question would be if we investors can do better than
stock market index fund of 10.5%?
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A lot of people believe they
can. But, the path ahead is full of obstacles. First, you need
to get educated about stocks in general and how to calculate the
fair value of a common stock. Next, you need to open a brokerage
account to execute your buy and sell order. Finally, you need to
keep abreast of new developments. Business comes and goes.
Industry rises and falls. Examples of industry that used to
dominate are: typewriters, cassette players, sewing machine and
traditional camera. If you don't read often, you may predict
that certain stock has a high fair value even when the entire
industry is collapsing.
It all comes down to individual investors. Would they want to
learn more and get a few more percentage return each year? Or
would they let someone else manage their money? Me, I prefer to
learn how to manage my own investment. Sure, it is time
consuming. But giving a little bit of your time may give you the
potential to double your retirement money in fifty years. The
potential is rewarding and someday you might even manage someone
else's money.
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