Tips for investing in Mutual Funds

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An investment made up of a pool of funds collected from many investors for the purpose of investing in securities like stocks, bonds, money market instruments etc. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.In simple, a mutual fund is a professionally managed type of collective investment that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.

Its not a simple task. Deciding the best mutual fund is an important task. The first thing to decide is about the  purpose of the mutual fund like retirement, education, or any other purpose, as the level of risk is based on the purpose.

If your purpose is for retirement fund or capital gain then you can go for equity funds. Equity funds are not advised for long term. For retirement you can also go for other low risk investments, if you don’t want to invest in equity. But the longer you stay invested, the better return you get. An important point to note is that mutual funds are not risk free. It is adviced to read all the documents carefully before investing.

Think twice before you decide the plan. after you select the type of mutual fund, collect as much information as possible. Get the list of the companies and also get the prospectus. Befor inverting in a fund, read the prosectuse to find out how long the fund has been operating. Newly created or small funds sometimes have excellent short-term performance as these funds may invest in only small number of stocks. But as these funds grow larger and increase the number of stocks they own, each stock has less impact on the fund’s performance. You can get a better picture of a fund’s performance by looking at how the fund has performed over longer periods.

Fund charges investor fees and expenses. Get a clear picture of fees and associated cost, taxes for all funds and how they affect your returns. Ask all the doubts, terms and condtions before you invest your money.

Gold: The best investment

A couple of weeks ago I said about the importance of gold as an investment. You can read it here. Do you know that the gold price is increased by $200 per ounce, thats an increase by 12.5%.

This increase is due to the shaky stock market. Gold moves opposite to the market. Its the safest investment. Now its getting close to $1750. I think for now it will not increase as it did in previous two weeks. It will move slowly and its the best time for people to buy gold. It will take another month to increase at that speed. You can buy gold bar or gold coins. I am happy that I invested in gold instead of shares.

Gold is consider as the best investment. It helps you during any crisis. Unlike shares and other type of investments, you dont lose anything in case of loss(which is not possible). You will have a minimum guaranteed amount.

Buying foreign Currency: Say a Welcoming “Hello” to Good-luck

Luck enjoys full freedom. Sometimes, it can shower fortunate bliss on you or sometimes it can snatch all you have. But, we the human beings have sheer faith on luck, isn’t it? We love to try our luck for benefits. At least, if it doesn’t involve any harm, what is wrong about trying luck? If you believe that you are enough fortunate, I can suggest you a way which can bring shining luck upon you. Why don’t you try buying foreign currency? Let me help you with this.

Image via WikipediaMost of the people love buying foreign currency when they are in abroad for bearing their expenditures in that country. But, have you ever considered it as a profit-making business?

Let me help you with some guidelines for buying foreign currency.

Market condition: Since, you are going to buy a currency which is unknown to you, before making your investment a close study of its market value can be of benefits. You should know well for which you are investing your hard-earned money. If the currency has a good market scope of increasing its exchange value, don’t waste your time for purchasing because luck often gives you second chances.

Hire a dealer: A dealer can be of great help when buying foreign currency. They are the skilled person who has in-depth knowledge about the market condition of the currency as well as what to invest and how to invest! They can give answers to your questions about the currency, but, since it is an age of cheaters and treasons, before hiring such currency dealers don’t forget to check their legal and professional license (It’s necessary). If you are buying Iraqi currency, ask the dealer to show their license provided by the U.S. treasury Department and Better Business Bureau (BBB).

While buying foreign currency, it is better to stay secure for acquiring a good-luck.

Gold as an investment

Image via WikipediaAmong all the prescious metal, gold is the most popular as an investment. Gold is used as an investment from years. Throughout the history of the human civilization, old has played an important role in the currency and trading activites. Gold helps you during major crisis. History is the evidence. In all the major crisis like world war, inflation period or any other economic crisis. Even when the stock exchange fails, gold helps you.

Gold helps you anytime. It can be bought and sold anytime you want. If you don’t wanna sell your gold, you can get a gold loan. The increase in th price of the gold will be more than the interest you pay.

My dad gave me some money to buy a new car when I was in the first year of the college in 2007. But I bought 20 pounds of gold instead of a car. I got a gold loan for that 20 pounds of gold and bought another 10 pounds of gold from the loan amount. Today the value of the gold I have is more than three times the amount I paid for those 30 pounds. That day the only thing I thought was that if I buy a car then I will pay three times the value of the car untill in the next 4 years on gas, service and maintainence( the four years for my graduation). 

 The price of the gold depends on some reasons like demand, central bank, industral needs, short selling, war or national emergency etc. the interest rate of the central bank and the price of the gold are interdependent. When the interest rate increases the gold price decreases and decrease in interest rate will increase the gold price.

The most traditional way of investing in gold is buying gold bars. Another way is to buy gold coins. The gold bar genrally carries lower price premium then the gold coins. But the gold bars carry risk of forgery due to their less stringent parameters for appearance. Buying jewelleries is another type of investment. It can be considered as a investment as well as a form of adorment.

For gold investors, gold certificate helps to avoid risk and cost associated with the transfer and storage of the physical bullion. Bank may issue gold certificate for allocated and unallocated gold. Unallocated gold certificates are a form of fractional reserve banking and doesnot guarantee an equal exchange for metal in the event of a run on the issuing bank’s gold issuing.

Many bank offers gold different kind of gold loan where gold can be bought and sold like a currency. People has to pay tax at some percent of their profit to the government. The percentage depends on their investment. From January 1, 2012, all the purchases that exceeds $600 per year will be required to fill IRS tax form 1099 due to section 9006 of the U.S Patient Protection and Affordable Care Act.

Tips for investing in stock market

Investing in stock market is not a simple thing. Many people lost everything in the stock market. It involves huge risk. You are trading at your own risk. No one is responsible for your loss in stock market. If you are looking for investment without risk then check my post on riskless investment.  It’s always suggested to get the information from some people who deal with shares. There are some small common mistakes to be avoided. Analyzing the stock market before investing is the most important part in it.

Warren Buffett has suggested that every investor should be able to understand basic accountancy principles, an annual report and stock market history. Without this basic knowledge you can’t manage your investment.  

To begin your investment, you should select a stock broker first or wait for a company’s IPO. The stock broker acts like an agent for you in the stock market. You don’t need to go anywhere to get the stock broker. You can do all these things online.

Nowadays people use some software which helps them in trading in the stock market. This software helps them managing time, risk, investment etc. It helps you in many cases such as stock charting and technical analysis. If you want you can buy them. Each software has its own advantages.

Invest in the best place. Before investing go through the particular company’s profile, current BOD, CEO and other management people’s profile. Never invest in any company only because it’s earning huge profit.  Don’t invest all your money. There is no guarantee that the company or the stock market will be same as it is today. Its dynamic in nature and anything can happen at any time.

Top Debts

 Debts are increasing in everybody's life around the world due to the financial shortages. Debt may seem to help people but sometimes it creates more problems.Many people are relying on debts for their everyday life. This may help them at that time but it may lead to many problems in the future. People borrow many types of loans. People should try to avoid debts and pay their currents debts as quick as possible. Let's talk about different types of debts.

Credit card debts: A debt used by many people everyday. Its a small plastic which helps people in buying without having money. Credit card helps you to afford something which you can't afford. Everyone likes t get more than what he\she should get and it may look good for sometime but it will show its cause in the future. To know more about problems in credit card debts check out here.
Students loan: This is loan for education purpose. You may think that students loan is good for your future. But it not as good as you think. This is the place where all your debt cycle starts from. You invest a huge amount in your studies. But at the end of the graduation all you get is a huge debt and a small job. You spend 10 to 20 years of your life in paying it. Those 10 to 20 years are the most important part of your life. In those years you pay the loan installment first and then take the balance amount of your salary to home. Your balance salary will not be enough for other expenses. Then you will have only one option left and that will be getting other types of debt.
Home Loan: I can never consider it to be a bad form of debt as I have a home loan. Fankly speaking I dont think it as a debt. I consider it as an investment. I purchased a home a year ago and now its value is double of my loan amount. Home loan will be considered to be bad only when people buy without thinking. Before applying for a home loan one should think of many things like whether they can manage their life with the balance amount and any other expense they have in the future which can affect their life. Even though its like an investment, you should never get a situation where you sell your home to pay off the debts.
Auto loan: When I was in college, I used to walk 4 miles to go to college from home. Many of my friends suggested me to buy a car, but the only thing I said was that "I don't wanna spend thousands of dollars for a car on which I have I to spend few dollars for gas every week". I prefer walking over riding a car( another truth is that I am a lazy guy and I can't maintain it. I prefer sleeping instead of  washing and cleaning it in the weekends). Even now I prefer in using the public transport. I dont wanna spent huge portion of my earnings in paying for the auto loan. I have many things to buy.
Retirement loan: A retirement fund your investment. Its investing in your future. I dont prefer you to get retirement loan .i.e 401k loans as it will restrict you from moving away from your employer and getting a new job. You should consider many things before taking a retirement loan like cost of loan, its effect and the purpose. It depends but try not to use it untl you its the only option for you.
Personal loan: Personal loans are the borrowings from family and friends. Many prefer it as its easy to get it. I never prefer personal loans as it may cause the relation.
Did you ever calculated the extra money you paid(or will pay) in all the debts. Its easy to calculate it. Think on how much you can save and how you can use them

Riskless Investments

Investment is putting money into something with the expectation of gain, that on thorough analysis, has a high degree of security of principle, as well as security of return, within an expected period of time. Everyone invest his\her money somewhere. Investment also involves risk. The risk level of the investment depends on how much money is involved and how much return does we expect from it.
But many of us are either afraid to invest or dont know much about investments. For those people  their are some risk free investments.

1. Bank deposits:   The easiest way to invest your money. Even though its doesn't give much returns like other investments, its still a better option. You can use the CD i.e Certificate of deposit ( or term deposit). It offers a higher interest rate and is virtually risk free.
2.Retirement plan(401k): Investing in your retirement plan is a best place to invest. Its very useful if we utilize it well. Many of us realize its important very lately, when we have few years for retirement.
3. Real estate: Investing in the real estate is never considered to be a waste. Every year the value increases. Even though it is risky while buying it, but if you own it, its never considered to be a loss.
4. Gold:  It is been used as an investment from years. Of all the precious metals, gold is the most popular as an investment.^[1] Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest.) Its known to everyone that whenever their is a crisis like war or stock market crashes, gold value increases. As per my analysis gold value is increasing at the rate of 30% p.a.
Their are plenty of ways to invest your money but these are simplest risk free investments for people who either are not ready to take risk or don't know much about investing.