Financial Answers

Top 10 Reasons To Buy A Mutual Fund

2012-02-13T20:12:00.000-08:00

Author: Arthur Miller

1. Mutual Funds Offer Diversification:
The beauty of a mutual fund is that you can buy a mutual fund and obtain instant access to a hundreds of individual stocks or bonds. Otherwise, in order to diversify your portfolio, you might have to buy individual securities, which exposes you to more potential volatility.

2. Mutual Funds are Professionally Managed:
Many investors don't have the resources or the time to buy individual stocks. Investing in individual securities, such as stocks, not only takes resources, but a considerable amount of time. By contrast, mutual fund managers and analysts wake up each morning dedicating their professional lives to researching and analyzing current and potential holdings for their mutual fund.

3. Mutual Funds Come in Many Varieties:
A mutual fund comes in many types and styles. There are stock funds, bond funds, sector funds, target-date mutual funds, money market mutual funds and balanced funds. Mutual funds allow you to invest in the market whether you believe in active portfolio management (actively managed funds) or you prefer to buy a segment of the market with no interference from a manager (passive funds and index mutual funds). The availability of different types of mutual funds allows you to build a diversified portfolio at low cost and without much difficulty.

4. Mutual Funds Have Low Minimums:
Many mutual fund companies allow investors to get started in a mutual fund with as little as $1,000. Schwab's mutual fund family has a minimum of $100 for many of their mutual funds.

5. Systematic Investing and Withdrawals with Mutual Funds:
It is simple to invest regularly in a mutual fund. Many mutual fund companies allow investors to invest as little as $50 per month directly into a mutual fund. Money can be pulled directly from a bank account and invested directly in the mutual fund. On the other hand, money can be regularly withdrawn from a mutual fund and be deposited into a bank account. There are generally no fees for this service.

6. Mutual Funds Offer Automatic Reinvestment:
An investor can easily and automatically have capital gains and dividends reinvested into their mutual fund without a sales load or extra fees.

7. Mutual Funds Offer Transparency:
Mutual fund holdings are publicly available (with some delays in reporting), which ensures that investors are getting what they pay for.

8. Mutual Funds Are Liquid:
If you want to sell your mutual fund, the proceeds from the sale are available the day after you sell the mutual fund.

9. Mutual Funds Have Audited Track Records:
A mutual fund company must maintain performance track records for each mutual fund and have them audited for accuracy, which ensures that investors can trust the mutual fund's stated returns.

10. Safety of Investing in Mutual Funds:
If a mutual fund company goes out of business, mutual fund shareholders receive an amount of cash that equals their portion of ownership in the mutual fund. Alternatively, the mutual fund's Board of Directors might elect a new investment advisor to manage the mutual fund.

While there are a plethora of investment options (individual stocks, ETFs, and closed-end funds, to name a few) a mutual fund can offer a simple, efficient way to invest for retirement, education or other financial goals, by Lee McGowan, About.com.

3 Things You Should Know About Credit Cards

2012-02-10T23:39:00.000-08:00

Getting into too much credit card debt can lead you into feeling like you struggling to get out of a sandpit. the more youtry to get out of debt, the deeper you sink in the pit. More than 60 percent of Americans are more that 30 days late on their credit card payments. Credit cards will be a thorn in your side until you decide to take action and get yourself out of the debt that has held you down.

Here is what you need to know about credit card debt.
1) Credit Card companies want you to only pay the minimum payments so that they can make the most amount of money off on you by requiring that you pay the interest plus a few dollars. A $500 credit card could take you 3 to 4 years to pay if you focus on paying the minimum payments only. So the higher your credit limit and the number of card that you have the worse off you are. Oay off the cards as fast as you can.

2) High Credit Card Balances hurt your credit score. Holding balances on you card that are 50% of your credit limits or higher will actually lower your credit FICO score. Hold a credit balance between 5 to 15% of your credit limits and watch your credit FICO score rise.

3) Inactive Credit card accounts can hurt your credit score and you in the long run. My rule is that if you have not used your credit card in the past year, then it is time to close the account with the creditor and cut up the card. You could acquire quick debt if you were ever to loss the card or have it stolen. It's a good practice to close the account and distroy the card.

I hope that my suggestions are able to answer any questions that your questions. Please reply if you have anything to add and would like to start a productive discussion.

Waiting on a New Stock Market Catalyst

2012-02-09T17:28:00.000-08:00

I had to share this article for those that have an interest in the stock market. The author Mitchell Clark knows his stuff and the information that he shares could help those people who are looking to make their mark in the global stock market. Please read and commit to start a dialog.

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Waiting...on a New Stock Market Catalyst

Author: Mitchell Clark

The catalyst we need for a sustainable stock market advance isn't yet present. Economic news still isn't strong enough to warrant rising share prices. While corporate earnings are mostly solid, expectations for earnings growth over the coming quarters are modest at best. This makes the potential for a bullish stock market highly very low.

As I've written previously, I would be happy if the S&P 500 Index would hold around the 1,300 level for now. All of last year's investment risks remain, but it's pretty obvious that investors have grown tired of thinking about the eurozone debt crisis. A Greek default is almost assured and, while this will pressure the euro currency, the news is already priced into the stock market.
What are holding the equity market at its current level are decent fourth-quarter earnings and reasonable valuations. This is a difficult market in which to make predictions, but there is a growing probability—in my view—that the stock market will perform similarly to last year. A strong start, followed by consolidation and then correction is likely to reflect the change in earnings expectations this year. The economic news is mostly expected to be what it is now—lackluster. So, with the expectation for modest gross domestic product (GDP) growth, it's difficult to imagine improving corporate visibility. Industry specific economic news should continue to be varied this year, with some sectors significantly outperforming others. The certainty about interest rates is useful, but it's also a sign that the Federal Reserve expects the economy to continue to be difficult. There's no bright light at the end of the tunnel yet; it's continued mediocrity for next while.

With the expectation of choppy economic news and the likelihood of declining earnings expectations over the coming quarters, individual stock selection is absolutely key in a market without a tailwind. (See Austerity, Inflation, Sovereign Debt & Earnings Growth—An Investor's Survival Guide.) Price strength in gold, silver and oil is a necessary confirmation if the stock market is going to advance further in a meaningful way. My view is that the stock market will be holding up well if the S&P 500 index can build a base around 1,300. As I said, the economic news isn't yet strong enough for share prices to make a big advancement. Good corporate earnings were the catalyst for a strong January, but the stock market's next catalyst is elusive.

Very shortly, the market will be in the "lull" between earnings seasons and this makes share prices that much more vulnerable. With only economic news and geopolitical events to go on, investors will be skittish. Accordingly, the trades in the stock market will be event-driven or corporate-specific only. A general investment strategy in this kind of market isn't likely to work too well. Outperformance is all about owning the right stories at the right time. Fortunately, the economic news right now isn't bad enough to cause a major decline in sentiment. If we can hold around the current level, the stock market will be doing well.

About the Author
With Profit Confidential we analyze the actions of the stock market, precious metals, interest rates, real estate and other investments so we can tell you what we believe Today's Financial News will mean for you tomorrow!

Investing In Real Estate

2012-02-08T18:03:00.000-08:00

Investing in real estate is an exciting and a frustrating roller coaster ride. If you do not have the stomach for going through the ups and downs, then this may not be the right type of investment for your money and time. But if you enjoy the thrill of the ride and have the nerves of steel required for this type of investment plane, then real estate is for you. If you like what you are reading then please continue on through the post. And I welcome dialog if you disagree or have a comment. So let’s talk about buying a home.

Buy low and sell high. Why would anyone plan on buying real estate at an overpriced value knowing that the investment is only going to lose value year-after-year. It is much like buying a car. A car can never be considered an investment. The value of the car will go down year after year and the money will never be recouped. But real estate has been a proven investment that can and will increase in value as time goes on. And as soon as the mortgage crisis has run its course, real estate value will begin the recovery process and grow once again. And with homes being underpriced, this is the best time to make a home purchase.

When deciding on what type of real estate to buy, consider the type of life that you like to live. If you like the idea of living in the country with horses, then a country farm with stables would be ideal. If you like the idea of living in the big city, then by all means make it a reality. When it comes to buying real estate, you should treat the purchase as if there is a possibility that you may need to live there. In hard times such as these, many real estate investors are in this situation.

Be patient if you have problems finding the right home or property to fit your needs. Hunting for a new home is a process that takes time and dedication. You know what you want in a home. If you settle now for something less, you may find yourself resenting your choice in the long run. Eventually, you will find the home that you are looking for.

When you find your home, make sure you do your home work to make sure that everything dealing with the home and the property are in order. Ask many questions. How old is the roof? How old is the furnace? Have there been any past problems with termites? What every you think needs to be ask, make sure you inquire. There are no dumb questions. And the seller is required to inform you if there are any issues that may need your attention. And the problems that do come to light may even help you get the home cheaper if you are willing to deal with fixing the problems. Or even better, the owner would have to fix it at no cost to you.

Do not make an offer on the first home you see. There are tons of homes in the market right now and you need to be able to compare the different homes in style and price. I suggest looking at more than 190 homes before making a decision. But remember that you are looking for your dream home. If the dream home is not available, then continue looking.

Make sure you have your financing in order. Get yourself pre-qualified prior to contacting a real estate agent to start your search. They are not going to want to work with anyone who is not pre-qualified. And getting pre-qualified will help you understand how much home you can buy.

How To Use The Envelope Budgeting System

2011-04-11T06:10:00.001-07:00

By Bob Lotich

If you're struggling with creating and maintaining a budget, you've come to the right place. It's not always easy to create a workable budget in this electronic age - swiping the credit card has become all too easy. Wouldn't you say?

Sometimes we simply need to get back to the basics of personal finance. The basics tend to go overlooked. What are they? No credit cards. No worrying about how much money we can actually spend. No electronic mess!

The envelope budgeting system is a great solution for those who are looking to take control of their finances. Here's how it works:

Determine a reasonable amount of spending money for the month. You can do this by looking at previous bank statements. What did you spend on average over the past 3 to 6 months? Use this figure for starting your money envelopes.
Put it all together. Use a budgeting worksheet to figure out how much to put in each envelope. Gather up your cash and separate it by category into the appropriate envelope. Write on the envelope the name of the category and the amount allocated for the month.
Spend only what you have in the envelopes. Many times you'll be tempted to move money between envelopes; avoid this if possible. When you reach the end of the cash, stop spending!

The envelope budgeting system is a great tool in your financial toolbox to get you on the road to financial freedom. But why? Can it really work better than cash back credit cards? Here are a few things to consider:

Credit cards are easier to use when trying to justify a purchase. When you're standing in front of that new piece of clothing or electronic gadget, it's easier to pick it up off the shelf when you can "pay for it later." If you're holding an envelope with a few bucks in it, it's more difficult to imagine handing over the cash. If you determined how much money to spend using your budgeting worksheet, you won't spend more than you needed to.
You'll automatically be saving money. At the end of the month, you'll have a few extra bucks (usually in change) scattered amongst your envelopes. Think of it as a bonus! The amount you'll save can be rolled over to next month's envelopes or simply put to whatever financial goals you have - saving, investing, or giving.

So there you have it! The envelope budgeting system is a great way to save money, keep yourself from overspending, and... get a few strange looks from retail store cashiers. But it's well worth it!
Bob writes about getting out of debt, saving and making money, and other personal finance topics at ChristianPF.com. Stop by and download some Free Budgeting Worksheets and learn how to create your envelope budgeting system today!

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Save Money - Make a Meal Plan and Cut Down on Dining Out

2010-12-12T08:55:00.000-08:00

Dining out just about every night can put a lot of strain on the family finances when it comes time to figure out the monthly budget. That money would be better served paying off high credit card debt or being put into a savings account for an emergency fund.

Dropping $20 on a family fun night out is not a bad thing. But it has to be done in moderation to hold the budget together.

So how should the average family tackle the nightly dining out problem? Here is some advice I give to my clients.

1) Budget out what you would like to spend for the family meals. I tell my clients to plan for $100 per family member per month. So if you get paid semi-monthly and have 4 family members (including yourself), then you would budget $400 per month on meal planning.

2) Create a meal plan that will meet the needs of your family. You decide how you want your family to eat. The meals need to be things that you are willing to make on a nightly basis. You can decide your meals on any criteria you want.

3) Develop a shopping list that will purchase the basic groceries you need to support your meal plan. Stick with the budget and avoid purchasing more than what is needed.

4) You have an option to pre-cook your meals for the week. This is an option that I use every Sunday. I cook all my meals for the week and store them in microwavable plastic wear to be warmed up once I get home from work. This saves me a lot of time and makes sure I do not fall into the “I am too tired to cook” mentality.

5) My final piece of advice is to use the leftovers as your lunch the next day to avoid purchasing your lunch at work. Thus saving you more money in the long run.

A Second Job May Be Just What The Doctor Orders

2010-05-26T13:15:00.000-07:00

If you need more money to pay down your debt, then you just may to look for ways to make more money. This is a very basic idea that millions of people are starting to realize in this hard economy. I am not sure why is it so hard to understand, but sometimes you just have to bite the bullet and take a second job to get yourself out of the hole that you are in.

I was once forced to take a second job while I was serving in the Air Force over ten years ago for the same reason. My enlisted pay was not allowing me the ability to pay my bills and support my family. So I had to make the tough decision and spend a little less time at home to help do my part.

And while it was a stressful time in my life, I was able to reap the rewards of paying off all my unnecessary debt and get the family back on the path to fiscal responsibility.

So do not be afraid of taking that extra step needed to bring in a little extra cash into the home.

Looking to start making money online? Take a look at a few programs below that I have tried.
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Ways to Stop My Foreclosure

2010-05-24T13:31:00.000-07:00

Losing your home to foreclosure is a dramatic experience. Where are you and your kids going to live now? Who will be able to help you get back on your feet? How is this going to affect your credit rating? Will your ever be able to buy a home again?

These are all very good questions that will take you a little bit of time to answer. But if you have found this posting before the bank has foreclosed, then you still have a fighting chance to save your home.

The first thing that you need to do is prioritize your budget so that you can make regular payments on your mortgage. If you have been neglecting your mortgage to pay credit cards, then shame on you. Reorganize your bills to pay the following in this order.

1) Mortgage
2) Utilities
3) Transportation (Car, Gas, and Insurance)
4) Groceries

Next contact your mortgage company and look to come to an agreement on how you will pay back your past due amount. Some banks will allow you to break the payments up over the month. There are some mortgage programs out there where the bank may forgive. But you need to contact them to get the information.

If you are jobless, you need find a way to start making money. Take what ever job you can in order to start generating some sort of cash flow.

The key here is to make sure that your mortgage payment is the one payment that you will never miss again. It should have top priority.

Looking For Financial Answers

2010-05-20T13:56:00.000-07:00

It wasn’t that long ago when I was in financial troubles. I was looking for ways to help get me out of debt fast. I had just bought a house with one of those no good sub-prime mortgage loans, and still have $20,000 of credit card debt that I was struggling to pay. My credit score was a mere 521, and things just looked bleak in term of the future for me and my family. I was at the end of my rope and did not know what to do. I continued to apply for and get credit cards to pay off the past due amounts of other cards.

I finally realized that something needed to change. And the fact of the matter was that I need to either file for bankruptcy or take ownership of the problem and get some help.

This blog is dedicated to those individuals that are looking for a means to provide free get me out of debt tips to help you get out of debt now. Financial stress is the main cause of marriage problems and divorce. I have used many of the calculators and ideas on this blog to eliminate a majority of my debt.

Here are some helpful links that can help

Free Debt Calculator

Debt Reduction Snowball Calculator

Free Mortgage Calculator

Personal Budget Information and Resources