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No Load Mutual Funds

What are No Load Mutual Funds?

In order to understand what it means to invest in no load mutual funds, you must first understand what it means to invest in loaded mutual funds.  Loaded mutual funds are funds that carry a sales load which is commission paid to investment brokers typically ranging anywhere from four to eight percent.  Mutual fund investing of this type generally means that you pay the sales fee up front, on the back-end, or there is an annual fee associated with it. No load mutual funds do not contain any type of commission or sales charge because the shares are distributed directly to the investment company, rather than going through a secondary party. The reason for this is that there is no transaction cost to purchase this type of mutual fund and therefore all of the money invested is working for the investor. The justification provided for loaded mutual funds is that the investors are compensating a sales intermediary, such as an investment advisor, or a financial planner for his or her time and expertise in the selection of an appropriate fund. Investors seek out no load mutual funds instead of loaded mutual funds because they believe that they will outperform the higher priced funds over time because the fees won’t eat away at the overall net return on investment.  The shares for this type of fund are purchased directly from a mutual fund company or indirectly though a mutual fund supermarket.  True no load mutual funds contain absolutely no fees, whereas a supermarket no load fund may contain a very small fee referred to as the 12b-1. This 12b-1 fee can be 0.25% to 1.0% of its assets, and is also known as the cost of distribution. It is still however, considered a no load fund and will lead to better investing and diversification of your investment portfolio. Words of wisdom regarding no load mutual funds consist of a few known facts that investors should realize before investing money in mutual funds. For instance, for every high-performing loaded mutual fund, there is a similar no load fund or low load mutual fund that can be purchased at a cheaper price. When investing in mutual funds, no load funds consistently outperform loaded funds after you take into consideration final calculations, and a load does not go towards any type of incentive for the fund manager to perform better.

Investing advice that you should also consider is this. If a loaded mutual fund is held over a long period of time, the effect of the load is not diminished as quickly as you would think, if paid up front.  It is interesting to note that if you selected a no load mutual fund, that money paid (as if it were a loaded mutual fund) would have been compounding over the whole time period. In fact studies have shown that no loaded mutual funds significantly and consistently (as stated above) outperform loaded funds.Successful investors realize that to build a strong portfolio, mutual fund investing is a must.  It is up to each investor, however to determine the type of mutual fund that they will invest in to achieve portfolio diversification. While loaded mutual funds can still provide a great return, each investor will ultimately need to decide whether the services provided by these loaded funds are valuable enough to justify giving up the higher returns of no load mutual funds.

Top Mutual Funds

Find the Top Mutual Funds

Finding top mutual funds to add to your investment portfolio can be a complicated process and may not necessarily be the same for every investor. When investors speak of top mutual funds, they are referring to those mutual funds that have weathered the market well and are consistently making money.  Before deciding which funds are the best for you it is important to understand your investment objectives and also to determine the risk level that you are comfortable with. For example, if you are older and are looking to begin retirement investing, you may want to invest in a fund that is lower in performance, but that is safe.  If you are very young and have more time to weather the ups and downs of the markets, you might look to invest in a fund that has a higher risk, but that is highly aggressive in terms of its performance.  In this article we will discuss key elements necessary to finding the top mutual funds that will work for you.

The first step is mentioned above and it refers to knowing your investment goals and objectives. The second step is to utilize the services of financial professionals such as investment advisors or investment brokers. Take advantage as well of some of the online rating systems that can give you a snap-shot of a mutual fund’s performance and the fees associated with that fund.  It is also important to utilize reputable mutual fund companies.  You can ensure this by researching various companies and through working with a financial planner who has experience with many different types of mutual fund investment companies. Another important piece to investing in top mutual funds is also to understand the performance of each fund that you choose to invest in. Mutual fund investing requires that you research prospective funds that have performed in line with your expectations, keeping in mind that past performance is not necessarily indicative of future performance.

It is also important to understand the tax implications when investing in mutual funds. It is different from investing in stock in that when you own stock, you are required to pay taxes each year on any dividends or interest that you receive even if you choose to reinvest. Top mutual funds only require you to pay taxes after you sell your shares, and only if you made money on the shares. It is important to note, however that you will owe income tax on dividends in the year that you receive them and you may also be required to pay taxes on the fund’s capital gains for the year. The tax implications are a bit confusing so it is very important that you have a clear understanding before you become a shareholder and begin to invest in this type of fund.

Each investor must also understand the fees associated with investing in top mutual funds.  The fees included are due when you initially invest in the fund, and each year following as you continue to invest. Additional fees typically include transactional fees, such as buying or selling shares, and if you move your money within the same fund group. Basically, whenever you make a change to your account, you will most likely be charged. Each investor must be sure that they understand all of the fees upfront to prevent any surprises when you receive your first statement.  You can also check out money market mutual funds as well if you interested in learning more about your choices.

Whether you are looking to build your retirement investment or to gain portfolio diversification, mutual funds are great option to look into to. Finding the top mutual funds will take time and patience, but taking the time to invest wisely will ensure that you are protecting your future and that your money is taken care of.

Foreign Currency in the Forex Markets

Forex is short for foreign currency exchange and it is very liquid and is the world’s biggest market for trading foreign currency. The forex market has been around since 1971 where large companies and a few very wealthy investors were only able to practice forex trading. With the advent of the internet, however now anyone with access to the internet and a meager amount of money can participate. When identifying foreign currencies you will see them with a three letter code, where the first two letters stand for the country and the last letter identifies the nation it represents. There are currently seven major currencies on the forex that are the most heavily traded. These include the U.S. Dollar (USD), Euros (EUR), Japanese Yen (JPY), UK Pounds (GBP), Swiss Francs (CHF), Canadian Dollars (CAD), and the Australian Dollars (AUD).  There are many advantages to fx trading. Below is a list of advantages as seen by most forex traders. 1)  The forex market is open 24 hours, 7 days a week around the clock, which is not the case when trading stock. You can also trade from just about anywhere as long as you have either a computer with high speed internet, or access to a phone.2)  Forex traders can be profitable in any conditions when foreign currency trading whereas when playing the stock market, stock prices must rise in order to make a profit.  Forex trading can make a profit no matter how the economy is doing. 3)  Investing in stock and other types of investments typically require and investor to set aside a large sum of money.  When trading currency, you can use as little as $300.00 to set up a small account that will let you trade in amounts of 10,000 units. 4)  Forex currency trading can be done using borrowed capital. This means that you don’t need hundreds of thousands of liquid assets to trade currency in large numbers. You can practice margin trading where a small amount of your own capital can be used to leverage a large chunk of borrowed assets, which can then be invested. 5)  Forex trading also does not require you to pay commissions to a stock broker.  The dealers in forex trading instead receive part of the spread between the buying and selling price of a foreign currency. This is generally a fraction of a percent so it is a very small amount per trade.6)  Unlike the stock market, it is close to impossible for any individual or company to manipulate the forex market due to the volume of trading that takes place each day.  As you can see there are many advantages to trading foreign currency that are missing when trading in the stock market. Forex markets have different regulations and terminology but the same overall principals apply.  You must stick to your trading plan, and perform technical analysis. If you are interested in learning how to conduct currencies trading, check into online resources and be sure to read a lot books about forex currency trading for beginners.


Over the Counter Stocks

There is a bilateral contract signed by two parties regarding how a particular trade is to be settled in future, when you deal in over the counter stocks. The reason for these type of stocks to be ‘unlisted’ is usually because the company is small and is unable to meet the listing requirements of the other significant stock exchanges. Because there is no regulatory body or organization, such as the SEC to oversee the securities industry, trading in over the counter stocks involves a high risk, as well. The stocks that trade through a dealer network instead of centralized exchange, and are traded by broker-dealers who collaborate directly with one another, either on the computer or on the phone, are also known as the over the counter stocks. It is a very rare occurrence when these type of shares are able to move from "pink sheets" or over the counter (OTC) to the NASDAQ or other major exchanges like the American Stock Exchange or The New York Stock Exchange. The OTC Bulletin Board stocks are either penny stocks or they are stocks that hold bad credit records, this makes it crucial that you be extremely cautious, and that you know what you are doing, when you are trading over the counter stocks.

In United States, OTC Bulletin Board is used for trading over the counter stocks. The OTCBB is an established service (started in 1990) that is regulated, reliable, and works in real time for those interested in getting the very latest information on stock quotes, sales, and which equity security firm is handling the most business. OTC securities, which generally don’t trade on a formal exchange, are also known as Bonds. Investment banks trade mostly in these financial instruments which create markets for specific issues. Investors should call the bank that makes the market in that bond, and they should get the quote if he is interested in bond investing.

Do remember to discuss penny stocks while you also discuss over the counter stocks. penny stock investing is attractive and popular because the possibilities seem endless; you don’t have to invest as much with them as you do with other stocks and the return can be both quick and lucrative. It is very risky to buy penny stocks because the price of these over the counter stocks can plummet considerably due to the potential value of the companies that are listed in OCTBB, which are also known as "pink sheets." Such companies have very limited financial history which makes it difficult to assess their actual value. Another reason it that some of the companies are exceptionally new and are extremely close to going bankrupt.  If you are really keen on trading in over the counter stocks, then make sure that at least those that you are trading are making an honest effort to move from OCTBB to major stocks like NYSE. You can certainly make some good return on investment with these type of stocks, but you must always remember that they are high risk stocks.

Trading and investing in over the counter stocks can bring huge rewards. However, even though you are only trading pennies, you should remember that there is still a huge risk of losing big money, while trading in over the counter stocks.

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