Archive for the ‘Investment’ Category
Lack of control: typically, investors can not ascertain the exact composition of the portfolio of a fund at any given moment, nor can they directly influence what you buy or sell securities by the fund manager or about the time when those businesses are conducted .
Uncertainty in prices: with an individual, you can get price information in real time (or approximately in real time) with relative ease, through consultations financial sites on the Internet or call a helper. You can also check the price changes of action from hour to hour, or even second to second. In contrast, a mutual fund, the price at which you buy or redeem shares typically depend on the NAV of the fund, the fund might not calculate until many hours after you have placed your order. In general, mutual funds must calculate their NAV at least once each business day, typically after they close the major U.S. exchanges. UU.
ETF (Exchange Traded Funds)
The “exchange traded funds (ETF, for its acronym in English) are a type of investment company that intends to get the same performance as a particular market index. They can be unlimited capital companies or ITU. However, the ETF are neither allowed to call them mutual funds.
Diversification: Diversification is an investment strategy that can be neatly summarized as “do not have to gamble everything on one card.” If you distribute your investments in a wide variety of businesses and industries can help reduce your risk if a company or sector fails. Some investors find it easier to achieve diversification through ownership of mutual funds rather than through ownership of individual stocks or bonds.
Affordability: Some mutual fund investors take into account that do not have much money to invest by setting relatively low dollar amounts for initial purchases for subsequent monthly purchases, or both
Liquidity: Mutual fund investors can readily redeem their shares at the current NAV (plus any commissions or fees charged at the time of redemption) at any time.
Costs despite negative returns: investors must pay sales charges, annual fees and other costs (of which discuss in detail in page 13), regardless of how the fund performs. And depending on the time of investment, investors may also have to pay taxes on any capital gain distributions they receive, even if it appears that the fund performs poorly after they have purchased the shares.
The office of education to investors of the Securities Commission of The United States (Securities Exchange Commission) has a very informative manual on mutual funds.
Key Issues to Remember
* Mutual funds are not guaranteed or insured by the Federal Deposit Insurance (FDIC, for its acronym in English) or any other government agency, even if you buy through a bank and the fund carries the bank’s name . You can lose money investing in mutual funds.
* The past performance is not a reliable indicator of future performance, so that no glare for the high performance of the previous year. However, past performance can help you assess a fund’s volatility over time.
* All mutual funds have costs that lower your investment income. Investigate different offers, investigate and compare costs.
Advantage
Management training: professional managers investigate portfolio, select and monitor the performance of securities purchased by the fund.
Inversion – Morgue File
Establishing a risk profile to find out how much you’re willing to lose if the investment does not generate income helps you choose between different types of investment.
Sometimes companies have liquid assets that do not need to develop their activities temporarily or commercial production. Companies need to have a certain amount in cash or liquid in banks and to help meet the payments shown in the development of normal activity. But keeping excess liquid availability is not advisable because it can generate low or no performance for the company.
Investment Types
When a company decides to change its availability liquid by placing the resources available in financial assets that can provide better performance. All these assets is called short-term investments or short-term financial investment. The maturity of these investments should not exceed three months and less than one year.
The short-term investments are cash loans that firms make in order to get a performance increase the capital of the company. In contrast, long-term investments are not in cash but are composed of assets. Another difference between short-term investments and long-term investments, is that the long term pose a higher risk in the market by fluctuating prices of stocks whose price is unpredictable.