Personal Finance-Mutual Funds

Class shares

-A: front end sales load -B: back end load -C- pay coming and going

Bonds maturities

-Short-term (1-5 years) -Intermediate-term (5-10 years) -Long-term (10-30 years)

Steps to consider when buying mutual fund

-Step 1: determine your goal, risk tolerance -Step 2: Meet your objectives, look at all options and investment styles -Step 3: Evaluating the fund, know where to look for the right mutual fund -Step 4: Make the purchase, buy direct (phone or internet)

Mutual fund

-an investment raised from investors, invests in stocks, bonds, and other investments -each investor owns a share of the fund, depending on their investment

Balanced Mutual Funds

-balance long term growth, income, and stability -hold common stock and bonds -aimed at those needing income to live on and moderate stability in their investment

Advantages of Exchange Traded funds

-can be sold short -trade on an exchange and can be bought and sold throughout trading day -allows you to take an instant position in a sector or country -low annual expenses -more tax-efficient than most mutual funds

Load end funds

-commission charged on a mutual funds

Exchange Traded funds

-cross between a mutual fund and individually traded stock or bond that trade exchange like indiv. securities do -charge lower annual expenses but still pay trading commissions

No load fund

-doesn't charge commission

Management fees and expenses

-expense ratio: ratio of mutual fund's to its total assets -invest in a fund with low expense ratio -turnover rate: measures level of fund's trading activity -higher turnover rate: higher fund's expenses

Investment Companies

-invest pooled money for a number of investors in return for a fee -open end investment comps or mutual funds -unit investment trusts -closed-end investment comps -real estate trusts

Disadvantages of mutual funds

-lower than market performance -costs -risks -taxes -can't shy away from market crash, so it may effect the money you receive

Mutual Fund-Amentals

-mutual fund pools money from investors with similar financial goals -shareholders elect a board of directors -fund is set up as a corporation -fund is run by a management comp -contracts with a custodian, transfer agent, and underwriter -each indiv. fund hires an investment adviser to oversee fund

Bond Funds

-mutual funds that invest primarily in bonds -fluctuate in value with market interest rates -use for small amounts of money to keep investments liquid

Advantages of mutual funds

-professional management: investment adviser decides which securities to buy and sell for the fund so you don't have to do it. -minimal transaction costs -flexibility -avoid bad brokers -liquidity: easy access to money, shares can be bought and sold in one day

Disadvantages of Exchange Traded Funds

-trade as common stocks but you pay commissions -don't always trade at their net asset -buy from another investor which means you have to sell it for less -can be more expensive than typical funds

Mutual Fund Services

-wiring express options -automatic investment/withdrawal plans -automatic reinvestment of interest -easily establish retirement plans