The best mutual funds for 2010 and the best investment strategy for 2010 and beyond may not be the same mutual funds or investment strategy that worked in 2009. Here are some adjustments to consider in mutual funds and investment strategy going forward.
In considering in the best mutual funds to invest in and the best investment strategy for 2010 and beyond remember this: what shook the nation and the investment world in 2008 was not just another recession. It was a financial crisis. The economy improved and stock prices went up in 2009 through early 2010, but are our troubles behind us?
BEST MUTUAL FUNDS, STOCK CATEGORY… Be less concerned with the best mutual funds here and more concerned with how much money you have allocated to stocks in general. Your best investment strategy for 2010 and going forward: lighten up; don’t load up on stock funds. Don’t chase a market that has gone up 70% in little over a year. The large institutional investors have bid prices up, for at least two basic reasons. First, stock prices had fallen almost 60% by early March of 2009 and were over-sold (cheap). Second, big money managers had few other attractive alternatives with low interest rates making both bonds and money market securities less than attractive. Hence, the best investment strategy they could come up with for most of their money was to wade into the stock market.
Stay away from the more volatile and riskier stock funds that invest either domestically or abroad. Debt problems are in the spotlight in several areas of Europe, and there is fear that this contagion could spread. Emphasize high-quality stock funds of the large-cap equity-income variety that pay a respectable dividend in your portfolio. In the international stock fund area, go with high quality as well. One exception to avoiding volatility is that you may want to include some specialty stock funds, or those that invest contrary to the norm in your portfolio: like gold, real estate, natural resources funds or funds with a “contra” approach to investing. This will give you added diversification.
BEST MUTUAL FUNDS, BOND CATEGORY… The average investor in recent times has bought into bond funds in search of higher income and more safety than stock funds offer. Few seem to realize that this can be a risky proposition in today’s economy and interest rate environment. The best investment strategy for 2010 and into the future: avoid long term bonds and bond funds with average maturities of 10 years or more (that invest in longer term bonds). Interest rate risk is high, which simply means that when interest rates go up these bonds and funds will fall significantly in price (value). Bond funds with average maturities closer to 5 years will pay a reasonably attractive income with a whole lot less interest rate risk.
BEST MUTUAL FUNDS, MONEY MARKET CATEGORY… Money markets and the funds that invest there are paying next to nothing, but at least these are among the safest investments in the world. The best investment strategy for 2010 is NOT TO AVOID these funds. This interest rate situation is highly unusual and can not continue indefinitely. Our government has purposely moved to keep money market (short-term) rates low to stimulate growth in the economy. The problem is that with these rates near zero, what do they do to stimulate the economy the next time we see recession or worse? What happens when the rest of the world is no longer eager to buy our Treasury securities at historically low interest yields to finance our debt? Interest rates will go up, and so will money market fund yields.
The best mutual funds for 2010 in the money market category could be the tax-free versions, especially for those in higher tax brackets. Some of them are actually paying more than their taxable counterparts. Money market funds pay interest in the form of dividends, do not fluctuate in value, and are by far the safest of all fund categories. These funds do not have sales charges, but investors do pay for yearly expenses. Check and compare the expense ratios and yields before deciding on a money market fund.
BEST MUTUAL FUNDS, STOCK and BOND CATEGORIES… There is one best investment strategy for 2010 and beyond that can only work for you as an investor, and never fails to increase your profits and returns in mutual fund investing. The best mutual funds keep the cost of investing low. No-load funds have no sales charges and some of them have lower than average yearly expenses. Sales charges, expenses and fees come out of your pocket and only work against you. The very lowest cost of investing can be found in no-load index funds of both the stock and bond variety. Lower your cost of investing as part of your overall investment strategy.
Best Mutual Funds & Best Investment Strategy For 2010 & Beyond
Understanding Home Mortgage Loans
The price of houses keeps rising across the US. Since most require a down payment that is more than a renter can afford, how do you become a home owner when you don’t have the savings to cover the down payment? The answer is a home mortgage to purchase your house.
A home mortgage is different from a home loan. A mortgage is a contact that is required for you to obtain a loan from a banking institution or lending company. The actual loan is the money the lender provides.
In recent years, the types of mortgages for the home that are available to the public have increased dramatically. I remember purchasing my first home when most loans required a twenty percent down payment. Today, loan terms and the rate status are different with home mortgages and is applied depending on the financial situation at the time of the loan. Some mortgages offer better terms when the interest rates are low and others rise with high mortgage rates.
With a fixed rate mortgage, the interest rate remains the same for the duration of the loan. Therefore, your monthly payment remains the same, even when interest rates rise. This type of home mortgage usually extends for a term of 15 or 30 years.
The amortization period for 30-year fixed rate mortgages is longer and the monthly payments are lower. Although you can borrow money on a long-term basis, it comes with a high interest bill and builds equity very slowly.
With a 15-year fixed rate home mortgage, the amortization period is shorter allowing equity to build quickly with interest bills much lower. Expect to pay higher monthly payments with this type of home mortgage loan period.
Adjustable rate home mortgages have lower interest rates. Keep in mind, this low interest rate is only for a short time. Usually after the first year, the new interest rate will rise or fall, depending on the movement of the lending company’s prime rate.
If you’re considering an adjustable rate home mortgage, make sure the interest rate is low enough to be an advantage. Your monthly payment will remain low when the interest rate is low, but when interest rates rise, you may be left with a monthly payment you are unable or unwilling to pay.
Once you’re in the home of your desire, your property begins to accumulate equity with the rise in home prices. If you find yourself in need of quick cash, you can always take out the equity with a home equity loan. The home mortgage rates for home equity loans have always been thought to be higher than the home mortgage rates of other loan types. If you plan to stay in the home for many years, this may be a good option for you, otherwise don’t sacrifice the equity unless you absolutely must.
Once you understand the types of home mortgages that are available, you will need to decide what you must have in your new home and what you consider as an “extra.” You’ll want to find the best interest rate, but you’ll also find that homes in your price range may not include everything you want. So be prepared to negotiate and willing to sacrifice if you find a great deal. Once you’re in your home, you can always upgrade in a few years, using the equity you’ve built up in your property.
3 Best Return On Investment Ideas
Return on investment can be controlled to a certain extent with 3 things. The SOR or speed of return, Leverage and Personal Cash control.
Speed of Return
One of the biggest ways a yearly compounding rate can be increased is to invest for faster turn around cycles. If you can find investments that actually have a one or two week cycle, that is much stronger than a yearly cycle.
Leverage
Available capital can be magnified using leverage. A $100 dollar account can be turned into a $1000 using borrowed money. If the yield is 10% then on $100 you would have made $10 but if you made a bigger purchase with borrowed money, the same yield is 10% of $1000 which equals $100 so in real terms you have made a 100% return.
Personal Cash Control
Having ready access to your cash puts you in a position to swoop on good opportunities when they present themselves. There is a plethora of opportunities that can be had, for people with the available funds. Anything from a small business in trouble whose assets are worth more than the asking price (which you can sell off for a profit) to under valued consumer goods which can be resold for a profit, or even dabbling in importing from China.
The best ways to increase your speed of return can have a dramatic impact on your annual compounding goals and with a little smart planning anybody can achieve compounding rates of 100% or even more each year. This is not difficult using the above three strategies.
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