Guide to Mutual Funds
1. Market Timing Systems
A market timing system is a trading strategy that involves selling stocks when the trader believes the market is about to fall and then re-buying the stocks when the trader feels that the said stocks will start to take off again. This strategy relies on gut feelings and luck with the use of no actual evidence or strategy. Because of this, this strategy is not the one that an investor would be most successful applying to a mutual fund. Most mutual funds will not allow short selling, a strategy that is necessary for market timing. Mutual funds are meant to sit and grow slowly over long periods of time, and by constantly taking your money out and then putting it back in a trader is compromising the maximum gains that could be made from his mutual fund.
2. New York Hedge Funds
Hedge funds are basically mutual funds without the restrictions. As previously discussed, most mutual funds restrict short selling, or selling right before a trader believes the market is about to fall. However, hedge funds have no such restriction. Because of this, they are often said to produce large sums of money very quickly. Though it is possible to make large amounts of money quickly with the use of a hedge fund, they are not the safest place for your money. They have been deemed by the New York Times as “exotic and risky”. Essentially, if one wants to traverse the markets without the restrictions and security that a mutual fund provides, but still wishes to have a diversified portfolio that a mutual fund offerers then hedge funds could be a viable option.
3. Investing for Dummies
What is investing? It is the process of giving money to a company in the hope of receiving a return on that money and therefore a profit. Investing does not just apply to stocks in the stock market. It also applies to bonds and bank accounts. Any situation where you are putting money in to a company in hopes of getting money out counts as investing. In regard to the stock market, investing involves buying a share, a part of the company. This means that you own a small part of the company and when the company gains money, you also gain part of that money. Various investment practices have different risk factors, generally with savings accounts being the lowest and stock trading being the highest. However, the higher the risk the bigger the reward as stocks have a much higher interest rate, or percent of the money that you get back, than that of a basic savings account.
Shares are the basic form of stock trading. When you buy a share of a company you own part of the company, and therefore gain privilege to certain rights and decisions that the company might make. When a company gains money, you gain money through your share. And when a company loses money, you lose money as well.
Dividends are one way to make profit from a company through stock trading. When a company makes money, they either reinvest that money into the company, or the give the share holders dividends, or payments that come from the companies profits. These make up the bulk of the money that you will make from a stock.
6. Blue Chip Stocks
A blue chip stock is the stock of a company that has stable earnings and therefore low risk. Because they are not a startup or a company with money trouble, they are less likely to loose large amounts of money through the stock market. Their shares stay at a stable rate and therefore are good choices for a mutual fund.
7. Unclaimed Funds
Unclaimed Funds are funds that result from the closure of an account with FDIC insurance. When a bank closes, the members of the bank are liable to receive compensation. However, many times these funds go unclaimed resulting in Unclaimed Funds.
8. Lost Money
Lost Money or Property are assets that are not claimed by their rightful owner after a certain period of time. These often end up in the hands of the government. However, there are various ways that can these lost assets can be retrieved.
9. Mutual Fund Analysis
Mutual Fund analysis takes two forms, qualitative and quantitative. Qualitative looks at the background and experience of the managers as well as their previous records. Quantitative looks deeper into performance, style, and risk. Mutual fund rating services perform Mutual Fund Analysis for investors.
10. Money Market
The term that is used to describe the network of short term debt securities. These include treasury bills, commercial paper, and certificates of deposits. These are all accounts that mature generally in short term, being anywhere from less than a year to five years. This is not a physical market, but rather the network of all the banks and centers that deal with these short term lines of credit.