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A mutual fund represents money contributed by multiple investors. That money is managed by an individual, or more likely, a whole slew of individuals. Not surprisingly, those folks who help manage and oversee your money do not do it on a volunteer basis. They get paid. Do you want to guess who pays them? You do – through your fees assessed by the mutual fund. As an investor, mutual fund fees is one of five things everyone should know about mutual funds.
What are the Different Mutual Fund Fees?
When you look at the mutual fund prospectus, the mutual fund is required to disclose all its fees. In addition, they will include a chart that shows you how the expenses and fees would impact a $1,000 investment.
Remember, fees are not inherently bad. But, there are many people who think this is one of many problems with mutual funds. The mutual fund company does need to pay for the cost of overseeing your money. Exorbitant fees can cut deeply into your potential profit. You should also remember that all mutual fund companies charge fees and they simply adjust or allocate the fees in different ways – often with the hope of making you think you’re not paying any fee.
Loads
A load is a sales commission paid either when you buy the mutual fund or when you sell it. When the sales commission is added at the time you purchase the fund, it is called a “front-end load”. Not surprisingly, when the commission is added upon selling, it is called a “back-end load”.
Load payments typically end up in the hands of brokers or sales agents. I left my previous financial advisor because he could not recommend something without a load.
The biggest problem with a load is it automatically limits how much of your money will be working to increase your gains.
Management and Expense Fees
The management fees cover the cost of overseeing your investments. They help pay for everything from computers, to mailings, to salaries. Just think big offices and high overhead, and you know where this percentage of your money is going.
An average expense is between 0.25% and 1.5%. Most people suggest investors avoid funds that have fees over 1.5%. My personal feeling is that if you are paying a higher management fee, but you are getting better returns, then the expense fees really do not matter.
12B-1 Fees
Typically if a fund does not charge a load, you can expect that they have a higher 12B-1 fee. This fee covers advertising and marketing. Since the mutual fund company did not offer a load to a financial advisor to encourage you to purchase from them, they now use the investor’s money to try and get more investors.
Hidden Load Fee
When a mutual fund does not charge a load but then charges a higher 12b-1 fee, this is called a hidden-load fund. They are not technically charging you a load, but they are making the same amount of money by restructuring their fees. As always, due diligence by the investor is necessary.
Exit or Redemption Fees
These are fees charged when you sell your shares. The fees may be a flat rate or a percentage. In order to discourage short term trading some funds will have a mandatory minimum holding period. If you sell before that time frame you can expect to pay their specified fee. Other companies encourage you to hold their funds by scaling the fees back year after year.
For example, if you sell after year 1, you pay a 5% fee. If you sell after year 2, it is 4%. Year 3 = 3%. Year 2 = 2%. Year 5 = 1%. Year 6 + you pay no fee.
Brokerage Fees
It is important to remember that all the fees listed above are fees charged by the mutual fund company. Your broker might also charge additional fees. These fees might be annual fees, purchase fees per mutual fund, and their own short term trading fees. Thus, in addition to researching the mutual fund fees you must also be familiar with the fees imposed by your brokerage. You will need to find the best investment brokerage for mutual funds.
As with every investment, it is essential that you know and understand the fees. Even within a mutual fund type you can have different share types (A, B, C) – each with their own fee structure. You must have a personalized investing plan and then choose shares that have the lowest fees according to your plan.
Because of all of the fees associated with mutual funds, some investors prefer index funds. These funds typically have very small fees (less than 1%). Either, way if you are a beginning investor it is important to do some preliminary research before you start investing.
Saturday, February 13, 2010
Life Insurance with a No Exam Policy - Learn the Truth about It
Do you want a life insurance without giving a medical test or examination? If the answer is yes, you will get many policies that will not take a medical test and not ask you a single medical question. Surprised? Yes, to confirm this, try searching the Internet and you will see it for yourself. There is cutthroat competition in the market these days and every company is trying to increase its market share.
This is the right time to buy the policies such as the life insurance with no exam policies. Most people who opt for the no exam policies are people who have been denied a policy due to medical reasons or who have constantly failed the medical examinations that were conducted by the life insurance companies. With the no exam policies, you can be sure that you cannot be turned down-all you need is a little bit of more money.
Most people when they are in their twenties are not aware of the policies or they are mostly ignorant about the life policies. Then why it is not as popular as it should have been? Indeed, very few people buy life insurance with no exam. Those who are reasonably healthy opt for ordinary term insurance because the life insurance no exam rates are exorbitantly high.
Only those who have some medical problem that will make them uninsurable buy this kind of policy. They have realized the importance of policies too late in their life and find life coverage at a high rate is better than no coverage at all. You do not need to take my word for it. Receive quotes from as many sources as possible. You will soon realize the truth behind my words. This no exam rates may be exorbitantly high, but not without reason.
Try to understand why it is so. Normally, you have to fill up a quote form, which contains queries like:
• If you have ever used tobacco in any form
• If you have quit, how long ago
• If you have any chronic or hereditary disease
• If your parents or siblings have had such diseases
• Personal informational like name, sex, age, height and weight etc
• Basic quote information like coverage period or coverage amount On thing to be noted is that the death benefit is limited during the first, second, and third years of the policy.
The wholesale insurance website needs some information before they award you with the guaranteed whole policy.
The information needed is: - Basic quote information
- Pre-screening health questionnaire
- Personal information
The questions asked in the basic quote information section will help you give the best quotes. Make sure that when you get the insurance quotes, you have a good look at them and then decide on what you want. If you have any trouble in understanding the quotes, pick up the phone and talk to a phone agent immediately. In the basic quote information, you will have to give your state details, date of birth, gender, height weight, and coverage amount. At the same time, it is necessary that you should not lie while submitting your personal data. Answer these questions honestly; even if that results in higher rate because if they find out that you have not been honest, they may refuse to pay the death benefit. Honesty has always been the best policy, more so in the case of quotes.
This is the right time to buy the policies such as the life insurance with no exam policies. Most people who opt for the no exam policies are people who have been denied a policy due to medical reasons or who have constantly failed the medical examinations that were conducted by the life insurance companies. With the no exam policies, you can be sure that you cannot be turned down-all you need is a little bit of more money.
Most people when they are in their twenties are not aware of the policies or they are mostly ignorant about the life policies. Then why it is not as popular as it should have been? Indeed, very few people buy life insurance with no exam. Those who are reasonably healthy opt for ordinary term insurance because the life insurance no exam rates are exorbitantly high.
Only those who have some medical problem that will make them uninsurable buy this kind of policy. They have realized the importance of policies too late in their life and find life coverage at a high rate is better than no coverage at all. You do not need to take my word for it. Receive quotes from as many sources as possible. You will soon realize the truth behind my words. This no exam rates may be exorbitantly high, but not without reason.
Try to understand why it is so. Normally, you have to fill up a quote form, which contains queries like:
• If you have ever used tobacco in any form
• If you have quit, how long ago
• If you have any chronic or hereditary disease
• If your parents or siblings have had such diseases
• Personal informational like name, sex, age, height and weight etc
• Basic quote information like coverage period or coverage amount On thing to be noted is that the death benefit is limited during the first, second, and third years of the policy.
The wholesale insurance website needs some information before they award you with the guaranteed whole policy.
The information needed is: - Basic quote information
- Pre-screening health questionnaire
- Personal information
The questions asked in the basic quote information section will help you give the best quotes. Make sure that when you get the insurance quotes, you have a good look at them and then decide on what you want. If you have any trouble in understanding the quotes, pick up the phone and talk to a phone agent immediately. In the basic quote information, you will have to give your state details, date of birth, gender, height weight, and coverage amount. At the same time, it is necessary that you should not lie while submitting your personal data. Answer these questions honestly; even if that results in higher rate because if they find out that you have not been honest, they may refuse to pay the death benefit. Honesty has always been the best policy, more so in the case of quotes.
Life Insurance to Protect Your Loved Ones From Future Uncertainty
Life insurance protects your near ones from future uncertainties, like death or severe illness. It is actually a contract where your insurance provider guaranties protection for your family when you will be not there. You are paying for this death benefit in terms of the insurance premiums.
In terms of affordability, term life insurance is definitely an affordable option than any of the permanent schemes. Especially if you are healthy and young then it is generally advisable for you to go for a term plan and in future convert it to a permanent insurance plan without the need of any medical exams or to show that you are in good health. In case of term scheme the term may expire without payout but permanent insurance must always payout, making it an expensive option. There is another reason that these rates are less, and that is the low commission structure of the agents in case of term life insurance plans. Again as compared to term plans or pure insurance plans one may go for whole life plan or a universal plan which tend to affordable life insurance as compared to traditional endowment plans. If one has got a risk appetite he/she can go for unit linked plans where one can go for an affordable life insurance plan in comparison to traditional endowment plans where one can get a decent to high return on his/her money with decent life coverage, but subject to market conditions.
Again almost all the employers in the organized sector today provide group insurance coverage to their employees. This is another way in which an individual can get a decent coverage for a very less cost or sometimes even zero cost. These type of insurance coverage are really low cost depending on the size of the company, though it is advisable to have a separate individual cover in case one face a job loss or any other unforeseen events leading to ones job loss.
Lots of insurance companies design relevant and affordable policies for the low income group population. Especially in the developing countries, there are plans with or without survival benefits and death benefits with a low premium base. The livelihood of these easy and cheap plans is based upon the needs of low income socio-economic strata. You can compare the life insurance rates provided by these insurance companies to convince yourself to have a policy that you can afford. The best policies from any company are called "fully underwritten" which means that the insurance provider is going to ask you lots of questions, about your health, your family history and life style. Some companies also have a "preferred plus" rate which is even lower priced than the old preferred rates. It is not easy to get, but you can ask for it. To convince the insurance provider to take the risk of giving you such a policy, you need to show them that you are in good health and you do not take physical risks and that your family has a healthy lifestyle with regular medical checkups. One can also reduce the cost of insurance by going for it at the early age. If one delays the insurance needs then the cost of coverage will go up with his/her age.
Now to get the best life insurance rates so that you get an affordable coverage tailor made to your needs you have to collect different life insurance quotes either from the internet or directly from the different company agents. But these operations sometimes seem to be complicated due to lack of information. Hence in this adverse selection scenario the best you can do to find out the most affordable life insurance is to research and gather information as much as you can in order to derive the best suited protection for you and your family.
In terms of affordability, term life insurance is definitely an affordable option than any of the permanent schemes. Especially if you are healthy and young then it is generally advisable for you to go for a term plan and in future convert it to a permanent insurance plan without the need of any medical exams or to show that you are in good health. In case of term scheme the term may expire without payout but permanent insurance must always payout, making it an expensive option. There is another reason that these rates are less, and that is the low commission structure of the agents in case of term life insurance plans. Again as compared to term plans or pure insurance plans one may go for whole life plan or a universal plan which tend to affordable life insurance as compared to traditional endowment plans. If one has got a risk appetite he/she can go for unit linked plans where one can go for an affordable life insurance plan in comparison to traditional endowment plans where one can get a decent to high return on his/her money with decent life coverage, but subject to market conditions.
Again almost all the employers in the organized sector today provide group insurance coverage to their employees. This is another way in which an individual can get a decent coverage for a very less cost or sometimes even zero cost. These type of insurance coverage are really low cost depending on the size of the company, though it is advisable to have a separate individual cover in case one face a job loss or any other unforeseen events leading to ones job loss.
Lots of insurance companies design relevant and affordable policies for the low income group population. Especially in the developing countries, there are plans with or without survival benefits and death benefits with a low premium base. The livelihood of these easy and cheap plans is based upon the needs of low income socio-economic strata. You can compare the life insurance rates provided by these insurance companies to convince yourself to have a policy that you can afford. The best policies from any company are called "fully underwritten" which means that the insurance provider is going to ask you lots of questions, about your health, your family history and life style. Some companies also have a "preferred plus" rate which is even lower priced than the old preferred rates. It is not easy to get, but you can ask for it. To convince the insurance provider to take the risk of giving you such a policy, you need to show them that you are in good health and you do not take physical risks and that your family has a healthy lifestyle with regular medical checkups. One can also reduce the cost of insurance by going for it at the early age. If one delays the insurance needs then the cost of coverage will go up with his/her age.
Now to get the best life insurance rates so that you get an affordable coverage tailor made to your needs you have to collect different life insurance quotes either from the internet or directly from the different company agents. But these operations sometimes seem to be complicated due to lack of information. Hence in this adverse selection scenario the best you can do to find out the most affordable life insurance is to research and gather information as much as you can in order to derive the best suited protection for you and your family.
Life Insurance - I Don't See Myself Needing It
In many parts of the world that I know of, people do not like thinking of the possibility of their death. This rubs of on their thinking of life insurance. No one thinks they would need it.
If you have ever witnessed a family reduced to penury because of the death of the bread winner then you would see the need for every one who has any bit of love for his/her family and wishes a bright future for their offspring to have a life insurance policy.
Think of life insurance as a business plan to protect your family.
It is not at all possible to replace the loss of a loved one with financial compensation. It however makes it easier for the survivors of the deceased to live a fulfilled life in the absence of the insured thought they would feel the emotional loss for a long time to come. In fact they may never really fill the void caused by the loss but at least their quality of life would not be over turned.
There is a lot involved in life insurance that you may not understand unless you take the time to talk to an expert. Life insurers does not only benefit your family after your death. You can draw on your life policy in some situations. Ask your financial adviser about income protection benefits.
Do not be in a haste to say I don't need life insurance. It might actually have been the answer to the question or challenges you may have been having now had you gotten it earlier.
I read about a widow who told her husband financial manager "I know how much he loves me because he battled to pay the premiums so now I do not have to battle without him" What a great thing this man did while he was alive so that even in death he was still providing for his loved ones.
If you have ever witnessed a family reduced to penury because of the death of the bread winner then you would see the need for every one who has any bit of love for his/her family and wishes a bright future for their offspring to have a life insurance policy.
Think of life insurance as a business plan to protect your family.
It is not at all possible to replace the loss of a loved one with financial compensation. It however makes it easier for the survivors of the deceased to live a fulfilled life in the absence of the insured thought they would feel the emotional loss for a long time to come. In fact they may never really fill the void caused by the loss but at least their quality of life would not be over turned.
There is a lot involved in life insurance that you may not understand unless you take the time to talk to an expert. Life insurers does not only benefit your family after your death. You can draw on your life policy in some situations. Ask your financial adviser about income protection benefits.
Do not be in a haste to say I don't need life insurance. It might actually have been the answer to the question or challenges you may have been having now had you gotten it earlier.
I read about a widow who told her husband financial manager "I know how much he loves me because he battled to pay the premiums so now I do not have to battle without him" What a great thing this man did while he was alive so that even in death he was still providing for his loved ones.
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