...Important Reasons to Save Money By Miriam Caldwell Money in Your 20s Expert You may be asking yourself why is there so much pressure to save money. If you have enough to pay for everything you need, why should you worry about putting any aside each month? There are a variety of reasons to begin saving money. Different people save for different reasons. You can start by saving ten percent of your income each month. Here are seven reasons that you may consider saving your money. Eddie Hironaka/ Photographer's Choice/ Getty Images 1 . Save for Emergency Funds It is important to have an emergency fund set aside to cover unexpected expenses. This could cover an unexpected car repair, your emergency appendectomy or a sudden job loss. Ideally your emergency fund should be about three to six months of your expenses. If you are just starting out you should put aside at least $1000.00 for this. In addition to your emergency fund you need to make sure you have a plan and good insurance in place to help you survive the unexpected financial events in your life. 2 . Save for Retirement Another important reason to save money is your retirement. The sooner you start saving for retirement, the less you will have to save in the future. You can put your money to work for you. As you continue to contribute overtime you will be earning more interest on the money you have, then you put in each month. You should at least be contributing up to your employer's match and eventually you will want...
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...Market Funds 2012 The World Behind Fitch’s MMF Ratings by Charlotte Quiniou, CFA, Director in Fitch Ratings Fund and Asset Manager Rating Group Fitch money market fund (MMF) rating is far more than just a stamp on a fund. Its value for investors comes from the depth and breadth of the underpinning rating analysis and process. A key component of a Fitch MMF rating is also the regular, independent surveillance performed by Fitch’s analysts, which supports ongoing dialogue with fund managers, so that systematic mechanical reactions are avoided. To better serve investors, Fitch provides information on rated MMFs and developments in the money market industry, notably based on MMF surveillance information, through freely available periodic publications and online tools. A Disciplined procedures ensure consistency Fitch conducts analysis and assigns ratings on MMFs following a consistent, disciplined process that is applied globally. The diagram in Figure 1 provides a summary view of the major steps followed by Fitch when assigning or reviewing a MMF rating. At the start of the rating process, each MMF is assigned to a group of two analysts: the primary (or lead) analyst, and the secondary (or back-up) analyst. Analysts are responsible for leading the analysis and formulating a rating recommendation. The primary analyst is typically responsible for the continuous surveillance of the rating, once it has been assigned, and maintaining the dialogue with the fund manager...
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...Rae Bock started Bock Investment Services (BIS) in 1994 with the goal of making BIS the leading money market advisory service in South Carolina. To provide better service for her present clients and to attract new clients, she has developed a weekly newsletter. Lisa has been considering adding a new feature to the newsletter that will report the results of a weekly telephone survey of fund managers. To investigate the feasibility of offering this service, and to determine what type of information to include in the newsletter, Lisa selected a sample random sample of 45 money market funds. The Data File “Bock”, reports fund assets and yields for the past seven and 30 days. Before calling the money market fund managers to obtain additional data, Lisa decided to do some preliminary analysis of the data already collected. Managerial Report 1. Use appropriate descriptive statistics to summarize the data on assets and yields for the money market funds. 2. Develop a 95% confidence interval estimate of the mean assets, mean 7-day yield, and mean 30-day yield for the population of money market funds. Provide a managerial interpretation of each interval estimate 3. Discuss the implication of your findings in terms of how Lisa could use this type of information in preparing her weekly newsletter. 4. What other information would you recommend that Lisa gather to provide the most useful information to her clients? (This case problem is due to Anderson, Sweeney, and Williams for...
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...Investment Funds and Securities Bloomberg Exercises 1. Learn about the different types of funds and their classifications by going to the Bloomberg’s FUND screen: FUND <Enter>; click “Fund Functions” and “Fund Lookup”; or enter MFOD and click type: Equity, Debt, Money Market, Real Estate, Commodity, or Alternative. 2. The performances of funds by type (e.g., mutual, hedge fund, ETFs, and unit investment trust) can be found on the Fund Heat Map Screen, FMAP. Use the screen to identify the top performers based on total return for several types: FMAP <Enter>, Click “Fund Type” in “View By” dropdown. 3.) alternative) can be found on Bloomberg’s Fund Heat Map Screen, FMAP. Use the screen to identify the top performers based on total return for several objectives: FMAP <Enter>, Click “Objective” in “View By” dropdown. 4. Use the Bloomberg fund search screen, FSRC, to search for the following types of equity-type funds and ETFs: a. Fund Type: Open-End; Classification (Asset Class Focus): Equity; Fund Strategy: Growth or Growth and Income; Analytic criterion: Input total return for one year of greater than X% (e.g., 20%) b. Fund Type: Closed-End; Classification (Asset Class Focus): Equity; Country of Domicile: select (e.g., U.S.); Analytic criterion: input total return for one year of greater than X% (e.g., 20%) c. Fund Type: Open-end; Classification: Industry Focus: Select industry (e.g., technology); Analytic criterion: input total return for one...
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...PROBLEMS – conflicts of interest between management and stockholders. ASSET ALLOCATION – allocation of an investment across broad asset classes. SECURITY SELECTION – choice of specific securities within each asset class. SECURITY ANALYSES – analyses of the value of securities. RISK-RETURN TRADE-OFF – assets with higher expected returns entail greater risk. PASSIVE MANAGEMENT – buying and holding a diversified portfolio without attempt to identify mispriced securities. ACTIVE MANAGEMENT – attempting to identify misplaces securities or to forecast broad future trends. FINANCIAL INTERMEDIARIES – institutions that connect borrowers and lenders by accepting funds from lenders and loaning funds to borrowers. INVESTMENT COMPANIES – company that manages funds for investors. An investment company can manage several mutual funds. INVESTMENT BANKERS – firms specializing in the sale of new securities to the public, typically by underwriting the issue. PRIMARY MARKET – a market in which new securities are offered to the public. SECONDARY MARKET – a market in which previously issued securities are traded among investors. GLOBALIZATION – tendency toward a worldwide investment environment, and the integration of international capital markets. PASS-THROUGH SECURITIES – pool of loans sold in one package. Owners of pass-troughs receive all of the principal and interest payments made by the borrowers....
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...and investment trusts. Firstly, it will shortly introduce the definitions of two different funds, then after identifying the main difference between them, it will talk about the advantages and disadvantages for each other. Finally, it will come up with a conclusion. Unit trusts and investment trusts are two types of funds that people can invest in as a private investor in the world. They together form the very fundamental way of how funds operate. Unit trusts are‘open-ended’funds, which means that the size of the fund and the number of units depends on the amount of money investors put into the fund.(Arnold,2012:30) Moreover unit trust fund is an investment scheme where money from many investors is pooled together for collective investments, and is invested towards a specified goal as stated in the investment objective of the fund.(Fig1.1) (ambmutual.com) Arnold(2012) also claimed that investment trusts differ from unit trusts-they are companies able to issue shares and other securities rather than units. Investors can purchase these securities when the investment company is first launched or purchase shares in the secondary market from other investors. These are known as closed-end funds because the company itself is closed to new investors – if you wished to invest your money you would go to an existing investor to buy shares and not buy from the company. An open-end fund does not restrict the amount of shares that can be issued or redeemed at any time. Usually,...
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...management are the two classes in which the investment strategies are categorized. Active management is whereby financial professionals try to outperform a specific benchmark. Passive funds like the exchange traded funds (ETFs) are whereby the index is tracked with no active stock selection (Barr, 2009). The risk of a failing a benchmark or index can be reduced through passive investment. Passive investment also reduces the cost. The active investment has the potential of boosting returns through outperforming some benchmarks. However, there are increased risks and also there are no guarantees that the benchmarks will be exceeded or matched. In a well-diversified portfolio, active and passive investment can flourish. The role of ETFs which is an important building block for dynamic and diverse portfolios is to offer access to equities and fixed income across large developed economies and the emerging markets. ETFs can be traded like share, thus similar liquidity is offered hence it allows the investor to adjust to their portfolios. In the context of investors’ specific objective, active management allows risks to be managed properly (Barr, 2009). Passive funds don’t neutralize risks, but they introduce benchmark risks and concentrated risks to investors and in relation to exchange-traded fund. The concept of market efficiency holds that there can be no over-valued or under-valued securities because of the market factors of discount which at all times influence the pricing of...
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...Chapter 13, 14,18,19,20 information manager The manager responsible for the activities needed to generate, analyze, and disseminate infor- mation that a company needs to make good decisions. information management An internal operation that arranges the firm’s informa- tion resources to support business per- formance and outcomes. data Raw facts and figures. information A meaningful, useful inter- pretation of data. Data Versus Information Although business people often complain that they receive too much infor- mation, they usually mean that they get too much data—raw facts and fig- ures. Information is usefully interpreted data (see Figure 13.1). Consider the following data: ■ Fifty million tubes of toothpaste were sold last year. ■ The birth rate is rising slowly. ■ Forty-four million tubes of toothpaste were sold the year before last. ■ Advertising for toothpaste increased 23 percent last year. ■ A major dentists’ group recently came out in favour of brushing three times a day. information system (IS) An organized method of transforming data into informa- tion that can be used for decision making. electronic information technolo- gies (EIT) IS applications based on telecommunications technologies. by performing two functions: 1. Providing coordination and communication within the firm 2. Speeding up transactions with other firms Six of the most widely used innovations in today’s digital business sys- tems are as follows: fax machine A machine that...
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...management are the two classes in which the investment strategies are categorized. Active management is whereby financial professionals try to outperform a specific benchmark. Passive funds like the exchange traded funds (ETFs) are whereby the index is tracked with no active stock selection (Barr, 2009). The risk of a failing a benchmark or index can be reduced through passive investment. Passive investment also reduces the cost. The active investment has the potential of boosting returns through outperforming some benchmarks. However, there are increased risks and also there are no guarantees that the benchmarks will be exceeded or matched. In a well-diversified portfolio, active and passive investment can flourish. The role of ETFs which is an important building block for dynamic and diverse portfolios is to offer access to equities and fixed income across large developed economies and the emerging markets. ETFs can be traded like share, thus similar liquidity is offered hence it allows the investor to adjust to their portfolios. In the context of investors’ specific objective, active management allows risks to be managed properly (Barr, 2009). Passive funds don’t neutralize risks, but they introduce benchmark risks and concentrated risks to investors and in relation to exchange-traded fund. The concept of market efficiency holds that there can be no over-valued or under-valued securities because of the market factors of discount which at all times influence the pricing of...
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...23 1. Mutual funds are attractive to small investors because they are able to diversify their portfolio for a minimum investment of $250 to $2,500 (p. 609). The investors must rely on the fund’s portfolio manager to make the investment decisions though. Mutual funds generate returns in three ways: through dividend payments to shareholders, distribute capital gains resulting from the sale of securities within the fund, and through mutual fund share price appreciation (p. 611). 2. Open-end mutual funds differ in the fact that they are open to investors which means they will sell shares to investors at any time (p. 609). They also allow investors to sell the shares back to the fund at any time which closed-end cannot (p. 609). 3. Load funds are promoted by registered representatives of brokerage firm, who earn a sales charge upon the investments in the fund between 3 and 8.5 percent (p. 615). No-load funds are promoted strictly by the mutual fund of concern, thereby avoiding an intermediary (p.615). 6. The ideal mutual fund for investors who wish to generate tax-free income and a low degree of risk would be a short-term municipal bond fund (p.620). 9. If the mutual fund distributes at least 90 percent of its income to its shareholders, the fund itself is exempt from federal taxation (p.625). 11. Money market funds differ from other types of mutual funds based on the composition, maturity, and risk of their assets (p. 625). The most common money market funds are commercial...
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...Bonds are appealing to investors because they provide a generous amount of current income and they can often generate large capital gains. These two sources of income together can lead to attractive and highly competitive investor returns. Bonds make an attractive investment outlet because of their versatility. They can provide a conservative investor with high current income or they can be used aggressively by investors who prefer capital gains. Given the wide and frequent swings in interest rates, investors can find a variety of investment opportunities. In addition to their versatility, certain types of bonds can be used to shelter income from taxes. While municipal bonds are perhaps the best known tax shelters, some Treasury and federal agency bonds also give investors some tax advantages. Bonds are exposed to the following five major types of risk: (1) Interest rate risk: This affects the market as a whole and therefore translates into market risk. When market interest rates rise, bond prices fall, and vice versa. (2) Purchasing power risk: This is the risk caused by inflation. When inflation heats up, bond yields lag behind inflation rates. A bond investor is locked into a fixed-coupon bond even though market yields are rising with inflation. (3) Business/financial risk: This refers to the risk that the issuer will default on interest and/or principal payments. Business risk is related to the quality and integrity of the issuer, whereas financial risk relates to the amount...
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...versus Speculation: Results to Be Expected by the Intelligent Investor 58 65 COMMENTARY ON CHAPTER 3 4. A Century of Stock-Market History: The Level of Stock Prices in Early 1972 80 General Portfolio Policy: The Defensive Investor 88 COMMENTARY ON CHAPTER 4 5. 101 124 Portfolio Policy for the Enterprising Investor: Negative Approach 133 COMMENTARY ON CHAPTER 6 7. 112 COMMENTARY ON CHAPTER 5 6. The Defensive Investor and Common Stocks 145 iv 155 COMMENTARY ON CHAPTER 7 8. Portfolio Policy for the Enterprising Investor: The Positive Side 179 The Investor and Market Fluctuations 188 v Contents COMMENTARY ON CHAPTER 8 9. Investing in Investment Funds COMMENTARY ON CHAPTER 9 213 226 242 10. The Investor and His Advisers 257 COMMENTARY ON CHAPTER 10 272 11. Security Analysis for the Lay Investor: General Approach COMMENTARY ON CHAPTER 11 12. Things to Consider About Per-Share Earnings COMMENTARY ON CHAPTER 12 13. A Comparison of Four Listed Companies COMMENTARY ON CHAPTER 13 14. Stock Selection for the Defensive Investor COMMENTARY ON CHAPTER 14 15. Stock Selection for the Enterprising Investor COMMENTARY ON CHAPTER 15 16....
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...ARTICLES BY AUTHOR Superior performance has helped Neuberger Berman survive and thrive since the Lehman Brothers bankruptcy. Neuberger Berman was knocked around more than most asset managers in the treacherous seas of the 2008 financial crisis. The 73-year-old firm had only recently been lashed to Lehman Brothers when the investment bank foundered and ultimately failed. Buyout firms proposed a lifeline, but they fell short as the financial crisis deepened, leaving Neuberger's leaders to improvise an employee buyout during the most punishing financing environment in memory. Yet, four years later, Neuberger is freshly invigorated and focused on the essentials in the way disaster survivors tend to be. Its business is in sturdy condition, its fund performance is outpacing most peers and its strong investment culture has been affirmed. If the new Neuberger is in some ways "a $200 billion start-up," as one executive characterizes it, it is also one of the country's premier and most deeply rooted asset managers. Roy Neuberger, a founding partner and guiding force of the firm, died just two years ago, at the age of 107. Until he was nearly 100, he came into the office every day. For all the drama Neuberger has undergone in the past 15 years -- going public in 1999 after 60 years as a partnership, being absorbed by Lehman in 2003 and then set adrift five years later -- Neuberger is in some ways now much closer to the firm that Roy Neuberger ran than it has been in years, with its focus...
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...CHAPTER - I INTRODUCTION Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions. Types of investor In continuation of the lessons I’ve learned from Rich Dad Poor Dad author, Robert Kiyosaki, I will discuss today what he called “Types of Investors.” According to him, there are two main types of investors: Average Investors and Professional Investors. Average investors - buy packaged securities such as mutual funds, treasury bills, or real-estate-investment trusts. Professional investors - are more aggressive—they create investment opportunities or get in on the ground floor of new offerings, build businesses and marketing networks, assemble groups of financiers to fund deals too large for them to undertake alone, and pick the companies with the most promise for initial public offerings of stock. INVESTMENT AVENUES IN INDIA There are a large number of investment instruments available today. To make our lives easier we would classify or group them under 4 main types of investment avenues. We shall name and briefly...
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...The Mutual Fund At a basic level, mutual funds are nothing more than a collection of stocks and bonds. A mutual fund primarily focuses on bringing groups of people together to invest their money into bonds, stocks, and other different securities. It’s important to know that each of these gathered investors owns shares that ultimately make up a portion of the holdings in the total fund. Once a person invests into these stocks, bonds, or securities through the mutual fund they can make money in three different ways. One being if the fund sells a security that increases in price then it has a capital gain. If a capital gain occurs then most funds forward these gains to investors in a distribution. Another way investors make money through mutual funds is if fund holdings’ price rises but is not sold by the fund manager. The fund’s shares increase and one can sell their mutual fund shares for a profit. The third way an investor can make a profit is when income is earned from the interest on bonds and from the dividend on stocks. The fund pays out almost all of the income it receives throughout the year to fund owners in a distribution. Mutual funds not only have great benefits on a profitable level but also have many other perks to them. Most importantly, mutual funds provide professional management of the investors’ money. Most investors purchase funds because they either don’t have the time or the expertise to thoroughly manage their own portfolios. This is a great way for...
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