A mutual fund is an investment vehicle in which multiple investors pool their money into one account to be managed by a professional investor. From a money making standpoint, the benefits of using a mutual fund are pretty clear. For one, if you've got extra cash lying around but don't know how to invest it, it pays to hand your money to someone who knows what they're doing. Secondly, mutual funds are heavily regulated by the government, so it's definitely a more secure way to invest. Finally, the primary benefit of investing a mutual fund is the diversification. Mutual funds typically hold many different securities and this diversification is a great way to mitigate risk. It isn't all sunshine and rainbows, however. Investors in a mutual fund have to pay various fees and expenses, and since they're part of group, each investor must sacrifice his/her ability to invest individually.
How do they work?
From a functional standpoint, mutual funds are simultaneously an investment portfolio and, because of their size, a full fledged company. A mutual fund, day-to-day, works much like any other company. A fund manager is elected by the board of directors and is legally obligated to make decisions that benefit the fund's shareholders. Most mutual funds exist as part of a larger investment corporation, with some companies containing hundreds of funds.
Mutual funds invest in multiple securities at once in order to hedge their bets.
What's the difference between a mutual fund and a hedge fund?
Mutual funds are not to be confused with their risk-taking, coke-addled cousin, the hedge fund. The fundamental difference between the two is that a hedge fund's leverages (bets made with borrowed cash or prospective earnings) aren't regulated. While both mutual funds and hedge funds lack a certain level of transparency, investors in a mutual fund can rest a little easier, knowing that the company they're invested is relatively safe (in theory). While the SEC doesn't have the jurisdiction to supervise a mutual fund's investments, it does require these funds to publicly report their earnings. The biggest safety net in the world of hedge funds is its barriers to entry. You must have a net worth of at least $1 million to ride that ride. That said, if you're trying to bet the minimum, you might be better off at a casino.
Are there different types of mutual funds?
Since there are different types of securities (bonds, stocks, derivatives etc.), naturally there are different types of mutual funds. One of the more prominent types is based on fixed income and the collecting of government and corporate bonds. Fixed income funds generate their income via interest. Another type of fund is based around market indexes. These funds are predicated on the belief that the stock market is too hard to judge. Instead of trying to beat the market, investors buy into specific indexes (i.e. Dow Jones, S&P, NASDAQ). The advantage of these funds is twofold. Investing this way is extremely risk averse and feels significantly safer than the other mutual funds out there. On top of this, betting on an index isn't rocket science, so there are way less fees involved with this type of fund. Another relatively secure option is a money market fund, in which the objective is to keep the fund's share price at $1 and to turn a profit on short term investments. These funds move quickly but are a comparatively safe way to invest one's money. There's also no fee associated with entering and exiting a money market fund. There are also sector funds (funds based on specific industries), balanced funds (funds that hold both stocks and bonds), and too many other variants and combinations to mention here. This is the 101 course for God's sake. If you've read this and thought "gee, I didn't know what mutual funds were, but now I'm itching to get involved," I recommend talking to a financial advisor.
Index Funds are the safest way to play
Aren't all funds just scams?
Yes. Invest in real estate you idiot. Sorry, I got ahead of myself there. What I meant to say was:Yes and no. Where mutual funds come up short, is in the idea that picking a company with a star investor or manager is going to to yield better results. An investor's success rate is not predictive of future success. According Henry Blodget and David Swensen the only thing that's predictive of a mutual fund's success is the cost it takes to run it. This is why index funds, with their lower operating costs, always seem to beat out other funds in revenue. So yes, funds that claim to have "inside knowledge" about the stock market and investing, are lying to you. Investing at that level tends to be little more than educated guessing. That said, these funds exist and have been legitimized in the American financial space. The amount of money tied up in US-based mutual funds is about the same as our GDP. So, if you have the money, and are looking to bet it, a mutual fund is closer to blackjack than roulette. Still, unless you're counting cards (or insider trading) it's pretty much all luck.
Airbnb offers an affordable option for people looking to be more comfortable as they travel.
However, there are downsides to staying in a host's home rather than a hotel. Whereas hotels are designed for constant streams of visitors and often have furniture built to last, at an Airbnb, you may be staying on old or cheap furniture that a host is using in order to maximize their profits.
And while most reputable hotels will have regular room inspections from staff to check for any wear and tear, Airbnb damage disputes are oftentimes he said, she said situations. If you are in an Airbnb and something breaks, there are a few steps you should take in order to ensure that you are not on the hook for damages out of your control.
If you're keeping tabs on the art and tech worlds, you've probably been hearing whispers about "NFTs" for the past month. Just over the past week they've entered the mainstream lexicon.
Twitter founder Jack Dorsey made the news for selling his first ever tweet. The app has been teasing paid subscription models and newsletter-like features, but tweets for sale is "the next frontier."
just setting up my twttr— jack (@jack)1142974214.0
The 2006 tweet went up for auction as an NFT, and the current bid is $2.5 Million. But what does it mean to own that? Why would anyone want to? And what even is an NFT?
Long gone are the days when the majority of Americans dreamed about owning a home with a white picket fence.
The traditional American Dream may be on its deathbed, but that doesn't mean a core component of the vision can't survive. It simply takes a diverse perspective. People can still believe they can attain their own vision of success in society with hard work, knowledge, and risk-taking. Investing in today's American Dream may literally mean investing money in our modern economy, starting with our infrastructure.
Real estate investing in particular is a lucrative method that can boost income and secure a better financial future for many. There's always risk involved, but the payoffs can far outweigh the uncertainty. Selecting solid financial investments is about confidence and competence. If you're looking for some advice on this kind of investment, here are a few savvy tips for new real estate investors.
Stick To a Specific Strategy or Niche
Real estate is a challenging sphere of the business world, one that requires several key skills: groundwork knowledge, networking, perseverance, and organization. True knowledge of the real estate market will come with time and experience, but it's a smart idea to select one area of the market and stick to it. This is the best way to attain in-depth familiarity with your specific niche.
First, choose a geographical area close by and then a niche strategy within it, such as house flips, rental rehabs, or residential or commercial properties. By doing so, you can become aware of current inner working conditions in the market and you'll have a better idea of how these trends may change in the future.
Be Vigilant About Viable Financing Options
While it takes money to make money, you don't have to use all your own money. A common misconception about real estate investing is that you must be wealthy to start off. This isn't straight fact, however. A majority of people can test the waters of real estate investing without a lot of initial cash in their pocket.
Aside from traditional financing options from banks and institutions, private lending options can be worthy solutions. Hard money lenders are popular, reasonable choices, and they tend to have fewer qualification requirements upfront. However, be sure to strategically choose a hard money lender to find the best possible fit.
Master the Art of Finding Good Deals
There may be hundreds of thousands of available properties for sale on the current market, but the bulk of them will never amount to the final money-making result you desire. Another great tip for new real estate investors is to use good math to estimate profit. Taking risks is part of the process, but you have the ability to analyze properties and use networking sources to find the greatest deal. You can't win every deal, but you can steadily work towards a thriving financial future.