2013년 11월 27일 수요일

About 'examples of mutual funds'|The Hidden Costs of Mutual Funds







About 'examples of mutual funds'|The Hidden Costs of Mutual Funds








Most               people               won't               become               millionaires               by               winning               the               lottery,               or               gaining               extreme               fame,               or               inheriting               a               mass               of               wealth               from               a               relative.

So,               how               does               the               average               joe               become               a               millionaire?

By               using               the               time               value               of               money.

I               wish               this               was               taught               in               schools,               because               I               didn't               learn               about               this               until               I               was               in               my               30's.

This               means               I               already               lost               many               years               of               using               the               time               value               of               money.

So               how               do               you               save               a               million               bucks?

The               following               examples               differ               based               on               the               initial               amount               of               money               to               invest,               how               much               is               invested               each               period,               the               time               of               the               periods               such               as               per               month               or               per               year,               the               percentage               rate               received               on               the               investment,               how               often               interest               is               compounded,               and               the               effect               of               taxes.

Two               websites,               moneycentral.msn.com/Investor/calcs/n_savapp/main.asp               ,               and               planningtips.com/cgi-bin/savings.pl               are               useful               to               reference               during               this               discussion,               and               for               purposes               of               figuring               out               what               to               do               to               reach               your               own               savings               goals.

1.

Start               with               a               certain               amount               of               money               and               save               it               for               a               long               time.

This               is               one               way               to               reach               the               million               dollar               goal.

Here               are               some               specific               examples:
               If               you               start               with               $10,000               and               you               get               an               10%               return               on               your               money,               it               will               take               you               46               years               to               reach               a               million               dollars.

(You               can               verify               this               using               the               planningtips.com               website               noted               above.)               This               means               that               if               you               start               saving               this               amount               at               age               18,               when               you               reach               64,               you               will               have               a               million               dollars.

One               thing               this               savings               calculator               does               not               take               into               effect               is               taxes.

So,               you               would               have               to               pay               the               taxes               separately               or               have               this               money               in               a               retirement               account               in               order               to               actually               have               this               amount               at               the               end               of               the               46               years.

To               figure               in               money               lost               to               taxes               each               year,               use               the               moneycentral.msn.com               website               noted               above.
               If               you               start               with               $20,000               and               get               a               10%               return               on               your               money,               it               will               take               you               39               years.

This               implies               monthly               compounding               of               interest.

So,               if               you               are               18               at               the               beginning,               you               will               be               57               when               you               reach               your               million               dollar               savings.
               If               you               start               with               $30,               000,               with               10%               and               monthly               interest               compounding,               you               will               reach               your               goal               in               35               years.
               If               you               start               with               $40,000,               a               million               dollars               will               be               reached               in               32               years.
               2.

With               no               money               at               the               beginning,               invest               a               regular               amount               each               month.
               If               you               invest               $200               per               month,               with               a               10%               return               compounded               monthly,               you               will               have               a               million               dollars               in               37               years.
               If               you               invest               $300               per               month,               with               the               above               return               and               compounding,               you               can               have               the               million               dollars               in               33               years.
               If               you               invest               $400               per               month,               you               will               reach               a               million               in               30               years.
               If               you               invest               $1000               per               month,               it               will               only               take               you               22               years.

If               you               started               saving               at               age               18,               by               age               40               you               could               have               a               million               dollars.
               3.

Start               with               some               money               initially,               and               invest               a               set               amount               per               month.
               If               you               start               with               $10,000               and               invest               $100               per               month,               you               will               have               the               million               dollars               in               38               years.
               If               you               start               with               $10,000               and               invest               $200               per               month,               your               million               dollars               will               be               reached               in               34               years.
               If               you               start               with               $20,000               and               invest               $100               per               month,               it               will               take               you               34               years.
               If               you               start               with               $20,000               and               invest               $200               per               month,               it               will               be               31               years               later               that               you               will               reach               a               million               dollars.
               Comparison
               So               which               way               will               you               go?

That               depends               on               what               your               finances               dictate.

It               is               interesting               to               compare               the               different               savings               plans               from               above               and               note               the               total               amount               invested.

If               you               start               with               the               $10,000               and               don't               invest               anymore,               it               takes               you               46               years               for               the               million               dollars.

But               that's               all               you               invested.

If               you               go               the               route               of               saving               $200               per               month,               it               takes               you               less               time-               37               years,               but               your               total               amount               invested               is               $88,000!

($200               per               month               x               12               months               per               year               x               37               years)
               Conclusion
               You               can               visit               the               websites               noted               above               and               try               different               scenarios,               such               as               receiving               only               at               8%               rate               of               return               or               interest               only               being               compounded               annually.

The               key               is               to               save               the               money               and               save               it               over               time,               with               all               of               the               above               examples.

You               also               have               to               be               able               to               obtain               a               strong               rate               of               return               on               your               money.

If               you               invest               in               certificate               of               deposits,               you               will               have               a               guaranteed               rate               of               return,               but               lower               interest               rate.

If               you               invest               in               mutual               funds,               your               rate               of               return               is               greater               but               you               also               incur               the               risk               of               losing               your               money.

It               will               be               up               to               you               to               determine               what               to               invest               in.

Make               sure               to               make               wise               decisions               by               doing               a               good               deal               of               research               and/or               speaking               to               a               professional.






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