For an investor in mutual funds, it is essential to understand the expenses of mutual funds. These mutual fund expenses directly influence the returns and cannot be left to chance.

The expenses of mutual funds are met from the capital invested in them. The ratio of the expenses associated with the operation of the mutual fund to the total assets of the fund is known as the “expense ratio.” It can vary from as low as 0.25% to 1.5%. In some actively managed funds it may be even 2%. The expense ratio is dependent on one more ratio – “the turnover ratio”.

“The turnover rate” or the turnover ratio of a fund is the percentage of the fund’s portfolio that changes annually. A fund that buys and sells stocks more frequently obviously has higher expenses and thus a higher expense ratio.

The mutual fund expenses have three components:

 The Investment Advisory Fee or The Management Fee:  This is the money that goes to pay the salaries of the fund managers and other employees of the mutual funds.

Administrative Costs:  Administrative costs are the costs associated with the daily activities of the fund. These include general office supply costs, costs of maintaining customer help lines and so on.

12b-1 Distribution Fee: The 12b-1 fee is the cost associated with the advertising, marketing and distribution of the mutual fund. This fee is just an additional cost which brings no actual benefit to the investor. It is advisable that an investor avoids funds with high 12b-1 fees.

The law in US puts a limit of 1% of assets as the limit for 12b-1 fees. Also not more than 0.25% of the assets can be paid to brokers as 12b-1 fees.

It is important for the investor to watch the expense ratio of the funds that he has invested in. The expense ratio indicates the amount of money that the fund withdraws from the funds assets every year to meet its expenses. More the expenses of the fund, lower will be the returns to the investor.

However it is also essential to keep the performance of the funds in mind too. A fund may have higher expense ratio, but a better performance can more than compensate higher expenses. For example, a fund having expense ratio 2% and giving 15% returns is better than a fund having 0.5% expense ratio and giving 5% return.

Investors should note: It is not sensible to compare returns of funds in different risk classes. Returns of different classes of funds are dependent on the risks that the fund takes to achieve those returns. An equity fund always carries a greater risk than a debt fund. Similarly an index fund that invests only in relatively stable and thus less risky index stocks, cannot be compared with a fund that invests in small companies whose stocks are volatile and carry greater risk.

Avoiding funds with high expense ratio is a good idea for the new investor. The past performance of a fund may or may not be repeated, but mutual fund expenses usually do not vary much and will certainly reduce returns in future as well.

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Car insurance can put a big hole in your pocket. Here’s 10 ways to save on car insurance and keep some cash.

We all want to save on car insurance, and most find it confusing. Insurance premiums vary hugely between companies, agencies or agents, brokers, and of course the make of the car you own and your credit rating.

Ready to save on car insurance?  Let’s get started: 

1. Always maintain a good driving record.  This should be self explanatory.

2. Shop Around.  Never accept the first estimate you receive. Be wise and check comparisons of different insurance providers at your state insurance department website or phone them. Their addresses and contact numbers can be accessed from http://www.consumeraction.gov/insurance.shtml the consumer action website. Be sure to get competitive quotes from different insurance providers. Contact providers that are strongly recommended by people you know well. Keep your peace of mind by checking the financial stability of the companies with rating companies like A.M. Best (http://www.ambest.com/) as well as in forums and blogs.

3. Drive a car that’s affordable to insure.  Complete a market survey well before you select a car make and make a comparative table of insurance and other hidden costs. Find out which features increase insurance premiums and which ones reduce premiums. For example if parts of a certain make are hard to find or expensive such cars will have huge insurance premiums, similarly installation of anti-theft devices or an extra brake system lowers insurance premiums. Many questions are answered by the Insurance Institute for Highway Safety at http://www.iihs.org/.

4. Raise Your Deductible.  Choose to have higher deductibles this will reduce the burden by at least 15-25%. But look at your finances first and determine whether you can set aside US$ 200-US$1000 periodically to create an emergency vehicle fund.

5. Use the same insurance company for all your policies.  Consider availing the insurance from the same company that has you covered for home, accident, or life. Many companies offer concessions to clients who have more than one kind of policy. Known as a multi-policy discount this could help you save on car insurance and your other policies as well.

6. Raise Your Credit Score.  Most policies are based on your personal credit record. Having a solid credit history can lower costs. Pay bills on time, don’t take out too many loans, and be sure that credit balances are as low as possible.

Free Credit Score Estimator – No SSN Required – Try It Free Now!

7. Avoid duplicating medical coverage. Find out whether eliminating medical cover in car insurance will reduce your premiums or the personal injury protection costs. In some places the reduction is as much as 40%. So, if you have adequate health insurance you could weigh the pros and cons of eliminating this as a way to help save on car insurance.

8. Check your Zip Code.  Find out if insurance premiums are dependent on where you stay. Sometimes staying in a rural community or suburbs as against the city center could save you a bundle.

9. Ask for Discounts. Take advantages of discounts like low risk career, low mileage, taking public transport to work, car pooling, no violations or accidents, taking defensive driving courses, following safety rules and regulations, or having a child who studies far away.

10. Check for association discounts.  Use the reductions offered for insuring more than one car belonging to the family. Many companies have special offers for corporate organizations, club members, professional groups, alumni groups, or clubs.

Make time to make a big saving. Check through all the parameters and mark areas where a saving can be made. The market is competitive and you can be the beneficiary.  Share your best thoughts and ideas and what you’ve done to save on car insurance in the comments below.

www.Hypersmash.com

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When you create a budget for yourself, you can work through your debt issues.

Figuring out and sitting down to create a budget is something that too many people have difficulty with. Unfortunately, many people are just not educated enough about finding debt relief by having the ability to properly manage a well balanced budget. Following a strict budget each month or week, however you would want to do it, is no doubt the best way for everyone to improve their debt condition.

This is something that you should all really have already started thinking about because knowing how to manage your money properly and being consistent with it, will drastically pay off down the road. You will finally be able to enjoy your life completely, without all of the worries that come along for anyone who is just totally overloaded with debt over debt over debt.

Once you create a budget  it will make it possible for you to recognize that you can get through every single month with  a little bit of extra money left over for savings or paying down debt.

Staying away from credit cards, or actually, staying away from TOO many credit cards, is and will be your wisest decision that you have ever made because your financial future will be much brighter because of it and who knows, you might even be able to save yourself some money each month because of not having an overabundance of credit card payments being mailed out each and every month, which would be absolutely wonderful!

How To Create A Budget for the First Time

Its really a few simple steps to create your first budget:

1. List all your sources of income.  Be realistic and don’t overstate potential overtime, bonuses etc.
2. List all your debts by total amount, and minimum monthly payments.
3. List the dates your payments are due so that you can manage your cash flow.  If its all due on the 1st, you may have a problem making payments.
4. Remember to add in things like cash for pocket money expenses, random cups of coffee, entertainment, clothing etc so you have a realistic picture of your spending.
5. Add all of this up and create a budget in Excel using the spreadsheet.

Take the time out of your busy and very hectic schedule, sit down, take a deep breath and prepare yourself for this fun and exciting learning experience. You will learn so much about yourself once you have prepared a budget for yourself, to follow each and everyday that passes, that is going to rid you from all your debt. It will definitely be an eye opener for many of you out there that tend to go a little overboard from time to time when you are out shopping around for things.

Debt is your worst enemy so if you can do anything at all to prevent this from occurring with you all throughout your fun life, start at an early age figuring out how you will follow your budget each month and make it work.  Don’t delay, create a budget for yourself today!

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Wondering what FOREX trading is all about?

Foreign exchange trading (FOREX) is capturing imaginations, and all over the cable news shows.  But can you make money at it, or is it just a swindle?

Foreign exchange trading involves buying and selling different currencies. It works on the theory that is similar with share market. As we know that to make the profit, you have to buy at lower price and sell at higher price, or we can also sell at higher price first and buy at lower price. But its not as easy as it sounds. By studying certain market conditions, you can actually make profits in FOREX. All you have to do is to analyze the FOREX in a correct way and do the good trade.

Why to go for Foreign exchange trading?  There is an option to invest in stock market also but here are a few important advantages of currency trading over stock market.

24-hour Trading

Forex trading is done on 24-hours basis. This market is open throughout day and night as somewhere in the world, there must be this buy and sell trading is going on. Traders involved in Forex trading strategy can always get that first hand information and can act accordingly. The currency rate is actually run through telecommunication all over the network of banks 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday. There are ECNs (Electronic Communication Networks) which bring together buyers and sellers.

Greater Liquidity

There is a superior liquidity in the market as there are always buyers and sellers to purchase and sell foreign currencies. Forex trading market size is 50 times bigger than the New York Stock Exchange and liquidity of such large market ensures price stability. Forex trading stop orders could be carried out more simply. This makes Forex trading signal more liquid and permits Forex traders to take benefit of trading opportunities as they happen rather than waiting for the market to open the next day.

100:1 High Leverage in Forex trading

100 to 1 leverage is commonly available from online Forex dealers, which substantially exceeds the common 2:1 margin offered by equity brokers. This gives them a huge leverage in their trading and presents the potential for extraordinary profits with relative small investments. Leverage can also go the opposite way and may lead to huge losses if you are not careful.

Forex trading transactions have no commissions. Forex Brokers can earn money by fixing their own speculation between what a currency could be bought at and what it could be sold at. In difference, Forex traders have to pay a commission fee or brokerage fee for every futures transaction they come in to the view. The Forex market is so large that no one individual, bank, fund or government body can influence it for a long period of time. In Forex trading strategy, you can trade between seven currencies but not everyone trade in all.

There are certain trading signals that give indications to the trade. These Forex signals are delivered by email, instant messenger or direct to your desktop. Some services even offer auto-trading, allowing you to auto-execute their trading signals direct into your broker account.

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Credit scores are shrouded in mystery…. that’s how the credit bureaus like it!

Your credit score is an integral part of your financial life. It is important that you understand what it’s all about. Lenders, landlords, insurers, utility companies and even employers look at your credit score. It is derived from what’s in your credit reports, and it ranges between 300 and 850.

Yet, according to a recent survey, nearly half of all Americans don’t know how these scores are derived or even what factors are used to come up with them.

With so much depending on the credit score, it’s important to understand what it is all about and what are the things that affect it.

For example, if your credit score is 580 you are probably going to pay nearly three percentage points more in mortgage interest than someone who had a score of 720.

Or another way of looking at it, if you had a $150,000 30- year fixed-rate mortgage and your credit score was good enough to qualify for the best rate, your monthly payments would be about $890. This is according to Fair Isaac, the company that created the FICO score and who the rate is named after (Fair Isaac COrporation). If your credit is poor, however, it is very likely that you would have to pay more than $1,200 a month for that same loan.

Free Credit Score Estimator – No SSN Required – Try It Free Now!

Unfortunately, people commonly have a lot of misinformation and misunderstandings about their credit score. Here are five of the most common credit score myths and along with it the true facts:

MYTH #1: The major bureaus use different formulas for calculating your credit score.

FACT: The three major credit bureaus – Equifax, TransUnion and Experian — give the score a different name. Equifax calls their score the “Beacon” credit score, TransUnion calls it “Empirica” and Experian gives it the name “Experian/Fair Isaac Risk Model.” They all use different names for the credit score, but they all use the same formula to come up with it.

The reason that the credit score you receive from each bureau is different is because the information in your file that they base the score on is different. For example,the records that one bureau is using may go back a longer period of time, or a previous lender may have shared its information with only one of the bureaus and not the other two.

Usually the scores are not too far from each other. Unless there is a big difference between what each bureau says is your credit score, many lenders will just use the one in the middle for the purpose of analyzing your application. So, for this reason alone it is a good idea to correct any errors that exist in each of the three major credit bureaus.

MYTH #2: Paying off your debts is all you need to do to immediately repair your credit score.

FACT: Your credit score is mostly determined by your past performance more than your current amount of debt. It will definitely be very helpful to pay off your credit cards and settle any outstanding loans, but if yours is a history of late or missed payments, it won’t remove the damage overnight. It takes time to repair your credit score.

So definitely pay down your debts. But it is equally important to consistently get in the habit of paying your bills on time.

MYTH #3: Closing old accounts will boost my credit score.

FACT: This is a common misconception. It’s not closing accounts that affects your credit score, it’s opening them. Closing accounts can never help your credit score, and may actually hurt it. Yes, having too many open accounts does hurt your score. But once the accounts have been opened,the damage has already been done. Shutting the account doesn’t repair it and it may actually make things worse.

The credit score is affected by the difference between the credit that is available and the credit that is being used. Shutting down accounts reduces the amount of total credit available and when compared with how much credit you can use your actual credit balances are made to seem larger. This hurts your credit score.

The credit score also looks at the length of your credit history. Shutting older accounts removes old history and can make your credit history look younger than it actually is. This also can hurt your score.

You generally shouldn’t close accounts unless a lender specifically asks you to do so as a condition for them giving you a loan. Instead,the best thing you can do is just pay down your existing credit card debt. That’s something that definitely would improve your credit score.

MYTH #4: Shopping around for a loan will hurt my credit score.

FACT: When a lender makes an inquiry about your credit, your score could drop up to five points. Some borrowers think that if they shop around by going to a number of different lenders that each time a lender does an inquiry it will generate another reduction in the credit score. This isn’t true. For credit score purposes, multiple inquiries for a loan are treated as a single inquiry, as long as they all come within a 45 day period. So it is best to do your rate shopping within this 45 day window.

MYTH #5: Companies can fix my credit score for a fee.

FACT: If the credit bureaus have accurate information, there’s nothing that can be done to quickly improve your score if in fact you have a history of not handling your debts well. The only way to have an effect on your credit score is to show that you can manage your debts in the future.

Also,if there are errors in your file, you can contact the bureau yourself. You don’t need to pay someone else to do it. Each of the major credit bureaus has a website which clearly explains what you need to do to correct an error.

So, the best ways to improve your credit score are: pay down the debt, pay your bills on time, correct existing errors on your credit reports in each of the three bureaus and apply for credit infrequently.

 Free Credit Score Estimator – No SSN Required – Try It Free Now!

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Mortgage rates could move a bit this week, based on how these reports come out.

Mortgage rates can move as the Fed has yet to set a date for rolling back its quantitative easing program, and Friday’s jobs report said that the unemployment rate was still high, at 7.4%.

Housing markets are showing strong improvement. High unemployment continues to be a drag on the economy, which means good news for interest rates.

Tuesday – the U.S. Trade Deficit and Job Openings reports for June are released.

Wednesday – a report on Consumer Credit will be released, giving investors insight into the overall health of the economy.

Keep an eye on mortgage rates with the mortgage rate tables at RateNerd.com.

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This High Yield Checking Account from AAA Bank pays 2.85% APY up to $10K, and is NOT a teaser rate!

With this high yield checking account from AAA Bank, you’ll earn a remarkably high yield on your funds and unlimited, FREE ATM withdrawals in exchange for using your debit card at least 12 times per statement cycle.

With this high yield checking account you get:

• 2.85% APY on $10,000 or less
• 0.05% APY on $10,000 or more
• Free online access to account balances and information
• Make deposits, transfers and loan payments
• Pay bills with automatic bill pay
• Can tie to your savings account for instant overdraft protection with no monthly fee
• Receive up to 0.25% discount off the APR for personal loans
• Free electronic statements
• Free unlimited check writing
• Free unlimited usage nationwide, including surcharges levied by other banks, when you meet monthly requirements

Those who do not meet the requirements for this high yield checking account will still enjoy free checking for that month and there is no penalty for not qualifying in a given cycle. A base 0.05% APY will be earned for that month, returning to 2.85% APY with ATM refunds in the next qualifying cycle month.

High Yield Savings Accounts

Annual Percentage Yield (APY) accurate as of 4/1/13. Rate tiers are as follows: 2.85% APY applies to balances of $0.01-$10,000 and 0.05% APY applies to balances over $10,000 as long as qualifications are met each qualification cycle: 0.05% APY applies to all balances if qualifications are not met. Rates are variable and may change after the account is opened. Fees may reduce earnings. Qualifying transactions must post and clear the account during the monthly qualification cycle. Transactions may take one or more business days from the transaction date to post to an account from the date the transaction is made.

 Visit AAA Bank for more details on this high yield checking account offer.

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Mortgage rates climbed for the sixth week in a row, but remain at historic lows.

The benchmark 30-year fixed-rate mortgage rose to 4.14%, compared with 4.1% last week. One year ago, that rate stood at 3.91%. Four weeks ago, it was 3.71%.

The 30-year fixed-rate mortgage rose 4 basis points to 4.14 percent. A basis point is one-hundredth of 1 percentage point.

The 15-year fixed-rate mortgage rose 4 basis points to 3.32 percent. The average rate for 30-year jumbo mortgages, or generally for those of more than $417,000, rose 5 basis points to 4.32 percent.

The 5/1 adjustable-rate mortgage rose 7 basis points to 3 percent. With a 5/1 ARM, the rate is fixed for five years and adjusted annually thereafter.

Mortgage rates are rising because they tend to follow the yield on the 10-year Treasury note. The yield on the 10-year note climbed as high as 2.29 percent this week from a low of 1.63 percent last month.

Just over a year ago, a 4% mortgage rate would have been considered a record low for a 30-year fixed rate mortgage.

In all the hype surrounding rising rates, what is realistic is that existing homeowners should lock in lower interest rates as soon as possible. In the past month alone, applications for refinancing rose 5%, according to the Mortgage Banker’s Association.

For people paying more than 5% on a mortgage today, they should find out if refinancing makes sense as soon as possible. People who have older loans at rates of 6% or 7% could save thousands by refinancing, even as rates are rising.

Jumbo Mortgage Rates Similar To Conventional Mortgage Rates

Historically, the rate on jumbo loans — those too big to be guaranteed by Fannie Mae and Freddie Mac — had been around 0.25 to 0.5 percentage point more than the rate on conforming loans, which are below the Fannie/Freddie limit.

For the week ended June 14, the average rate nationwide for a 30-year fixed-rate loan was 4.09 percent for conforming mortgage loans, 4.23 percent for high-balance conforming and 4.25 percent for a jumbo mortgage.

Some individual banks are offering jumbos as cheap or cheaper than conforming 30-year fixed-rate loans.  See the mortgage rate tables on RateNerd.com to learn more.

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Mortgage interest rates edged up a little from their record lows this week, with 30-year fixed mortgage loans at an average of 3.50%.

Concerns about the next fall out related to the so-called fiscal cliff have depressed interest rates as demand increased for ultra-safe Treasury securities and insured mortgage bonds from Freddie Mac and other government-backed issuers.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.50 percent from 3.47 percent, with points increasing to 0.44 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 3.73 percent, the lowest rate in the history of the survey, from 3.77 percent, with points decreasing to 0.29 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.34 percent from 3.32 percent, with points increasing to 0.54 from 0.51 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.83 percent, the lowest rate in the history of the survey, from 2.85 percent, with points remaining unchanged at 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.61 percent from 2.63 percent, with points increasing to 0.36 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

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These new U.S. Savings Bonds don’t pay much interest, but they are valuable in other ways.

To celebrate the holiday season, the U.S. Department of the Treasury is proud to introduce a new set of savings bond certificates to mark the time-honored tradition of giving U.S. Savings Bonds as holiday gifts. The newly designed gift certificates feature historical and patriotic themes and can be given when digital savings bonds are bought as gifts for children, grandchildren and other loved ones.

“Whether it’s to save for a child’s college education or for a young couple’s first home, U.S. Savings Bonds are excellent gifts to help people achieve a financial milestone,” says Jerry Kelly, national director of the Treasury Department’s Ready.Save.Grow. campaign.

The printable certificates can be included in a card or envelope to represent the digital savings bond gift. Learn more about the new certificates by visiting www.treasurydirect.gov/readysavegrow.

To recognize the first holiday season since the transition from paper to digital savings bonds, the Treasury Department created a new video that explains how to give a digital gift savings bond using TreasuryDirect.gov.

TreasuryDirect.gov is a safe, secure and convenient website operated by the Treasury Department where people can buy, manage and redeem savings bonds 24/7.

A step-by-step tip sheet and instructional demo about buying a savings bond as a gift is also available. Watch the video and print the tip sheet at www.treasurydirect.gov/readysavegrow.

Before you buy your U.S. Savings Bond gift

Make it convenient for friends or relatives to give the gift of saving by opening a TreasuryDirect account for yourself, as well as your children. To buy a digital savings bond as a gift, both you and the person receiving your gift will need to have an account in TreasuryDirect.gov. Parents will need to set up TreasuryDirect accounts under their own primary account for children under the age of 18.

More information on U.S. Savings Bonds

For more information on giving savings bonds as gifts, how to open a TreasuryDirect account, or to learn about other Treasury savings options, visit the Ready.Save.Grow. campaign’s website at www.treasurydirect.gov/readysavegrow.

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