The perfect Mutual FundWritten by Charles M. O'Melia
"You have permission to this article either electronically or in print as long as author bylines are included, with a live link, and article is not changed in any way. Please provide a courtesy e-mail to charles@thestockopolyplan.com telling where article was published. The author retains full copyrights!"The Perfect Mutual Fund Is Mutual Fund you build yourself! The perfect Mutual Fund you build should have objective of owning no more than 12 to 15 companies; owning shares in 12 companies would allow diversity needed to sleep well at night and would provide a cash dividend every week of year. The 12 companies (with staggered dividend payout dates) in your perfect Mutual Fund should not only provide a cash dividend every week of year, each company should also have a historical record of raising their dividend every year for at least past 8 years (to eliminate risk). The perfect Mutual Fund would have no fees attached, every cent put into Fund would work toward your return on investment (ROI). There would not be any commission fees, load fees, management fees, operating or advertising fees, and there would be no illegal trading practices, hidden fees abuses or any type of hidden fee. The perfect Mutual Fund would benefit only you and your family and no one else. The perfect Mutual Fund would require a savings plan to add to your holdings every quarter, until retirement. This would allow your perfect Mutual Fund to dollar-cost average (buying same stock at different prices through years) into your holdings every quarter (your dividends from companies would be doing this already, commission free; and in perfect Mutual Fund your quarterly investments into more shares of each company would also be commission free). With this in mind, every dividend received every quarter from a company in Fund would be higher than previous dividend from that same company (as long as company, at least, maintains their dividend and in perfect Mutual Fund every company has a history of raising their dividend every year). In perfect Mutual Fund, when prices of your stock holdings in Fund decline, cash dividend income from perfect Mutual Fund would simply accelerate. The reason for this is simple - lower stock prices in Fund, higher dividend yields. A company, for example, may pay a quarterly dividend of 50 cents a share. Whether that company’s share price is 70 dollars a share or 40 dollars a share, company pays a quarterly 50 cents a share dividend. At a lower stock price reinvested dividend and quarterly investment purchases more shares.
| | Interest Rates Up, Up and Away?Written by Cindy S. Morus
Interest rates have been at their lowest levels in over 40 years. U.S. consumers have been able to purchase previously unaffordable homes, cars and other toys. Many have used cheap home equity loans to remodel, take vacations and pay off credit cards. Students have taken advantage of rock-bottom student loan rates. But, interest rates look to be headed up. Recently, Alan Greenspan and Federal Reserve escalated Fed funds rate from 1% to 1.25%. So, what does that mean to you and me? The increase in rates is important if you have variable (not fixed) loans. For example, if you have adjustable rate mortgage or home equity lines of credit, interest rates will probably go up (as well as payments) in next few months. Each time Fed increases Fed funds rate, it will roll down onto your adjustable rate loans and your payments will go up. The speed of increase and amount of increase will depend on what index your loan is based on – check with your lending institution for more information on that. If you have high credit card debt, situation may be even more bleak because credit card rates remained high while other rates have been incredibly low. The Fed increases are a good excuse for your credit card company to hike your rates even higher. So, what can you do if you’re looking at rates and payments going up, up and away? Your payment increases may be fairly gradual. Depending on economy, Fed will continue to increase rates although they have signaled that increases are likely to be very gradual. If economic or political situation changes, they always have ability to lower rates again. The Fed's rate-setting committee is scheduled to meet again Aug. 10, Sept. 21, Nov. 10 and Dec. 14, and they may skip a rate increase at one of those meetings if inflation is subdued. Check with your student loan lenders to see about consolidating and locking in rates. Good news: interest rates on savings are also likely to increase! So, if you have CD’s coming due, check with different financial institutions before automatically rolling them over. If you have money stashed in savings accounts, rates are probably starting to creep up. I highly recommend ING savings for highest rates around (http://www.ingdirect.com). They also give great service, have no fees or hidden costs and are FDIC insured. You can also name your accounts at ING to make it easy to identify what you’re saving for.
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