Personal Finance Blog by Debit versus Credit

Weekend Reading: June 28th

June 28, 2008 | Filed in: Weekend Reading | No comment

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There’s been some great reading online this past week.  A lot of the links that I’m posting this week are related to simple ways to save money, which should come in handy with the quickly increasing cost of living that we’re experiencing here in the U.S.

David at Moneyning posted some fantastic advice on how to take advantage of the wonder that is google, specifically google alerts, by setting up alerts for when coupons and deals are taking place for items that you have been searching for.  Check out Setup Google Alerts to Get Coupons and Deals.

Pinyo at Moolanomy is looking out for those who are looking at potentially buying a house in the near future.  He gives some fantastic advice on how you can test your finances and see if you can really afford that house payment.  Check out Test Drive Your Home Ownership Experience.

Is the price of gas killing your finances lately?  It’s getting warm outside now too… what are you going to do about your increased energy bill?  Trent at The Simple Dollar has some practical advice about using ceiling fans in order to be able to use your air conditioning less.  Check out Ceiling Fan Hacks: Save Big on Energy Use.

Here’s one for those of you interesting in investing ideas. Jonathan at My Money Blog posted an update talking about a new global index fund from Vanguard.  Might not be a bad fund to invest in if you’re interested in diversifying into the global market.  Check out Vanguard’s New Global Stock Index Fund.

That’s it for this weekend.  See ya next week!  ^_^

Tags: vanguard, Weekend Reading

Mutual Funds 101

May 29, 2008 | Filed in: Finance 101, Investing | No comment

I was talking to a friend of mine the other day about investing. She just recently received her tax refund and had yet to “spend it” as she said. Naturally I suggested that she invest it. We got to talking about what she might invest her money in and since she has absolutely no investing experience I suggested that she might consider a mutual fund. She had heard of mutual funds before, but wasn’t exactly sure what they are. Of course I told her she should read my blog post about mutual funds, when suddenly I realized I didn’t have one. Thinking that it was really quite irresponsible of me to not have covered this topic as of yet, I am now going to right this wrong. Welcome to Mutual Funds 101.

What is a Mutual Fund?

A Mutual Fund is a diversified portfolio of investments… essentially a ready-made, specifically focused, investment portfolio. A Mutual Fund is a large pool of money which is used to invest in stocks, bonds or other securities. Mutual Funds are attractive to a large number of people because it is easy to purchase shares and they are great for investors who do not have the time or the desire to create their own diversified investment portfolio. Mutual Funds are usually geared towards one of three different goals: income, growth or a mixture of the two. An income fund invest mainly in - you guessed it - income investments such as bonds, preferred stock and income-oriented common stock (stocks that pay a high dividend). A growth fund invests mainly in high-growth (often small or mid-cap stocks) stocks and other types of growth investments. And finally the growth/income fund would invest in a mixture of these types of investments so as to provide a stream of income to the investor as well as potential for future growth.

How do I purchase a Mutual Fund?

To invest in a Mutual Fund is similar to investing in the stock of a company. Mutual Funds are sold by the share, just as stocks are. The Net Asset Value (NAV) of a Mutual Fund refers to the value of just one share of a Mutual Fund. This NAV is updated daily. Investors have two choices when it comes to investing in a mutual fund. They can purchase shares of the fund from the fund company directly or purchase shares through a brokerage account.

If you already have a brokerage account you might consider purchasing shares of funds directly through your brokerage, so as to keep all of your investments in one “place.” One thing to keep in mind is that some brokerages charge a flat fee to invest in a fund. This fee might make it more practical to purchase directly from the mutual fund company.

Some brokerages include E*Trade, Scottrade and Zecco Trading. Some great Mutual Fund companies include Vanguard and T Rowe Price.

Update: A great place to do research on mutual funds is over at Morningstar.com

Tags: diversification, diversified portfolio, funds, Investing, mutual funds, stocks, vanguard