INVESTMENT ACCOUNTS » Investing Money

By Casey Bond

It may not be the stuff lively cocktail party banter is made of, but the often overlooked savings bond is making a name for itself as one of the best places to park your cash these days.

On Wednesday, Banking giant Bank of America said  it will pay an $8.5 billion settlement to investors who were sold fraudulent mortgage securities prior to the 2008 financial crisis. As a result of the settlement, the bank expects to report a second-quarter net loss of between $8.6 billion and $9.1 billion (or a range of 88 cents to 93 cents per share).

22 Investors to Be Paid in Settlement

Regardless of how much money you have in the bank, diversifying your portfolio is always a wise idea in order to avoid putting all your eggs in one basket. The variety of products and choices available can seem overwhelming to the novice investor, but learning the differences between them can aid you in making educated financial decisions.

If you are interested in taking your savings to a new level, knowing how managed funds differ from individual stocks is a crucial piece of information.

Civil fraud charges could be filed against several major credit rating agencies for their role in developing mortgage bond deals that helped bring about the financial crisis in 2008. The Wall Street Journal reported on Friday that the U.S. Securities Exchange Commission (SEC) is currently looking at the role these companies played in the crisis and exploring the possibility of holding them accountable.

SEC Reviewing Conduct of Companies

The recession may be officially over, but Americans are still hurting financially. The Department of Labor reports hiring was down last month, and the disappointing news had a ripple effect on the economy as the stock market fell this week. The good news is it’s national doughnut day, and who doesn’t love doughnuts?

Sony Gets Hacked…Again

Are you a go-getter who doesn’t let anything get in your way? If you answered yes, chances are you don’t want to leave the task of overseeing your managed funds to a stranger and plan on grabbing the bull by the horns. If you want to be successful at managing your own portfolio, there are certain things you need to consider before beginning the investment process.

• Understand the Risks: Managed funds are a great way for investors to easily diversify their portfolio. However, unlike some other types of investments, managed funds do not guarantee a positive return and the principal balance can actually depreciate if the managed fund loses value after your initial purchase. Additionally, there is no FDIC insurance coverage for managed funds.
• Know Your Goals: Are you looking to make a quick buck or plan on investing to meet long-term goals? As long as you can commit to a longer-term investment period, you may increase your odds of being successful in managed funds.
• Read All About It: If you are purchasing funds yourself, or even if you plan on hiring a financial professional, you need to know as much information as possible. Investment companies produce collateral material called a “prospectus” for all their securities, which details required disclosures, general terms and past performance. Understand, however, past performance is only an indicator of how a fund may do in the future and not a guarantee.
• Think Big: Managed fund options are plentiful. However, play it safe as you start out by mostly investing in bigger, well-established funds with good reputations to help you ease into the game. You can get an idea of where to start by asking trusted colleagues, friends and family about their investments and take it from there.

Investing is something that many people are intimidated by because they don’t understand the process. This is often truer of an investment fund than individual stocks and bonds because funds bundle a lot of securities.

The truth is, however, that the investment fund structure isn’t confusing if you take time to understand it. Here are some ways to overcome the intimidation of investment funds:

1. Research Companies and Definitions

A new report released by Fidelity Investments revealed the average 401(k) account balance in the U.S. reached a record high of $74,900 as of March 31. According to the report released on Wednesday, the increase was largely attributed to a rebounding economy and stock market gains.

Stock Market Gains Contribute to 12-Percent 401(k) Balance Increase

Earning more money is something that makes everyone happy, but that happiness is short-lived for some when they realize they have to pay taxes on that extra income. Those interested in minimizing fund taxes may consider investing in a tax-managed fund.

These investments were created by investment firms as a response to the number of investor complaints regarding capital gains taxes. When investors balked at having to pay extra taxes for gains they earned on successful investments, some firms began offering tax-managed mutual funds. These types of managed funds are meant to balance the amount of an investor’s taxes because the fund managers do the following:

Investing in mutual funds, ETFs, hedge funds or the many other funds and securities out there can be a bit challenging if you don’t understand the investment fund structure. Sometimes, it could be tempting to make hasty decisions when things look good, not realizing you could be setting yourself up for an investment failure. That’s why, before diving into an investment fund, it’s good to know what practices to avoid.

1. Chasing Top Performers