2. Disclaimer Andreas Rauterkus is not a registered investment
advisor or broker/dealer. Readers are advised that the material
contained herein should be used solely for informational purposes.
Andreas Rauterkus does not purport to tell or suggest which
investment securities attendants should buy or sell for themselves.
You should always conduct your own research and due diligence and
obtain professional advice before making any investment
decision.
3. Why Mutual Funds? Professional Portfolio Management
Automatic Diversification Easy to Buy and Sell Net Asset Value
(NAV) Small Minimum Purchases Automatic Reinvestment of Earnings
Easy Access to Information Morningstar
4. Whats the Cost? Front-End Loads Upfront sales charge
Back-End Loads Redemption fee Deferred Loads Sales fee charged if
redeemed too early Marketing Fees 12b-1 fees Management Fees
Expense Ratio Management and and 12b-1 fess as % of the funds
assets Does not include load fees Brokerage Firms usually offer
wide array of non-transaction fee funds
5. Calculation of Mutual Fund CostsInvest $10,000 in load
mutual fund. The load fee is 4%.Actual investment = $10,000(1-.04)
= $9,600In addition fund charges .75% management fee and .10% 12b-1
fee. Fees are charged on average amount invested in the fund and
recorded at the end of the year. Assume that the fund returns 5%
each year. Avg. investment: [$9,600 + $9,600(1.05)]/2 =$9,840
Annual costs: $9,840(.0075+.0010) = $83.64 Value of the investment
at year end: $9,600(1.05) - $83.64 = $9,996.36
6. Which Fund Should I Pick? Investment Objective? E.g. growth,
aggressive, bonds, etc. Investment Style Value stocks vs. growth?
Small vs. Midsize vs. Large Cap Performance Record Relative to the
market Relative to funds of its type Fees Expense Ratio
7. Funds For Long-Term Investors Growth Funds Growth and Income
Funds Balanced Funds Invest in stocks and bonds Index Funds Global
Funds International Funds Socially Responsible Funds
8. Funds for Income Oriented Investors Corporate Bond Funds
Global Bond Funds U.S. Government Bond Funds Ginnie Mae Funds
Municipal Bond Funds Generally federal income tax free
9. Other Types of Funds Aggressive-Growth Funds High Yield
(Junk) Bond Funds Single-Industry Funds Exchange-traded Funds
Bought and sold like stock No load fees Brokerage commission
10. Total ReturnRecall previous example: Value of the
investment at year end: $9,600(1.05) - $83.64 = $9,996.36Initial
investment = $10,000Total return after one year: ($9996.36/$10,000)
1 = -.000364Or -.0364%
11. THANK YOU!Please, join me for the next workshop:March 1,
6:30PM