Daily Investment Tips

An ETF is similar to an open-end mutual fund in that they both offer investors a pool of securities that consist of stocks or bonds.

But the difference between ETFs and Mutual funds is like day and night

ETF Vs Mutual Funds – Difference in How they trade

The first difference between ETF and mutual funds is in how they trade. ETFs trade like a normal stock in the stock exchange. Their prices move up and dwon throughout the day, allowing ETF investors to buy and sell anytime the markets are open.

Mutual funds, on the other hand, settle at the close of business, meaning that investors must wait to redeem or buy based on a mutual fund’s net asset value after the close of business.

Tax Efficiency

ETFs also tend to be more tax-efficient because they typically generate relatively low capital gains from fund distributions. ETFs usually have lower turnover of securities because they are not required to sell securities to meet investor redemptions, like mutual funds. When a mutual fund sells securities, it must pass along the capital gains to shareholders, even though the shareholders have not redeemed their shares.

Difference In Fees

ETFs do not charge redemption fees, and typically have lower expense ratios than mutual funds. However, every time an investor buys or sells an ETF, he or she pays a brokerage commission. For aggressive traders, these brokerage fees can quickly exceed the lower annual fees that ETFs usually charge.

Mutual funds on the other hand charge a redemption fees, they also charge annual fees which can be based on your invested amount plus a share of your profits.

written by Constantine Njeru \\ tags: Capital Gains, Etf, Expense Ratios, Mutual Fund, Mutual Funds, Redemption Fees, Tax Efficiency

According to a bond report by investment company institute, investors pulled a net $4.78 billion from tax-free municipal bond mutual funds in the seven days ended Nov. 17, about 1% of total fund assets, as falling bond prices and rising yields depressed muni fund share values.

The fall in Municipal bond prices is being caused by a rise in market interest rates in general, and a surge in the supply of new muni bonds from California and other issuers. This new bond issues are being offered with a higher coupon rate.

written by Constantine Njeru \\ tags: Bond Funds, Bond Investing, Bond Investment, Bond Issues, Bond Prices, Bond Report, Coupon Rate, Fund Assets, Investment Company Institute, Investors, Issuers, Market Interest Rates, Muni Bonds, Municipal Bond, Mutual Funds, New Bond, Seven Days, Share Values

When it comes to investing your money in the stock market, making a beginner’s mistake can cost you alot of money. Thankfully, Stock market games simulators makes it easy to practice with virtual money.

The following are some of the best or let me say most popular online stock market games.

Motley Fool Stock Market game simulator

The Motley Fool hosts a fantasy stock market game and gives participants a chance to win $5,000.

How The Market Works Stock Market Game

How the market works gives beginners a chance to experiment with Forex portfolios, penny stocks, mutual funds and short selling.

Updown Stock Market Game

Updown is for the green investor. If you have never touched stocks before this is the game to try. Provide key terms for beginners. Also has resources in the education center that cover even the most basic of investing concepts.

written by Constantine Njeru \\ tags: Education Center, Fantasy Game, Fantasy Stock Market, Game Simulator, Investing Concepts, Investor, Mistake, Money Games, Motley Fool, Mutual Funds, Online Games, Participants, Penny Stocks, Portfolios, Simulators, Stock Game, Stock Games, Stock Market Game, Stock Market Games, Virtual Money

I found some interesting comparisons of returns of index fund and mutual funds.

From motley Fool website;

During the 1990s, the S&P 500 has provided an annualized return of 17.3%, compared with just 13.9% for the average diversified mutual fund.

And From Yahoo

In 1998, for instance, 85 percent of all mutual funds that were set up to beat the S&P 500 failed to meet that goal. When you think about it, that’s an amazing statistic — eight out of ten mutual funds didn’t beat the market!

Investing in a stock index fund guarantees that you’ll never outperform the overall but an index fund might give investors a higher return because of their cost advantage. Index funds have lower or zero fees, they also don’t hire expensive equity analyst. All that saving is passed to investors.

written by Constantine Njeru \\ tags: 1990s, Amp, Annualized Return, Cost Advantage, Equity Analyst, Guarantees, Index Funds, Investor Returns, Investors, Motley Fool, Mutual Fund, Mutual Funds, Statistic, Stock Index Fund, Yahoo, Zero Fees

T. Rowe price investing firm has an investing strategy known as growth stock philosophy of investing.

The philosophy advocates investing in companies whose earnings and dividends could be expected to grow faster than inflation and the overall economy.

T. Rowe Price offers an investor a choice of over 90 mutual funds.

T. Rowe Price Retirement funds

Offers a fully diversified portfolio with one fund that matches the approximate year you turn age 65.

For more information Visit T. Rowe Price

written by Constantine Njeru \\ tags: Advocates, Diversified Portfolio, Dividends, Earnings, Economy, Growth Stock, Inflation, Information Visit, Investment Firm, Investment Guide, Investor, Mutual Funds, Philosophy, Retirement Funds, Rowe Price Investing, T Rowe Price, T Rowe Price Retirement