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Investing in Mutual Funds and Real Estate

Investing in Mutual Funds and Real Estate. #13. Learning Goals. Mutual Funds and ETFs: Some Basics. More people invest in mutual funds than any other financial product. The Mutual Fund Concept. Pooled diversification. Basic Mutual Fund Structure.

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Investing in Mutual Funds and Real Estate

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  1. Investing in Mutual Funds and Real Estate

    #13
  2. Learning Goals
  3. Mutual Funds and ETFs: Some Basics More people invest in mutual funds than any other financial product
  4. The Mutual Fund Concept Pooled diversification
  5. Basic Mutual Fund Structure
  6. Why Invest in Mutual Funds But remember - No choice in securities selection No control over sale of securities within fund
  7. How Mutual Funds are Organized and Run Each fund is a separate corporation or trust owned by shareholders
  8. Open-End versus Closed-End Open-End Investment Companies “Mutual fund”commonly denotes this type of investment company Shares purchased from and sold back to company New shares issued as money flows in NAV is quoted price Closed-End Investment Companies Fixed number of shares Trading between investors in market Shares are listed and trade at a discount or premium to NAV
  9. Net Asset Value (NAV) NAV = current price of fund assets - liabilities number of outstanding shares Net value of all securities held in fund’s portfolio
  10. Exchange-Traded Funds (EFTs) Typically structured as index funds Spiders based on S&P 500 Diamonds based on DJIA Qubes based on Nasdaq 100 Trade on listed exchanges like closed-end funds Numbers of shares change like open-end funds
  11. Exchange Traded Funds
  12. Important Cost Considerations Load and No-load Funds
  13. Important Cost Considerations 12(b)-1 Fees - annual fees for marketing and promotion Management Fees - annual fees charged by all funds to pay the fund manager
  14. Mutual Fund Quotes
  15. Money Market Index Sector Socially Responsible International Asset Allocation Types of Funds Growth Aggressive Growth Value Equity-Income Balanced Growth & Income Bond
  16. Bond Funds
  17. Money Market Mutual Funds All highly liquid, low risk
  18. Index Funds
  19. Sector Funds
  20. Socially Responsible Funds (SRFs)
  21. Other Fund Types International Funds Most or all of its investing is in foreign securities Asset Allocation Funds Spread investor’s money across different market types
  22. Services Offered by Mutual Funds
  23. Reinvesting Income
  24. Conversion Privileges shareholders easily move from one fund to another within the fund family Services Offered by Mutual Funds Retirement Plans funds set up and administer retirement plans
  25. Making Mutual Fund Investments The Selection Process
  26. Measuring Fund Performance Returns consist of: Past performancedoes not guarantee future returns
  27. Measuring Fund Performance Return is made up of net investment income fund earns from dividends and interest realized and unrealized capital gains fund earns Mutual funds provide a standardized format that highlights key income, expense, capital gains information
  28. Income and Capital Changes
  29. Investing in Real Estate
  30. Some Basic Considerations Cash flow and taxes Depreciation write-offs reduce taxes Passive investment Appreciation in value Use of leverage Borrowed money magnifies returns
  31. Investing in Income Property Commercial property Office buildings, industrial space, warehouses, retail space, hotels Residential property Homes, apartments, small multifamily buildings
  32. Real Estate Investment Trusts (REITs) Closed-end investment companies holding real estate Offer diverse, marketable way to invest in real estate Equity REITs invest in properties Mortgage REITs invest in mortgages Hybrid REITs invest in both Real estate limited partnerships (LLCs) Limited liability partnerships Other Ways to Invest in Real Estate
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