We can do that, or we can take action against it by investing in oil itself. If we’re paying more for gasoline, we can at least partially offset this by investing on the other side of the game—the oil production side.

Most of us are poorly equipped to do this; let’s face it, unless you actually work in the oil industry, it can be a challenge to find solid investments in the industry. And unlike with precious metals, we can’t invest in oil by taking physical possession of the commodity itself. Not only does oil take up a lot of space, but it’s also hazardous and requires very specialized storage facilities.

How can you invest in oil in a way that will at least partially insulate you from rising prices at the pump?

Oil stocks

There are two broad classes of oil related stocks, one broader, the other more specific to oil itself.

Energy conglomerates. These are the “household names” in oil—Exxon-Mobile and British Petroleum, for example. One of the issues with these however is that they’re less directly connected to oil than they once were. Most are more involved in energy in the broadest sense, and more specifically to refining and distribution—think in terms of your local gas station. They may be heavily involved in natural gas as well as other energy sources so they aren’t direct plays on oil.

Oil drilling companies. These are generally smaller, less well-know companies that are engaged in the actual production of oil, and usually more specific to oil as well. They can also be more volatile than oil itself since production involves production from politically unstable regions, weather hazards, labor problems and failed production efforts.

Holding a combination of stocks in both types of operation can be a good way to diversify your holdings within the oil industry. You’d be holding stock in both the companies that actually drill and supply oil, and those that refine and distribute it.

Mutual Funds

Mutual funds are a way of buying oil company stocks and they hold certain pronounced advantages over owning the stocks individually, such as the following:

1. You can achieve diversification among oil company stocks with far less money than if you had to build your own portfolio
2. Because you’re making a single trade on both the buy side and the sell side (as opposed to many transactions from buying and selling individual positions) you’ll save money in commissions and trading fees
3. Professional management—few of us have the specific knowledge of the oil industry that’s required to create an effective oil based portfolio.

Exchange traded funds (ETF’s)

ETF’s offer another way to invest in oil. There are generally two types of ETFs as they relate to oil, one is based on stocks of oil companies, and the other on commodity vehicles more directly tied to the price of oil.

Oil stock ETF’s. These funds invest in oil company stocks in much the same way a mutual fund does. There are certain differences between ETF’s and mutual funds that mainly come down to individual preference, even though the end result of investing in either can be pretty much the same.

Commodity ETF’s. These are the closest you’ll come to owning oil short of actually taking physical delivery of the fuel—which is if course completely impractical. A commodity EFT, or in this case an oil ETF, is comprised of various oil-related investment vehicles including oil futures, options and derivatives, that closely track the price of oil.

Plan to invest for the long term

Finally, if you plan to invest in oil make sure you take the long term view. Like most other commodities, oil prices can bounce in either direction, and it can all play out in short order. It can take a strong stomach to ride the ups and downs of the market.

Before investing in oil, you need to be pretty certain that the long term direction of oil will be higher. Oil is not a short term investment because the short term can go in either direction. Prices can swing on political unrest, destruction of production or distribution facilities, military actions, election outcomes in producing countries, or even on media rumors. In order to weather that kind of volatility, you have to have a firm direction.

And once you decide to invest, it’s better to do so through mutual funds or ETF’s that are more fully diversified, and run by people who are intimately familiar with the complexities of the oil market.

General credit score mortgage requirements

On conventional mortgages—which covers most mortgages—the minimum acceptable credit scores are 620 for a fixed rate mortgage, and 640 for an adjustable rate mortgage (ARM). If your credit score is 650, you’re hovering just above the minimum, and that has implications.

You probably won’t get the best rate

Understand that a 650 credit score probably won’t get you the advertised rate provided by a lender. If they advertise a rate of 4.00% on a fixed rate loan, you should fully expect to pay something higher. How much higher?

Mortgage lending today uses what’s called “tiered pricing”, which is to say that the rate you get on your mortgage is based on a matrix of information. One of the components is credit scores, but there are others, including loan-to-value ratio (LTV).

If the best rate a lender offers is 4.00%, that’s probably the rate for a borrower with an 80% LTV (or put another way, with a 20% down payment) and a credit score greater than 720. If you have a 650 credit score and need a 95% LTV (5% down), you may pay something closer to 5.00%. Your rate will be increased based on two risk factors, a higher LTV and a lower credit score.

It depends on the loan program

Earlier we noted that the minimum credit score is 620 for fixed rate loans and 640 for adjustables. But minimums can also be affected by the use of a second mortgage, or by a loan with a higher LTV. For example, an ARM loan that would normally permit a score as low as 640, may require 680 for a 90% LTV.

Some loan programs offered by direct lenders (usually banks) may have higher credit requirements. For example, on a bank loan program it won’t be at all unusual to see a minimum score requirement of 680 or even higher.

And on the lenders…

Nearly all mortgage lenders sell the bulk of their loans to either FNMA or FHLMC, the two largest sources of conventional mortgage funding. As such they need to be in compliance with the minimum guidelines of those agencies. But that doesn’t mean that an individual bank or mortgage company can’t raise their credit score requirements.

A lender can, for example, set an in-house minimum credit score of 680 on all of its mortgage programs. They may do this either because they’ve had a higher than average foreclosure rate in the past, or because they’re trying to make higher quality loans in the future.

Refinances are a different game—sometimes

So far we’ve been talking about credit scores as they relate to purchase money mortgages. But on many refinances, it’s possible to get a mortgage with lower scores.

Most lenders offer what are loosely called “streamline refinances”. These can apply when a borrower is refinancing merely to lower either the rate or the term of their loan, or both. They’re not increasing their loan amount, taking cash out, or consolidating a first and second mortgage.

Credit is less of a factor on these loans because the lender already has the loan, and lowering the monthly payment will only improve the performance of the loan. The lender will be most concerned that the mortgage payment has been made on time for the previous 12 months and if it is, the loan will be granted. Some lenders will run credit, and sometimes it will be a requirement, but this has been something of a variable factor that can swing either way.

There are certain requirements for streamline refinances and not all lenders participate in them either. But if your credit score is an issue, ask your lender if you can do one of these loans so that you can at least do a rate and term refinance.

FHA to the rescue

If you can’t get a conventional mortgage with your current credit score, ask about doing an FHA mortgage instead. These loans aren’t as flexible as conventional loans, but they are more forgiving when it comes to less than perfect borrowers—including credit. In fact, historically you could get an FHA mortgage as long as your credit has been clean for at least the past 12 months.

FHA mortgages have functioned as something as a halfway step between conventional mortgages (high credit standards) and sub prime mortgages (largely no credit standards).

When all else fails, work to improve your credit score

In order to get the best rates on the widest range of mortgage programs, you’ll need to increase your credit score to 720, or at least to 680. Not only will this get you a better rate, but it will also give you access to loan programs that might be completely unavailable to you with a 650 score.

In What Does a 650 Credit Score Mean we offered the following suggestions that will enable you to increase your credit score, and they’re worth repeating here:

1. Pay your bills on time from now on.
2. Get a copy of your credit report and check it for errors—if there are any, contact the creditor directly and see what you can do to remove the erroneous information.
3. Payoff any small collections as quickly as you can, and work out settlements or payment plans for the larger ones.
4. Pay your credit cards and car loans down to below 80% of available or original balances—this lowers your “credit utilization” rate and that has a major effect on credit scores. A credit utilization rate below 80% is generally seen as positive.
5. Credit applications result in credit inquiries on your credit report, and they can lower your scores. Hold off applying for any loans at least until your credit scores improve substantially.

If you decide that you want to improve on your credit score, its best done before applying for a mortgage. Give yourself a good 60-90 days to take these steps before you apply—you’ll need at least that much time in most circumstances. The benefits of having a higher score will work in your favor for the life of your mortgage, so it’s well worth doing.

On balance, a 650 credit score is decent, but credit scores aren’t the only reason you’ll get a car loan or not. Just as with other types of loans, whether or not you’ll be approved—and under what terms—only starts with a credit score. There are other factors that will influence the outcome too.

What is the cause for the bad credit?

Lenders generally view 720 and above as good credit, the point at which you’ll get the best rate and the best terms on a car loan. 650 is in the range where it can go either way.

Perhaps more important than the credit score is what factors caused it to be 650. Was it a few late payments that took place a year or two ago? Or was it a major credit problem, like a bankruptcy or foreclosure?

A lender will be more like to overlook the late pays, even if they impose a higher rate. But if it was major, you may not get a loan at all.

How recent is the derogatory credit?

The older your credit problems are, the better. A bankruptcy seven years ago may not get you denied, but a recent (prior 12 months) history of 30- and 60-day late payments could. Old bad credit can be seen as being in your past—current issues indicate that your problems haven’t been solved.

Car loan specific credit issues

There is one type of credit problem that will be difficult to overcome, and that’s any kind of bad credit experience connected with a car loan. Since a lender is making a car loan to you now, a bad history on a similar loan in the past will be heavy.

Even if your current car is paid for, a history on your last car loan of late payments, a repossession or unpaid loan balance will be almost impossible to overcome.

Practically the only way around this kind of a problem is to wait for the negative car ratings to fall off your credit report, and that will take 7-10 years after the event occurred.

Non-credit factors

Credit is only one factor used to evaluate car loan approval. The stability of your income, your debt-to-income ratio, and the size of your down payment will matter as well. Sometimes strength in one or more of these areas can offset a less than stellar credit score, like 650.

Dealer financing VS a bank/credit union loan

Banks and credit unions usually have the most favorable car loan arrangements, but if you can’t get a loan at one of these, the dealer may be able to make the loan.

Dealers need to sell cars, and since so many people have less than perfect credit, they often have loan outlets that will lend when the banks won’t. The rate and term on these loans won’t be anything as pretty as you see advertised, because those rates apply to the customers with the best credit profiles. Still, it will be a loan when none are available from banks and credit unions.

“By here/pay here” loans

There is yet another potential loan source, but you may not want to use it. There is a loan type often referred to as “buy here/pay here” loans. These are extremely risky loans—for you as the borrower.

These loans are usually available at small independent used car dealers, and they come at a stiff price. The dealer makes the loan to you directly, and you will need to pay the dealer directly each month.

The dealer will require 1) an unusually high down payment (20-50%), 2) a very high interest rate (25% or more), 3) stiff penalties for late payments (like late by one day), 4) and prepayment penalties if you attempt to payoff the loan early.

The dealers are also notorious for charging an inflated price for the car too. These are deals for the desperate, and the dealers know it. By charging you an inflated price, it’s extremely unlikely that you’ll be able to sell the car to pay off the loan.

Best recommendation on these loans: don’t take them!

Having a Plan of Attack

If you think a 650 credit score will hold you back, plan to approach it sequentially. Start by applying to a bank for a loan—your bank for starters. If they say no, consider trying another bank. Better yet, try a credit union—they are generally more liberal when it comes to car loans. Failing that, look into dealer financing, they may have a loan program for you. Just make sure you get your loan approved before you even start looking at cars!

If you can’t get a loan no matter where you look, you may still have other options…

Other options in case you can’t get a car loan

If there’s no way you can get a loan, and you need a car, try some of these:

Get a co-signer. Sometimes a lender will approve a car loan if you have a strong co-signer—sometimes not. It’s worth a try if you have someone who has a strong credit profile, but make sure you make all of your payments on time. If you don’t, you’ll not only ruin your credit, but your co-signer’s as well.

Improve your credit score. There are ways you can improve your credit score, including paying off old collections, paying down current loan balances and disputing erroneous credit information. Raising your score from 650 to 680 or 700 can open up a whole lot of options.

Make a larger down payment. A larger down payment on a car means the lender is carrying less risk on the loan. Many lenders will require a down payment of 20% or 25% to make a loan with a 650 credit score, but if they won’t you may need to go to 30% or more.

By a less expensive car. Sometimes the size of the loan is the issue, and this could owe to income restrictions in addition to credit scores. Instead of buying a $20,000 car, go for one that’s $15,000, or even $10,000.

Borrow money from family or friends. Still another option is to get a loan from family or friends. Just make sure that the loan and the monthly payment are at levels you can easily afford to repay. If not, you can permanently damage a good relationship.

Pay cash! When all else fails, pay cash. This may mean buying a car for $5,000 or even $2,000, but if that’s all you can afford, that that’s all you can buy. One advantage with this is that you’ll have no monthly loan payment! Use that advantage to save up money so that in due time you can have enough money to buy a better car.

You can probably get a loan with a 650 credit score, but if you can’t and you absolutely need to buy a car, there are ways to do it. It may not be as pretty, but you can do it.

1 ) Stocks are your best bet

Stock market the world over is the one where you can get some really amazing returns over the long term. In short term, if you are lucky and have a big risk appetite then you will be able to get good amount of money. The average returns in the Indian stock market have been around 17% since the beginning of 17%. The US market historical returns over the last couple of decades have been around 10 %. This goes on to show that given the long time frame you will be able to make good amount of money.

2) Mutual funds for those who want to leave it to professionals

Stock picking is not easy and as a working professional it is touch to research a particular stock and then invest. More so, you will have to keep track of the stock so as to cut your losses if the stock is not worthy of the investment. That is why I would suggest that you invest in mutual funds.

Mutual funds basically will allow you to invest money buying units of mutual funds and then professionals in those mutual funds will invest on your behalf. That way you will be able to make investments in stock market without putting in much time and effort. A very good site for mutual funds information is http://valueresearchonline. This gives ratings to various mutual funds and also assigns a risk grade to help you make a fund buying decision.

3) Fixed deposits in India

Do not ignore the power of fixed deposits for short term investing. Fixed deposits nowadays are offering 9% interest on deposits. Almost all the banks private as well as public sector banks offer fixed deposits.

If you are online then you can go to http://policybazaar.com and compare the rates for various fixed deposits or go to the websites of a couple of banks and check what they offer.
Again make sure that you take into the tax on interest earned on the deposits. For stocks and mutual funds if you make an investment and make money then it is tax free if you hold onto the stock or mutual fund for more than one year. That is known as long term capital gains.

4) Gold or silver

As far as commodities go gold or silver are the best bets for the beginners. There are other commodities and there is the futures market that you can invest in however as a beginner investor I will not suggest that you invest in the futures or the complex commodities market.

Buying physical gold or silver is easy in India.

You can buy physical gold in the form of gold jewelry from any jeweller. However the fact is that in jewellery there are making charges that the jeweller will charge. Instead you can buy gold coins from banks or in India they also call it as gold biscuits. Same goes for silver too.

Gold etf

Now India in the last decade or so there have been a lot of gold ETF’s which have been launched. They practically track the price of gold and you can invest in gold etf rather than physical gold. That way you ride the gold boom when prices rise without practically holding the gold in your locker.

5) Real estate

Now real estate that provide you great returns however it is still very risky investing in land directly given the huge amounts required and the lack of transparency. There are no worthwhile real estate ETF’s that is there which will help you invest in real estate.

6) Infrastructure bonds

– These bonds pay handsomely and are also given and additional tax benefit under section 80CCF.

7) PF and PPF

– These two schemes are a must for you. PF at least is a forced saving and is great for that rainy day when you need the money. I have always said that it is the discipline that will help you save money and there is nothing best than PF which will enforce that discipline in you.

PPF is a very good investing vehicle. As I write the interest on this is 8.8% and that is very good considering that all the returns are tax free. Now that said the only challenge is that it is not that liquid in terms that the money pretty much locked up to 15 years.
Notably all the banks and the Post Office offer this scheme. However as an investment vehicle this is a very good investment option.

What you should not be investing in

1)    ULIPS and insurance linked products – Again my view on them is very dim. These are a bit tricky given that the initial years they take a chunk out of your investments for management fees etc. It is better to use pure term life insurance products for insurance and pure equity products likes stocks, mutual funds or ETF’s for investing
2)    You can also invest in fixed deposits of companies and there are offers which keep coming in. I am somehow not comfortable with this given the risk that these are not secured.

This is the second part of the Investing in Mutual Funds for beginners series

Here is Part 1 of the series on Mutual fund definition, introduction and advantages

Types Of Mutual Funds

When it comes to mutual fund investment, you literally have thousands of choices, in fact, about 8,200 if you are in the U.S.

However, before investing in any fund, you need to decide whether the investment strategy and risks are worth it. Your first step towards successful investment in mutual funds should involve assessing your financial goals and ability to tolerate risks.

You can do this on your own or with the help of your financial adviser. Once you have identified what you are saving for, and the level of risk you can tolerate, then it will be easier for you to make wise investment decisions.

Generally, mutual funds fall into three main categories, bond funds (also referred to as ‚”fixed income” funds) money market funds and stock or equity funds. Each type comes with different features as well as different levels of risks and rewards. But, generally, funds that have higher potential returns also have higher risks of loss.

1. Money Market Funds

A money market fund comes with relatively low risk in comparison to other mutual funds and investments. By law, these funds can only invest in certain high quality, short term investments that are approved the US government, U.S corporations and State and local governments.

Money market funds endeavor to keep their NAV at a stable $1 per share. However, this can fall below $1 when the fund’s investments perform dismally. You will rarely make a loss when you invest in this type of fund, but it is certainly possible.

By investing in money market funds, you will earn dividends that reflect short-term interest rates. However, the returns for money on these funds have historically been lower than for stock and bond funds. As such, ‚”inflation risk” the risk that inflation can outpace and erode your investment returns over time, should be a serious concern when you choose to invest in money market funds.

These funds are ideal if you are looking for a short-term investment and savings goals or when you are looking to preserve your investment’s value while earning some income. This is because they have maturity dates of no more than 13 months. In general, money market funds are very handy when you are looking for a broadened program that comes with long-term investment.

Risks Associated With Investing In Money Market Funds

The short-term nature of money market investment makes these funds the least volatile in the investment industry. Money market funds are tailored to preserve your invested principal while generating income through dividends by maintaining a $1 per share price.

To help protect your principle investment, the law requires money market funds to meet stringent credit quality, diversification standards and maturity. In addition, these funds are required to invest at least 95 per cent of their assets within the U.S.

A money market fund cannot invest in a security that has a maturity of more than 397 days, nor can its average maturity go beyond 90 days. All these factors work towards minimizing the risk on investment. However, investing in these funds is no guarantee that your investment is safe and you will receive all your money plus interest back.

This is because the U.S government does not insure money market funds. Inflation risk is the other risk that you must contend with when you choose to invest in these funds.

2. Bonds Funds

These funds come with a higher risk than money market funds. This is mainly because they implement strategies that are aimed at yielding higher returns. Unlike in the case of money market funds, SEC regulations do not restrict bond funds to short term or high quality investments. Due to the different types of bonds, bond funds can significantly vary in their rewards as well as risks.

Some of the risks associated with these bonds include:

-Interest rate risk

There is always a constant risk that bond values will drop when interest rates are adjusted upwards. When this happens, you will definitely lose money in bond funds, even when you invest in insured bonds. In addition, there is a higher interest rate risk when you invest in long-term bond funds.

-Credit risk

There is always the possibility that companies or other issuers that have bonds in the fund may fail to pay their debts, including those owed to bondholders. However, this risk is usually inapplicable when you invest in U.S Treasury bonds or other insured bonds. On the contrary, when you invest in bonds from companies with poor credit ratings, then you will need to beware of this risk.

-Prepayment risk

This refers to the possibility that a bond can be paid off early. For instance, if interest rates fall, the bond issuer may decide to retire or pay off its debt before issuing new bonds that pay at a lower rate. When this happens, the fund may be unable to reinvest the proceeds in a high yield investment resulting in loss of investment.

3. Stock Funds

The value of stock funds can dramatically rise and fall over short periods. However, these funds have always had better long-term performance than other forms of investments, including treasury securities, as well as government and corporate bonds.

The greatest potential risk that you will have to contend with is the overall “market risk”. Stock prices can fluctuate because of various reasons such as the overall performance of the economy as well as changes in consumer behavior. In addition, you have to keep in mind that not all stock funds are the same.

Over the past few decades, Americans have increasingly turned to mutual funds as a way of saving for retirement and achieving other financial goals.

Mutual funds offer the diversification of your portfolio with the perhaps added advantage of professional investment management. A lot of beginners will consider professional management to be a benefit.

However, as with any other investment choice, mutual fund investment does come with its share of risks and drawbacks. The fees and taxes involved usually diminish the overall return on investment of the fund.

Before investing in any fund, it pays to understand the upsides and downsides of the plan as well as how to identify the investment vehicle that matches your goals and ability to tolerate risk.

In this post I will explain the basics of what mutual funds are, the different types available, how they work, factors to consider before investing in them, making wise investments, and industry regulations.

Mutual fund investing has only grown in popularity over the past couple of decades. This investment option is popular because it makes it easier for smaller investors to place their money in a diversified pool of securities.

As mutual fund investments evolve over time, many questions have come up concerning their nature of operation as well as the features of these funds.

By definition, a mutual fund is a pool of money that is managed for several investors by a professional finance manager. The manager is given the responsibility of investing the money on stocks, bonds and other securities based on the specific investment goals that have been established for the fund.

When you invest in a mutual fund, you will receive shares in return for your money. The more shares you purchase, the higher percentage of the fund you will own.

On the other hand, the fund manager charges a commission based on the value of the fund’s assets in return for managing and administering the fund and its investment portfolio.

Mutual funds are typically open-ended investment funds, meaning that new investors can come on board and contribute to the pool at any time.

Existing investors can also reinvest their shares into the pool or redeem them at any time. When you choose to redeem your shares from the fund, you will receive a check based on the current market value of the fund’s portfolio.

The Structure Of Mutual Funds

A mutual fund is structured like a corporation or a business trust. This means that like any other corporation, mutual funds are owned by the shareholders.

These funds are externally managed, so they do not have employees. Instead, mutual funds are run by affiliate organizations and independent contractors.

Here are the parties that are involved in the running and operation of a mutual fund.

-The mutual fund manager: He is responsible for establishing the mutual fund, marketing and overseeing its general administration.

-Portfolio adviser: This is the professional finance manager appointed by the Fund Manager to oversee the fund’s investment options. The mutual fund manager can also act as the portfolio adviser.

-Principal Distributor: This person is responsible for coordinating the sale of the funds to investors directly or through registered dealers.

-Custodian: This is the bank of the trust company appointed by the Mutual Fund Manager to hold the securities owned by the fund.

-Transfer agent and registrar: This person is responsible for maintaining the list of investors or shareholders in the fund.

-Auditor: This is an independent auditor contracted by the mutual fund manager to conduct an annual audit and provide a report on the fund’s financial statement.

-Trustee: This is the entity that has the title to the fund’s securities on behalf of the shareholders in cases where the funds are organized as trusts rather than corporations

Characteristics Of Mutual Funds

Some key distinguishing features of mutual funds include:

• As an investor, you will purchase mutual fund shares directly from the fund or through a broker rather than from secondary investors on a secondary market such as Nasdaq or New York Stock Exchange.
• The price that you will pay for your shares is the fund’s per share “net asset value” (NAV) and any shareholder fee that the fund will impose at the time of purchase such as sales loads.
• You can “redeem” your mutual fund shares by selling your shares back to the fund or to a broker acting on behalf of the fund.
• Generally, mutual funds accommodate new investors by creating and selling new shares. In other words, shares are sold on a continuous basis. However, some funds may stop selling when they become too large.
• Mutual funds’ investment portfolios are managed by separate entities referred to as “investment advisers” that are registered with the Securities and Exchange Commission (SEC).

The Advantages And Disadvantages Of Investing In Mutual Funds

Every investment comes with its share of pros and cons. However, it is important to note that the features that are attractive to one investor may not be appealing to you. For most investors, mutual funds are an attractive investment platform because of the following features.

A. Professional Management

Even under ideal market conditions, it takes a skilled and experienced investor to make the right investment decisions, and additional commitment of time to monitor those investments on a regular basis.

Through mutual funds, professional investors manage a portfolio of securities on a full time basis on your behalf, deciding the best securities to buy and sell after extensive research.

These investors take their time to find investments that best match the fund’s objectives. As the markets and economic conditions change, these investors adjust the mix of the fund’s investments to ensure that they are in line with the fund’s goals.

B. Diversification

Savvy investors know that diversification can help reduce the risk of a single investment. Through mutual fund investing, you will automatically diversify your investment portfolio by holding a variety of securities.

In addition, since you will be pooling your assets along with those of other investors, this investment option allows you to have a diversified portfolio that will be managed on your behalf at a fraction of the cost.

In short, mutual fund investing allows you to invest in several markets and sectors of the economy.

C. Variety

You can choose among a variety of investment approaches from the broad categories of bond, stock and money market funds. Today, there are over 8000 mutual funds available in the United States with various styles and goals to fit just about every circumstance and investment objective.

D. Low Cost

Through mutual fund investment, you can own several securities through a single platform. As an investor, you will primarily pay a fee for this service based on your account’s total value.

Since the mutual fund industry is made up of several competing firms and thousands of funds, the actual level of fees will definitely vary from fund to fund. However, mutual fund investing provides you with professional management and diversification at a fraction of what it would cost you to make such investments on your own.

E. Liquidity

This refers to the ability to access your invested money. Mutual fund shares are liquid investments that you can sell off on any business day.

In addition, the law requires mutual fund investment firms to buy or redeem shares each business day. You can redeem your share at a price known as the fund’s net asset value (NEV), which is the current market value of the fund’s assets less liabilities, divided by the total number of outstanding shares.

F. Convenience

You can buy or sell your mutual fund shares directly from the fund or through your broker, bank, financial planner or insurance agent.

Better still, you can make your purchase via mail, through a phone call or online from home. You can also prearrange periodic distribution of dividends or automatic reinvestment and capital gains paid by your fund.

Some funds even offer additional services like account statements, tax information and round the clock phone or online access to your account information.

G. Protection To Investors

Apart from self imposed regulations and restrictions, mutual funds are also heavily regulated by the federal government through SEC. The federal regulation requires all funds to meet certain operating standards, adhere to strict anti-fraud regulations and disclose complete information to existing and future investors.

These regulations are designed and enforced to protect investors from abuse and fraud. However, it is important to remember that these regulations cannot be your guide to choosing the right fund for you, and neither can they prevent the fund from losing your investment. You can still lose money by investing in mutual funds as they are not insured by the FDIC or SIPC.

Limitations Of Investing In Mutual Funds

Mutual funds also come with certain features that you might view as drawbacks. Some of these include:

1. Cost despite negative returns or loses

As a mutual fund investor, you will have to pay sales charges, annual fees and other expenses regardless of the performance of your investment.

In addition, depending on the time you buy your shares, you may have to pay tax on capital gains distribution that you will receive, even if the fund performs poorly after buying the shares.

2. Lack of control

Once you have invested in a mutual fund, it will not be possible for you to learn the exact make up of your fund’s portfolio at any given time. You also cannot have a direct influence on the kind of securities your fund manager will buy or sell as well as the timing of the trades.

3. Price uncertainty

By investing in a single stock, you can easily obtain real time, or near real time, pricing information by calling your broker or checking into financial websites. You can also monitor how the stock’s price is changing from hour to hour. However, when you invest in a mutual fund, the price at which you can purchase or redeem your shares will basically depend on the fund’s NAV, which the fund may not calculate until several hours after you have placed your order. Generally, mutual funds calculate their NAV at least once every business day, usually after the closure of the major U.S stock exchanges.

1. Silver often outperforms gold in rising markets
2. Silver can be a precious metals diversification—you diversify between stocks, you should do the same with precious metals
3. Because of its lower price, silver is more affordable to investors of ordinary means

If you decide that you want to invest in silver, what are the best ways to do it?

If you are still not convinced then read my detailed post here on Is Silver a good investment

Silver bullion coins

Silver bullion coins are the simplest way to own silver for most people. Because of their small size—one ounce of silver or less—and the fact that silver is the least costly of the precious metals, silver bullion coins are much more affordable than comparable gold or platinum coins. With the price of silver currently in the $30 range, virtually anyone can own at least a little bit by buying bullion coins.

They can be purchased at local coin dealers, or through larger online distributors such as Goldline and Blanchard & Company. They are purchased for the metal content, plus a small sales charge that decreases with larger orders. If you buy from an online source you may also have to pay shipping charges, unless you decide to let the dealer hold them for you.

There are several popular silver bullion coins, issued by various world governments, including the American Silver Eagle and the Canadian Maple Leaf. Both contain one ounce of silver, but the Maple Leaf is also available at a half-ounce as well. Several other silver coins, including the U.K. Britannia and Mexican Libertad also come in denominations as low as 1/20 of an ounce.

Bonus tip: American Eagle Silver coins (along with American Eagle Gold coins) can be held in an individual retirement account (IRA). They are the only bullion coins permitted to be held in IRA’s.

Silver bullion bars

Silver coins can be a cumbersome way to own silver if you’re looking to own a large quantity of the metal. For this purpose, you will be better served by purchasing silver bullion bars. They range in size from one ounce up to 1,000 ounces.

Because of the greater amount of metal and the lower minting costs compared to coins, bars cost less than coins on a per once basis. And just as with coins, you can either take possession of the bars, or allow the dealer to hold them in storage.

Numismatic silver coins

Another way to hold silver in coin form is with numismatic silver coins. A coin is considered numismatic when its value is based more on the rarity of a particular coin than for the amount of metal it contains. Numismatic coin prices can vary from just as small premium above the silver bullion price, up to many thousands of dollars for a very rare coin.

There are few standards for numismatic coins, but some of the more popular ones include pre-1933 U.S. silver dollars. Most prominent are the Morgan Silver Dollar and the Peace Silver Dollar. The price will be determined by the coin’s individual “mint state”, which is shown as a numeric range from, generally, 60-70. It will be provided by an independent numismatic grading service that evaluates the coin and assigns the grade. The higher the mint state, the more valuable the coin will be.

Be aware that numismatic coins are not an exact play on silver, though their prices often rise and fall with the price of the bullion. But because of the numismatic factor, the price of the coins can rise even though silver is falling, or they can fall even though silver is rising.

Silver exchange traded funds (ETF’s)

There are ETF’s for just about any investment you can think of and that includes silver. There are just a few silver ETF’s and they have different compositions from one to another.

Two funds, the iShares Silver Trust and Physical Silver Shares only hold silver and represent the most direct play on the metal itself. Other funds offer a mix that can include mining stocks or futures or both, while still others hold silver in addition to other metals.

The advantage with ETF’s is that you don’t have to take physical possession of the metal. They also trade like stocks which means they’re both easier and less expensive to trade than the metal itself.

Silver mining stocks

There are relatively few stocks for silver mining companies since in many cases mining companies extract several metals of which silver is only one.

Silver stocks have the advantages of paper investments in that they’re easily traded and at relatively little expense. But they’re also not direct plays on silver. As mining companies they are engaged in the mining of silver, not in silver itself. And while they can benefit from rising silver prices they can also be affected by labor issues, regulation and international conflicts.
There are different ways to invest, but if you want to focus on silver, look primarily toward silver bullion coins, silver bullion bars and silver-only ETF’s since those are the most direct plays on the metal itself. Numismatic silver coins and silver mining stocks should be thought of mostly as diversifications, and speculative ones at that.

What are your thoughts on investing in silver?

Sure, you’ll see your stocks fall in value from time to time, and you’ll almost certainly miss fully participating in some interesting bull markets. But over the long term, where it really counts, you’ll lose less in bear markets and gain more in a life time. Value investing allows you to be patient with your investments and that’s because you won’t be a trader—you’ll be an investor.

What is value investing

Value investing is the process of buying stocks that are trading below market norms, that is below the typical price/earnings ratio of it’s industry or at a price that’s less than the book value per share for the stock. Such stocks are said to be “cheap” in comparison to the competition.

This isn’t to say that any stock that’s trading for less than it’s competitors is automatically a value stock. A stock could be cheap because the company behind it is weak and uncompetitive or because it’s financial position is poor, neither of which make it a value stock.

But if the fundamentals of the company are solid—it’s highly competitive within it’s industry, its finances are generally strong, it has promising new products in the pipeline and a track record of success—but it’s stock price is low, it may be a value stock.

A company’s stock can be low for all kinds of reasons beyond fundamentals. There may have been a recent scandal or legal action that depressed the stock price without negatively affecting the company itself. Its industry group may have been hit hard because one or more major competitors have fallen on hard times. Or it may have been overlooked because it wasn’t part of the “Nifty Fifty” that led the market up early in a bull market run.

If a company’s stock is trading low for reasons having nothing to do with its fundamentals, then it might be a value stock.

Buying stocks when they’re on sale

There’s often a tendency in the stock market to load up on the shares of well performing companies. After all, they’re the high flyers, why fight the trend?

The problem with buying stocks that are riding the trend of the moment is that they can go the other way when the trend reverses. Eventually, all trends do. But if you buy into the trend, and especially late in it, you will probably pay an inflated price for the stock.

When you buy value stocks you’re buying stocks that are not benefiting much from the current trend—they’re considered to be “out of favor”. But this is like buying stocks on sale, and when the market discovers what you already know, the ride up can be a sweet one. You’ll have gotten into the trend on the ground floor, and the rise can be quite spectacular once it starts.

Better protection in down markets

In addition to greater potential gains, value stocks can offer better protection in down markets. Stocks that rise dramatically can fall just as hard, but since value stocks are usually depressed to begin with, the downside potential is much more limited. This is even more true if the stock is paying an above market dividend.

You won’t be tracking and riding the trends

Another value stock advantage is that you won’t need to track the trends any more. You won’t be buying trends, you’ll be buying value. Trends can be cruel masters—the greatest rewards go to those who identify them early and that can take a fully functioning crystal ball to do on a consistent basis.

You can find value stocks in rising markets, but they’re often easier to find in declining markets if only because there are more of them. As a result, you’ll be buying when everyone is selling and scooping up the real bargains. You’ll buy your stocks—at depressed prices—then all you have to do is sit back and wait.

A true long term play

Value investing enables you to be a long-term stock market investor. Your task as a value investor is to spot bargains—companies with great underlying values but low prices. This helps stack the long-term investment deck in your favor. You won’t have to constantly monitor the level of the stock markets or even to concern yourself with corrections and bear markets. You’re buying on fundamentals, not price levels!

If the stocks you buy are solid values with strong dividend yields, you can sit back and relax no matter what the markets are doing. This enables you to buy and to sell based on what’s happening with your own stocks, not what’s happening in the market. You can do this because value stocks tend to move at their own pace—after all, they aren’t part of any trends.

Value stocks can allow you to invest no matter what the market is doing, and that gives you the long-term advantage that trend investors will never have.

The range for credit scores

The only way to know what a 650 credit score really means is to compare it to the range of possible credit scores, as well as the predominant range that encompasses most people.

Credit scores can range anywhere from a low of 300 to a high of 900. Most people however, fall somewhere between 600 and 800. Nationwide, credit scores
average about 680, though this can vary substantially from one state to another.

A credit score of 650 then falls below the mid-point of the predominant range (600 to 800) and just below the average of 680. This puts 650 in the “average” range or, in reality, below average—at least by a little. And while it isn’t defined as “poor” credit by any means, it’s also a far cry from what’s generally considered “good” credit at the same time.

Excellent, good, average and poor credit ranges

How do lenders view credit ranges? In truth, it varies somewhat from lender to lender, but it will generally look something like this:

Excellent, 720 and above
Good, 680 to 719
Average, 620 to 679
Poor, 619 and below

This range would put 650 squarely in average territory, but that’s not always the case. Some lenders may consider average to begin at 680, 660 or even 651. Some may even have a category entitled “fair”, which can include a 650 credit score. Which group you’re bracketed into can determine the rate you get, the size of the loan or even whether or not you get the loan at all.

Creditors do look at your specific credit score, but the category your score falls in will have the greater impact on how your loan situation turns out.

Can you borrow with a 650 credit score?

The good news about a 650 credit score is that you can still get a loan in most places. You will probably pay a higher interest rate, or you may find that you can’t borrow as much as you had hoped but you’ll probably still get a loan of some sort.

Also remember that a credit score alone may not be the sole determinant of your credit. For example, if your low score relates to old credit problems and your credit has been clean for the past two or three years, the lender may take that into account. Recent late pays may also have an exaggerated affect, even though your credit report shows no major derogatory information.

And even if the lender looks only at your score, you can do something about that as well.

What can you do to improve on a 650 credit score?

Since 650 is a true borderline credit score—it could be average, it could be fair, and it can even fall below a loan approval threshold—improving upon it should be an imperative. If you’re looking for a goal to improve it to, 680 would be a good start. That’s the level that will move you into the “good” category with many lenders, and open up a larger number of loans to you.

How to you go from 650 to 680—or to an even higher score?

1. Pay your bills on time from now on.
2. Get a copy of your credit report and check it for errors—if there are any, contact the creditor directly and see what you can do to remove the erroneous information.
3. Payoff any small collections as quickly as you can, and work out settlements or payment plans for the larger ones.
4. Pay your credit cards and car loans down to below 80% of available or original balances—this lowers your “credit utilization” rate and that has a major effect on credit scores. A credit utilization rate below 80% is generally seen as positive.
5. Credit applications result in credit inquiries on your credit report, and they can lower your scores. Hold off applying for any loans at least until your credit scores improve substantially.

Whether you work to improve in some or all of these areas, the most important thing is to get started now. Efforts to improve your credit score can take months, so you want to be sure that you do it before you actually have a need to get a loan. By improving your credit before you need to, you’ll be giving yourself the time you need to make it happen.

More good news…

If you aren’t really happy with your credit score—whether it’s in the neighborhood of 650 or somewhere else—don’t be too upset. Credit scores are not fixed numbers! In fact, your credit score changes regularly; check it in 30 days and it will be something different, maybe really different.

That’s good news if your score is lower than what you want it to be. Small positive changes—or even just the passage of a little more time since your last late payment—can cause your score to rise. And the more you do to actively improve your score, the more dramatic the improvement will be.

Have you been turned down for a loan or charged a higher rate as a result of having something close to a 650 credit score?

Jason is a financial advisor and Dave Ramsey-trained counselor that blogs over at WorkSaveLive. He aims to educate his readers on a variety of financial topics while sharing his family’s journey out of debt and a few delicious recipes.

Being Frugal and Having a Social Life

Being a self-proclaimed cheapstake and having been on a fairly strict budget the past 6 years, I’d be lying if I told you that it hasn’t hindered our ability to grow relationships and hang out with our friends.

The reality of the world that we live in is that people like to go out, do things, and spend money while doing it. A golf outing, a trip to a sporting event, a concert, or even a meal out quickly adds up and can become a major hindrance on your budget.

While I don’t have all of the answers, here are 5 tips that we’ve implemented to live a frugal life so we can get out of debt, WHILE maintaining a few friends in the process.

5 Ways to Live Cheap While Having a Social Life

1. Find New Friends

This suggestion may take some people by surprise but it’s something you should consider. After leaving college and putting my glitz-and-glamor days behind me, I also had to leave behind many of the people I associated with. For one, the friends I kept back then didn’t have the same desires and goals in life that I had, plus they firmly believed that since they were young they should live life now and spend everything they had while doing it.

So, for me, moving on and finding a group of people that shared similar beliefs (on a number of topics) was something that needed to be done. Adding to that, it’s nearly impossible to maintain friendships if your friends believe that spending money is required to having a good time.

While I’d encourage everybody out there to help their friends/family that are struggling with money and spending recklessly, the reality is that sometimes you just can’t change somebody and it’s more likely that your spending patterns will reflect those who you’re closely associated with.

2. Groupon/Coupon it Up

Whether you’re keeping your old set of friends or finding people that are frugally minded such as yourself, it doesn’t hurt to get deals wherever you can find them. If I go golfing I choose the course I go to based on online deals or Groupons that are available.

If we’re going out to eat then there is nothing better to find some half-off deals; even consider buying an extra one for your friends and offer it to them when you suggest where to go out to eat for the night. We recently went to a Japanese Steakhouse with a couple and my friend implemented exactly what I’m suggesting here: he bought two Groupons, one for them and one for us. He allowed us to buy the 2nd Groupon from him and we both were able to dine half-off that night!

3. Find Free Venues

Here is the Kansas City area there are free museums to visit and in the downtown area there is a specific place that holds FREE concerts on Wednesday, Thursday, and some weekend nights. You couple a free concert with a half-off Groupon to a nearby dining venue and you may only drop $20 for a whole night of entertainment and bonding with your friends.

4. Potluck is Back

Something my wife and I look forward to each month is our “Dinner Club.” I know it sounds lame, but we get together with 4 other couples every month (2 people I did keep around from my college days) and each of us brings food to eat. Somebody is responsible for the main dish while others will bring the sides and dessert. Furthermore, if the host is spending a lot of money on meat then I’ll even throw in $5 or $10 to help limit his costs and try to make it fair for everybody.

5. Talking and Playing Games is FREE

I’m not sure when we decided that the only way to interact with people and have fun is by going out and spending money, but regardless of what I think, that’s reality. Being on a budget and living financial responsible lives has forced us to be different than most people, and we’re comfortable with that.

Saying that, we frequently have friends over to play games, enjoy a home cooked meal, and in the fall we’ll sit by our backyard fire pit while enjoying smores and conversation. Overall it may cost us about $15 for all of the supplies but that’s a small price to pay to keep your social life. You can even eliminate the costs if you just played games and enjoyed the fire! I recommend Taboo.

As our mindset has shifted over the years it has becoming increasingly difficult to save money and remain frugal WHILE keeping your social life. However, it is possible. It simply takes a little creativity, a financially responsible outlook, and friends that are willing to support you regardless of how much money you can or can’t spend. At the end of the day I’m not really sure I’d call them “friends” if that wasn’t the case.