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Tips for Choosing High Yield Mutual Funds

If you are considering investing some cash in mutual funds, it makes sense that you’d want to invest in the best ones you can find. So called high yield funds are the best ones to look for, since they provide you with the opportunity to enjoy the highest possible yield you can.

So with that in mind, here are some tips on choosing the best high yield mutual funds on the market today.

Do your homework

It should go without saying, but it is surprising how many people are so eager to invest in these funds they’ll slap their money down on anything that looks good. They do this without researching it properly first, so it makes sense to ensure you don’t fall into this group.

Start looking online to see how many mutual funds are out there that fall into this type. Of course you shouldn’t just trust everything you read. Everyone is keen to stress the positives without focusing too much on the negatives. This means it’s your job to do both.

There are plenty of well known and reliable websites that are long established online that can be relied upon to give out good information. If you search for the phrase ‘high yield mutual funds’ you will find lots of these sites popping up on the first page of Google. Use these results to help you find the companies you need to look at more closely.

Choose a fund that fits in with your investment plans

It goes without saying that most mutual funds will perform better over the long term as opposed to the shorter term. But there can be a difference between investing for five years and fifteen years. Think about the goal you have in mind and how long you want to save for, and consider which funds most closely match your ideal.

You may find some perform better over the period of time you want to save for, in which case you should add these to your shortlist. Now it is time to delve into each individual fund more closely. Find out everything you can about each one – get the literature and speak to those managing the funds if you can.

You should also bear in mind that while looking at the most successful mutual funds for this year will help in some ways, it doesn’t necessarily mean those same funds will perform just as well next year. Be sure to look back over a longer period, say five years or more, to get a more accurate pattern.

As you can see, it is wise to focus on the details of all the high yield mutual funds you have come across that you are thinking about sinking money into. Choose the one that appeals to you the most. While you cannot get rid of the risks inherent in investing in this type of fund, you can vastly reduce them and hopefully get the highest yields in the process.

5 Types of Common Stocks

If you’re even slightly new to investing, then it’s imperative to know the basics before you get too deep in the process. One of the most basic things you should learn about the stock market is the types of common stocks that exist. When people talk about stocks in general, they’re most likely referring to commons stocks.

The vast majority of stocks are issued in the form of common stocks. When you buy “common shares”, each share that you purchase represents your partial ownership, or stake, in a company. It’s essentially staking your claim for a portion of the dividends (read: profits) that the company generates. They may go up or down depending upon how the company performs.

In addition, when you buy common stocks, you become an investor in a company, meaning that you get a vote for each share you own. This vote can help elect board members depending upon the amount of stock you own. Let’s take a look at five of the types of common stocks that are out there.

1.       Penny Stocks

Don’t invest too heavily in penny stocks unless you’re feeling risky. They’re the most speculative form of stocks around. The rule of thumb for a stock to be considered a true “penny stock” is whether it’s priced at $5 or less per share. If it is, then you have yourself a penny stock. Companies that sell penny stocks are not quite established yet – and most are still deep in the development phase of their growth. A second kind of penny stock company is the kind that is offered by a company that is flailing financially. Penny stocks for either type are highly risky because there’s a huge chance that the companies you invest in may fail.

2.       Blue Chip Stocks

The biggest companies in the world – think Wal-Mart, Google, and the like, only offer blue chip stocks. These companies have higher-priced shares with little room for growth, but who cares? Adding a healthy mix of blue chip stocks to your portfolio will lend a great amount of stability to it because the likelihood of these companies failing is extremely low, and returns are as close to guaranteed as you’ll get in the stock market.

3.       Utility Stocks

Utility stocks are simply stocks issued by companies that offer public works services such as power and water. There’s limited competition since most of these companies almost have monopolies in the areas they service. That’s why utility stocks are low-risk, because their returns are almost guaranteed. However, the amount you’ll profit is marginal.

4.       Emerging Growth Stocks

Emerging growth stocks are offered by up-and-coming companies that are still in the growth stage and figuring out the best tactics for management and company structuring. Investing in these kinds of stocks may not yield anything at first. There is a chance for huge rewards down the road, but there’s also the chance that you’ll have a bankrupt company on your hands. Companies that offer emerging growth stocks tend to be volatile while in development, plain and simple.

5.       Established Growth Stocks

Companies that offer established growth stock have a proven track record, and they’re established enough not to be a high risk for bankruptcy. At the same time, the rewards are minimal compared to other types of stocks. There’s room for massive growth down the line, however.

What Are Some Company Names and Stock Symbols?

Company names and stock symbols are commonly confused. To make a long story short, a stock symbol (which can sometimes be called a “ticker symbol”) is simply a short abbreviation that investors use to uniquely identify all of the shares that are publically traded within a particular stock market. There are many different formats for stock symbols, and they may consist of numbers, letters, or even a combination.

The reason that stock symbols are occasionally known as “ticker symbols” is because the symbols were originally printed on the tape that ran from a ticker tape machine.

History of U.S. Stock Symbols

Standard & Poor (S&P) had the desire to add uniformity to the investment process, so the stock exchange implemented stock ticker symbols that were more modern and boasted only letters. Before that time, one company may have had dozens of different ticker symbols floating around depending on the stock exchange in question. Needless to say, that way of doing things became mighty inefficient in a hurry. The S&P changed all that, and then years down the line, the securities industry as a whole standardized the method to make it official – it had finally become the industry standard. However, to this day, for preferred stocks, stock symbols have yet to be standardized.

Examples of Stock Symbols in the United States

Let’s take a look at the standardized stock symbols for some of the biggest companies in the United States to get a better feel for the way companies are tagged in the marketplace. Some of the larger company stock symbols are as follows:

AAPL – Apple Inc.

BAC – Bank of America

C – Citigroup Inc.

GOOG – Google

HNZ – H.J. Heinz Company

HPQ – Hewlett-Packard

INTC – Intel

KO – Coca-Cola Company

MSFT – Microsoft

TGT – Target Corporation

WMT – Wal-Mart

WAG – Walgreens

For the beginning investor, understanding these symbols makes it easier to get into trading without feeling like you’re in a completely foreign world. You will be able to read stock tickers more easily and gain a better grasp on the process more quickly.

The SEC Changes the Rules

In the past, all an investor would need to do was look at a symbol in conjunction with its appended codes in order to figure out where a company’s stock was trading. But a move by the SEC in 2007 changed all that.

The SEC approved a rule that changed how companies that moved between the New York Stock Exchange and the Nasdaq were known. The rule allowed them to keep their three-letter symbols even though they moved between exchanges. At the beginning, the law excluded companies that only had one- or two-letter stock symbols, then after 2008, companies slowly began keeping their shorter symbols intact when making the switch. This trend started with CA, Inc., which traded using the symbol CA.

Knowing stock symbols is a great way to get your feet wet in the world of stocks. It will help you get accustomed to the companies that are trading and read the tickers more prudently.

The Best Places Worldwide to Invest Your Money

We are truly living in a global economy. Multinational corporations aren’t even “multinational” per say, because they do not have many nationalities – most have one gigantic global presence. Think Google, Microsoft, Apple – these are companies that set up shop from pole to pole, and they’re all reaping the rewards of casting their nets so wide.

Regular investors like you and me should take a page from this playbook and diversify our portfolios too, if we can. First, of course, you should take care of the biggest investments – you retirement, education for your kids, your emergency fund. Then, once you’ve locked down those things, it’s time to start looking at ways to up your returns by any means possible.

Think as the corporations do – take your money global and reap the rewards. Some places in the world are better to invest in than others; just look at the disastrous effects of the European Union’s Greek euro fiasco. The currency is expected to tank, and these are the kinds of minefields you’ll want to avoid when planning your overseas investment strategy. You should make sure to do your homework and scout out the best places worldwide to invest your money. Here are a few resources to get you started.

A Core Foreign Fund Could be Just the Ticket

Don’t try this at home, folks: If you want to start investing in foreign markets, then you need to have a qualified financial advisor by your side to hold your hand through the process. Ask about opening something simple to get yourself started, such as a core foreign fund.

You need to sink the majority of your dough into holdings with a fund that has the ability to track a very broad index of stocks in developed markets. If you’re looking for one particular index, consider the dependable option of the Fidelity Spartan International Index (FSIIX). When you pick this stock index, you will be investing most of your money in Australia, Western Europe, and Japan. This move got the kiss of approval from Money magazine, so it’s worth a look.

Throw a Little into Emerging Markets

Let’s take a case study as an example. One fabulous performer, Yum Brands (YUM), is the parent company of American favorites such as Pizza Hut, Taco Bell, and KFC. It’s likely you have all three of these not even a few miles from your house, right?

Well, believe it or not, they’re not just in the United States – In fact, Yum rakes in more than half of its annual revenue from its stake in emerging markets, and it’s actually one of a very limited number of companies in the S&P 500 to pull this off so successfully. A rep from Morgan Stanley even noted recently that for anyone who may be interested in parking their bucks in global growth, Yum is a no-brainer. If you’re going for individual overseas investments in emerging markets, try to choose companies with a similar track record to round out your portfolio.

How Stocks Are Classified

Stocks can be confusing. Before you try to invest in them, you should acquaint yourself with how stocks are classified. Businesses divide their company “stock” into many different shares, and when the business forms, it must declare how many shares exist. The value of each share is connected to the total dollar amount invested in a business. When you buy stocks, you are essentially purchasing partial ownership in a business. There are different types of stocks, and each type is called a class.

Blue Chip Stocks

A blue chip stock is one that is offered publically by a very large, stable company. Google and Wal-Mart are two great examples of blue chip stocks. These companies stand the test of time, and their power and stability is what earns their shares the name blue chip stocks.

Income Stocks

Income stocks are stable. They have a good history of consistent, high-paying dividends for shareholders. Public utilities and telecommunication companies are some of the most common kinds of income stocks on the market today.

Growth and Value Stocks

Growth and value stocks are straightforward. Companies that experience profit margins that increase faster than economic growth offer growth stocks. Companies who have stability but whose profits have dipped offer value stocks. Investors consider value stocks a “bargain” because when the market self-corrects, the price of these stocks generally increases.

Small, Mid, and Large-Cap Stocks

Small-cap stocks are those that have a smaller market capitalization than others. Although the definition can vary, most analysts agree that companies that have a market capitalization from around $300 million to $2 billion offer small-cap stocks.

A mid-cap stock is the abbreviated version of “middle capitalization” and it refers to stocks offered by companies that have market capitalization somewhere from $2 billion to $10 billion.

As the name implies, large-cap stocks are stocks from companies with the largest market capitalization. Companies with a value greater than $10 billion are considered to have large-cap stocks.

Cyclical Stocks

If a company is said to have cyclical stocks for sale, this means that the company offers stocks with profits and sales that fluctuate at a higher rate than other more stable stocks. The fluctuation generally happens in tandem with economic dips and spikes, so when the economy is bad, the market price of these stocks will likely decrease. When the economy picks back up, the prices of these stocks will generally rise are well.

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