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Dear ,
Welcome to the eighth issue of The Wealth Chronicle, a free monthly newsletter written by Marc Bautis of Bautis Financial, LLC. The objective of each newsletter is to present informative articles discussing the topics of wealth management, investment analysis, and personal finance. This month's article has a Mutual Fund flavor to it, focusing on providing tips on how to make the best of your investing experience. If you have any questions or comments about any of the articles, please send them to me. I also maintain a blog containing more frequently updated information at http://www.bautisfinancial.com/blog.
If you think the articles in this newsletter are informative and useful, please forward it to a friend or colleague. If you no longer wish to receive the newsletter you can unsubscribe by clicking the unsubscribe link at the bottom of the page. If you would like to discuss your personal financial situation, I would be happy to offer a free no-obligation consultation. |
Mutual Fund Share Classes
Do you know your A, B, C's
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Selecting the right mutual is hard enough, but investors
also have to select from different options of each fund. Unfortunately these options revolve around
different fee structures that you as an investor will have to pay. The share
classes are most commonly labeled A,B, and C. This article will help you understand the different types of classes and
help you select the right one for your portfolio.
Class A - contains an upfront sales charge when you purchase
the fund. If you purchased $10,000 worth
of a mutual fund, 5% or $500 would go to the person selling you the fund.
Class B - contain a deferred sales charge that you pay when you sell the
fund. This class is best if you plan on holding the fund for a long time.
Class C - called a "level-load" fund. You pay no upfront sales charge, a low
deferred-sales charge, however there are high annual maintenance fees for
keeping this type of fund. Best if you are going to hold on to a fund only for a short time.
The following is an example of the fees and expenses you can
expect to pay on a fund. The example I
took is from fund American Funds Intl Gr And Inc A
(IGAAX). At the end of the fund name you
see the letter A. This means that it is
an "A" Class fund and from the (Yahoo Financial) table below you can see that
you would expect to pay around 5% up front to purchase this fund.
It may make sense to take a look at your statements and see which type of funds you currently have.
Rule of Thumb - there are very few instances where it makes
sense to pay a sales charge on a fund.
Most likely you can find the same type with just as good of a
performance fund without the upfront or deferred charge.
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Mutual Fund Expenses
Discreetly taking your money
Even if your fund does not have a sales charge you are still
paying a yearly expense based on the total amount of money you have invested in
the fund. This fee is an annual expense
and you do not receive a bill for this expense.
It is discreetly deducted daily from the price (NAV) of your fund.
The expense can run from .05% to 2% and covers things such
as:
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The salary of the fund manager and his team
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The transaction costs of trading the securities
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Operational costs
Unfortunately these are not the only fees you will pay. There is an annual charge called a 12b-1 fee,
which is an annual fee automatically deducted from your account and pays for
the Fund company to advertise. You heard
that correctly, there is a specific fee you pay to watch your favorite T.Rowe
Price or Franklin Templeton commercial on the television.
Taking the same fund example as above we can now look at the
annual expenses that the particular fund charges.
Rule of Thumb - there are very few instances where it makes
sense to have a fund in your portfolio where the annual expenses is greater
than 1%
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Company Spotlight
Matthew Scheidel - Dog Trainer |
We got our Olde English Bulldog puppy, Winnie in December 2008 and
after a couple of months we decided to enroll her in a Puppy Kindergarten
class. The class was worth attending, however at
that age a majority of the class time was spent having the puppies socialize
with each other. We were hoping for more learning of commands and obedience. Winnie was good around other dogs, but
around us  her motto was "I'll do what I want to do, when I want to do it." If we tried taking her for a walk she would
find the nearest patch of grass and lie down refusing to move.
We decided to enlist the services of dog trainer Matthew Scheidel
and couldn't be happier with the results.
It only took a few sessions with Matt before Winnie would go for a long
walk with us and stay by our side the entire time. In fact we could tell the difference in
Winnie listening to us after the first session.
If you have a puppy or even an adult dog that you would like training
help with I cannot recommend Matt enough.
You can read Matt's full bio below and can reach him at
973-580-3615.
About Matthew Scheidel
To be really good at what you do, you need to love what you do. Matthew's love for dogs began as early as his
memories will take him. Growing up with an array of pets - dogs, birds,
rabbits, hermit crabs - he often found himself choosing time with them over
other common childhood distractions.
This strong devotion to animals drove Matt toward a career as a
veterinarian. But after much conflict he
realized this was not the interaction he wanted. He longed for a bonding experience between
animal and human. As fate would have it,
a difficult pet sent him into a whirlwind of training research - he scoured the
internet and read countless books. But
he needed a "hands on experience" which led him to John.
John Soares is an internationally recognized champion trainer
in New York
with high honors in obedience, protection, tracking and more. John helped Matt
understand the relationship between handler and pet. Matt was hooked. He was fascinated by the bond that could be
attained through training and behavioral modification. He now knew what the future held for him.
Matthew completed his apprenticeship with John and today is committed
to improving the dog and human experience through enhancing his education and
understanding of this amazing species.
He participates regularly in training forums on Yahoo Groups. He attends seminars and is open to the
constant advancements in dog training, applying new and old techniques as they
are required. He is continually learning about psychological and behavioral
temperaments among various breeds and how to apply those in his training
methods.
Matthew specializes in dog obedience instruction and behavioral
modification. Believing a dog's diet is
a core factor in proper training, he places keen emphasis on nutrition - a self
taught and proven approach. He believes
in training that makes you feel part of your pet's experience.
His tenderness and adoration of dogs grows stronger each
day. He is currently the owner of two
energetic, affectionate females - a Sheppard Collie mix named Hallie and a
Golden Retriever named Memphis.
Matthew has completed training courses with Lynee Petermann,
certified dog obedience instructor, mentor training manager of Club Barks
Institute, and owner of Pooky Professor in New Jersey
and also Dory Kowal of the American
Canine Academy.
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Mutual Fund Makeup
Did your fund miss the rally?
This spring and summer the stock market had a positive
swing. The Dow Jones Industrial Average
went from around 7000 in early March to over 9000 where it currently sits
at. The question is did your mutual fund
participate in the rally? Unfortunately
just because you have a stock fund in your portfolio does not mean you did.
Fund Managers have tried to time when to get back into the
market after last years downfall and have been hoarding cash in their funds. If you read the description of one
of your funds you might see something similar to: "typically
holds no more than 20% of assets in cash."
The key word in that statement is typically. It almost gives the fund manager the ability
to allocate his fund as he wants to. Research on a couple of funds that typically have no more than 20% in cash now have almost 50% in cash.
How do you ensure that your portfolio has the allocation that
you expect it to? You can track daily what
your fund manager is holding in the mutual fund, but a much simpler approach
would be to build your portfolio using index funds and ETF's. |
Blog Post of the Month
Personal Finance Magazines
You have to take the advice that some of these magazines give with a grain of salt. Both my Kiplinger's and Money magazine were delivered last week and I noticed that they provided contradictory advice on which sector to invest in. .
The topic in question was on investing in stocks from Emerging Market countries such as China, India, Brazil, and Russia.
Kiplinger's article was for Emerging markets stocks: "Tasty Returns from Emerging Markets - Add International flavor to your portfolio with fast-growing Foreign stocks"
Money's article was against the sector: "Three Inflating Bubbles to Avoid" - Emerging market stocks carry serious risk of currency devaluation and political instability
Another thing these magazines do is contradict themselves one month to another. In one issue they recommend 5 stocks for the long run, while in the next issue they recommend 5 different stocks to add to your portfolio. What drastically happened in one month? I would expect to see such contradiction from different magazines on who to draft with the fifth pick in my fantasy football draft, but not with financial advice.
That being said I do enjoy reading these magazines and have subscriptions to Money, Kiplinger's, Smart Money, Forbes, Fortune, and Business Week. They do have good articles; however you have to realize that sometimes they have to fill up a magazine. |
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Sincerely,
Marc Bautis
Wealth Manager
tel: 201-221-6895
fax: 201-754-9760
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Disclaimer:The information contained in this newsletter is for information purposes only and may not be suitable for your specific financial situation. You should consult a financial advisor before making any investment decisions relating to the information contained in this newsletter
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| About Marc |
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Marc Bautis is an Independent Investment Adviser specializing in working with retirees and those nearing retirement who want to protect their principal and ensure their money lasts. He is proud to deliver independent advice, always in his clients best interest.
Marc is a Bergen County native. He is a graduate of Lyndhurst High School and Seton Hall University. He, his wife Katie, and puppy Winnie live in Hasbrouck Heights. |
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