Episode 402: Are Mutual Funds Dead?

June 7, 2016

I recently read an article that questioned the future of mutual funds. It seems that ETFs or electronic traded funds are taking over and there are some good reasons that so many people are making the shift.

First, the expense ratios of ETFs are generally lower versus active mutual funds and in some cases, even lower than index mutual funds. Also, ETFs often have lower trading costs versus actively managed funds, due to their low portfolio turnover. The ETF cost savings can be significant, especially for long-term investors.

Second, transparency – Actively managed mutual funds report their holdings on a quarterly or semiannual basis, whereas exchange-traded funds disclose their portfolio holdings on a daily basis.

And, third ETFs are renowned for having low portfolio turnover, which is good for investors, because it reduces the possibility of tax gain distributions.

The only problem some 401(k)s and other qualified plans may not have made them available as yet. But if you do some investing on your own, you might want to look into ETFs – it could save you a lot of money!

And that’s the minute for today. I love helping people with all aspects of their financial lives. If you have a question, send it to me at info@mindingyourmoneyminute.com.

Thanks for listening and as always remember that minding your money really is the path to a richer life!

 

Episode 401: What’s in Your Emergency Fund?

June 6, 2016

It’s Monday and I have a question. Is your money working for you?

Well, I’ll get right to the point. What’s in your emergency fund? An emergency fund (cash cushion, cash reserves) whatever you call it is an account you have to bail you out if something unexpected happens – your car breaks down, you get sick and can’t work, you lose your job – you get my drift. So how much do you have packed away?

If the answer is nothing or you aren’t sure, now is the time to replenish it or start one.

To quote Denis Waitley, “ We should Expect the best, plan for the worst, and prepare to be surprised.” But I’m not a fan of surprises that put me in a financial bind and that’s why having an emergency fun is so important. So how much should you keep in your emergency fund – well it depends.

How does it cost to repair your car? Pay your expenses for a month or two or three? And so on. So start by thinking about how much you need to have on hand. $5,000, $10,000 or more to tide you over. And if that is way too much start where you can start and add to it every time you get paid until you build up a comfortable amount. Then as you use it don’t forget to put the money back. And here’s the key, don’t keep the money in your regular checking account, set up a special account to there will be less temptation to use it for non-emergencies.

And, that’s the minute for today. I love helping people with all aspects of their financial lives. If you have a question, send it to me at info@mindingyourmoneyminute.com.

Thanks for listening and as always remember that minding your money really is the path to a richer life!

 

Episode 400: Word of the Week: Financial IQ

June 3, 2016

It’s Friday and time for the Word of the Week! Our word this week is financial IQ.

I chose financial IQ because I was recently quoted in Essence Magazine and the topic was why you need a financial planner. As women and men too, we have a tendency to believe that managing your money is a bit of a no-brainer – that anyone can do  — that we are born with that knowledge.

It’s true that some people do have an affinity for it and they but a lot of people don’t and they struggle often in silence because they don’t want anyone to know what they don’t know.

The good news is that unlike your mental IQ, you can increase financial IQ and your can do so with just a little education and practice. So where’s a good place to get that education? Well, start where you feel comfortable, read a book like Minding Your Money, attend a seminar or webinar, talk to your money savvy friends and talk to a financial planner. Then put what you learn into practice. Once you start to implement some of the things you learn, you will quickly find out what information you’re missing. Educating yourself about money is really an ongoing process because things are always changing.

Our word of the week financial IQ. Your financial IQ to date is the result of all of the things you have learned up to this point. If you don’t like where you are, change it! There are so many resources available that there are no longer any excuses – and if you have money smarts – don’t keep it to yourself — share your wealth of knowledge and that will make you even smarter!

And, that’s the minute for today. I love helping people with all aspects of their financial lives. If you have a question, send it to me at info@mindingyourmoneyminute.com.

Thanks for listening and as always remember that minding your money really is the path to a richer life!