American Democratic Party Makes History

This week, Hoss's free financial money magazine has taken a back seat to the American Democratic National Convention.

The Hoss has been glued to CNN and yesterday's historic moment was one that moved The Hoss to tears. I knew the historical significance of what was about to happen when Hillary Clinton took the mike and motioned to cut the roll call vote short, saying "Let's declare together with one voice right here, right now, that Barack Obama is our candidate and he will be our president."


What I wasn't prepared for was the tears of joy flowing down the cheeks of many of the participants, who were obviously aware of the historical significance of what had just happened. Arguably one of the most momentous occurrences in American history. An African American leading a major party's ticket. Only 45 years ago Martin Luther King Jr gave his "I have a dream" speech. That dream, at least in part, has come to fruition.

In his acceptance speech Obama's Vice Presidential nominee Joe Biden, pointed out the economic success of the Bill Clinton presidential era and the economic failures of the Bush presidency and stressed that an Obama administration would reduce taxes for the working class, make health care accessible to all, and make education a priority.

All in all it has been a good week for the Democrats what with the great speeches from Michelle Obama, Joe Biden, Hillary and Bill Clinton, and the nomination of an African American for the President of the United States, Barack Obama. I feel privileged to have been able to watch this event and as a Canadian I congratulate the American Democratic Party and the American people. Maybe, just maybe, some day we will all be able to live in peace and harmony.

Stay on track,
The Hoss

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Mutual Funds: Advantages

From The Hoss's Mouth

Hoss Cents Free Financial Money Magazine explains the advantages of investing in mutual funds. Mutual funds are an excellent investment tool for both the novice and experienced investor. They are many benefits to mutual fund investing, which The Hoss has summarized below.

• Costs: Many mutual fund companies permit new investors to buy units (shares) with as little as a $500 initial investment. Subsequent regular unit purchases can be set up for as little as $50 a month. Whether you invest $100 or $100,000, all investors in the fund receive the same benefits of the fund.

• Diversification: You have probably heard the cliché "never put your eggs in one basket". Mutual funds, because of the vastness of their pool, provide a format in which the investor has a share in a variety of investments, bonds and securities. You can invest in any number of funds such as equity funds, income funds, specialty funds, mortgage funds, index funds, to name a few. Now that's diversification.

• Professional Money Management: Most people are not trained in the world of investing. When purchasing a mutual fund, you are in effect hiring the skill and expertise of a professional money manager. They do all the research and have the knowledge to make good investment choices on behalf of the fund. If they are not successful they will not be a fund manager for long.

• Efficiency: Mutual fund companies have large sums of money to invest and are able to negotiate commission rates.

• Liquidity: You can redeem you units or shares at any time at the net asset value per share (NAVS).

• Flexibility: Many mutual fund companies offer a multitude of fund types and allow the investor to switch between funds with little or no charge. This enables you to adjust the balance of your portfolio in accordance with the financial goals established by you and your financial adviser.

• Monitor Performance: You can monitor the performance of your mutual fund(s) by tracking their NAVS, which are reported daily in the financial press or on the Internet.

A word of caution: Due to the potential serious impact to your return on investment, The Hoss suggests that before you invest in any mutual fund, you familiarize yourself with all the costs associated with the fund(s) and the performance record of the fund manager.

Stay on track,
The Hoss

I have to mention three blogs I find to be very informative in no particular order of importance.

Very funny and informative The Red Stapler Chornicles.

For tips on how to make money on line check out the Money Blog

Next Hoss Cents Free Financial Money Magazine Post: How do Mutual Funds Work: The Loads
Previous Post: Definition of Mutual Funds

Definition of Mutual Funds

From The Hoss's Mouth

So just what is the definition of a mutual fund? Hoss Cents Free Financial Money Magazine explores the definition of one of the most popular investments tools available to today's investors: mutual funds .

Simply put, a mutual fund is a tool that permits a number of investors to form a pool of money to buy bonds, stocks or other types of securities according to a predetermined investment objective.

Mutual Funds are open-ended funds and can be bought and/or sold at any time by new and current investors of the fund in accordance with the NET ASSET VALUE per SHARE (NAVS). NAVS are calculated by subtracting the fund's liabilities from its assets and dividing by the total number of shares. This calculation is done each and every trading day.

In addition to providing the definition of mutual funds, The Hoss has compiled a list of positions you should be familiar with, as there are many people involved in the operation and organization of a mutual fund:

• Mutual Fund Manager: Markets and oversees the administration of a Mutual Fund(s)

• Portfolio Adviser: Directs the fund's investments. Often the Mutual Fund Manager and Portfolio Adviser is the same person.

• Principal Distributor: Responsible for the sale of the fund to investors.

• Custodian: The Mutual Fund Manager appoints a bank or trust company to hold all of the fund's securities.

• Transfer Agent And Registrar: Maintains the resister of the fund's unit holders.

• Auditor: Each year, performs an audit of the fund and compiles a report on the financial statements of the fund.

Now that you are familiar with the definition of mutual funds, The Hoss now will turn his attention to the question that all new mutual fund investors ask: How do I make money from a mutual fund?

You, the Mutual Fund Investor, profit when you receive distributions from interest, dividends or capital gains that the fund has earned. You also profit when the NAVS of your fund increase in value.

On the flip side, you could also experience a loss if your fund's NAVS decrease and the decrease exceed any interest, dividends or capital gains the fund earns.

The next several posts of Hoss Cents Free Financial Money Magazine will concentrate on mutual fund costs, the various types of mutual funds, the different investment strategies employed by each, and the advantages and disadvantages of investing in mutual funds.

The Hoss welcomes you to the world of mutual fund investing and hopes you benefit from this post on the definition of mutual funds.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Mutual Funds Advantages

Previous Post:Mutual Funds and Closed-End Investment Funds

Mutual Funds and Closed-End Investment Funds

From The Hoss's Mouth

Mutual funds and closed-end investment funds are the topics of today's Hoss Cents Free Financial Money Magazine post. The Hoss will provide you with detailed information you should know about these fund types. With this knowledge, you will be in a good position to handicap the various funds available.

Mutual Funds: A fund that continually issues shares or units to investors. The risk factor of mutual funds range from low to very high, and depend on what type of mutual fund you invest in. Government bond funds for example are less risky than equity mutual funds. Your profits come from a trifecta made up from earned interest, dividends and/or capital gains. In addition, when you decide to sell some of or all of your units ,you could have an additional capital gain. Of course, if you sell for less than you're paid, you will have a losing ticket (capital loss).

Banks, fund companies and investment firms all sell mutual funds. When you purchase or sell units or shares of a mutual fund you receive the "net asset value" (NAV). In other words, you receive the current value of the fund.

Any fees and/or expenses the fund pays are deducted from the fund's assets. This could consist of management fees, incentive fees, trailing commissions, operating expenses and/or administration fees.

You may also have to pay sales charges, switch fees, redemption charges, short-term trading fees, registered plan fees, and minimum account fees. The Hoss says, before you purchase any mutual fund, make sure you are aware of all the charges you will be responsible for.

Closed-End Investment Fund: These funds differ from mutual funds in that they do not continually issue units or shares to investors and these funds may trade on a stock exchange. Consequently, it can be difficult to buy or sell closed-end funds, particularly if they are not listed on an exchange, or if they are listed, they have low volume trading.

Like mutual funds, the risk depends on what type of fund the investor purchases.

NOTE: You will be charged a commission when buying or selling closed-end funds on an exchange.

Time for The Hoss to do a workout, so until next time...

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Definition of Mutual Funds

Previous Post:Labour-Sponsored Investment Funds And Commodity Pools

Labour-Sponsored Investment Funds and Commodity Pools

From The Hoss's Mouth

Today's Hoss Cents Free Financial Money Magazine post will highlight two unique investment fund types: Labour-Sponsored Investment Funds and Commodity Pool Funds. They are both considered high risk. So, The Hoss reminds you that if the risk tolerance assessment done by you and your financial adviser indicates you have a low risk tolerance, these funds are not for you.

Labour-Sponsored Investment Fund (LSIF): These funds help new and small businesses obtain venture capital and provides the investors with tax incentives. The costs associated with these Labour-sponsored investment funds are the same as mutual funds. However, the commission rates may vary from mutual fund commission rates and the manager may receive an incentive fee on top of the normal management fees.

The investors earn money from distributions of interest, dividends and/or capital gains. In addition, the investors may have a capital gain or loss when they sell their units or shares.

Financial institutions or labour organizations issue LSIFs.

The hold period on LSIFs can be as long as eight years, and even if you hold them long enough to qualify for tax credits, those tax credits may not be enough to offset any losses. SPECIAL NOTE: At the time of this post, LSIF tax credits in Ontario are scheduled to be eliminated at the end of the 2011 tax year.

Commodity pool: This fund invests in commodities or derivatives that are not permitted for investment by conventional mutual funds. The investor once again profits from capital gains, interest and/or by the dividends issued. The sale of the units or shares also result in a capital gain or loss.

The investor pays a commission upon the purchase or sale of units or shares. Management fees and operating costs are paid from the funds assets.

Due to the highly speculative nature of some commodity pools, you could lose some or all of your investment.

In horse race terms, neither of the above funds are for the chalk player .

Until next time.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Mutual Funds and Closed-End Investment Funds

Previous Post: Exchange traded funds and segregated

Exchange-Traded Funds and Segregated Funds

From The Hoss's Mouth

Exchange-traded funds and segregated funds are the topic of today's Hoss Cents Free Financial Money Magazine post. The first to enter the starting gate will be:

Exchange-Traded Fund (ETF): A fund that trades on a stock exchange and holds the same mix as a stock or bond market index. Some ETFs are actively managed more than others but they usually follow a stock market or bond market index. Just like a mutual fund, your profits are a trifecta made up from earned interest, dividends and/or capital gains. When you sell your units or shares, you will have a further capital gain or loss depending on the selling price as compared to your purchase price.

When you purchase or sell units or shares of an ETF you will pay a commission. Management fess and operating costs are the responsibility of the fund. As with other fund types, the risk is dependent on the type of fund you choose to invest in.

NOTE: When an ETF manager simply follows an index, less buying, selling, and research is required by him or her, therefore an ETFs fees and expenses are frequently lower than that of a regular mutual fund.

Segregated Fund: Investment funds combined with insurance coverage. It is an insurance product. Once again you hit the trifecta: earned interest, dividends and/or capital gains are your method of profit. Capital gains or losses also occur on the sale of your units or shares. These funds have the same cost as mutual funds and they have an annual insurance cost.

Insurance companies issue segregated funds and they hold these assets separate from other assets.

Segregated funds are bought and sold under an insurance contract. In most cases, if you hold the fund for ten years, all of your investment is protected against a market down turn. They typically come with a death benefit that guarantees a certain amount to your beneficiaries.

Risk, once again, is dependent on the fund type.

The Hoss and Mrs. Hoss have scheduled some personal time, so until next post time...

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Labour-Sponsored Investment Funds and Commodity Pools

Previous Post:Investment Funds

Investment Funds

From The Hoss's Mouth

Hoss Cents Free Financial Money Magazine turns its attention to the world of investment funds. Investment funds are perfect for the maiden investor. You can invest in any number of investments for a relatively low purchase price, and because the funds are managed by a professional fund manager, s/he makes the investment decisions. Similar to a horse owner who hires a trainer to train and manage a horse's race schedule.

Basically, investment funds are a group of investments made up of one or several asset classes. Separate funds concentrate on specific investment types, such as: stocks, bonds, foreign country investments, and/or any combination thereof.

Return on your investment comes by way of distributions of capital gains, interest, dividends or any other income the fund may earn. In addition, if you sell your portion of the fund for more than you paid for it you will have a capital gain. However, if the fund depreciates in value and you sell, you will have a capital loss.

Investment funds are usually set up as a corporation, partnership or trust. Each individual investor is issued units in a trust or partnership, or shares if the fund is a corporation.

The Hoss has listed various investment fund types below:

Mutual Fund: units or shares are continually issued to investors

Closed-End Investment Fund: units or shares are limited and may be traded on the stock exchange

Exchange-Traded Fund: investments are proportional to a stock market or bond market index, and trade on a stock exchange

Segregated Fund: combines investment funds with insurance coverage

Labour-Sponsored Investment Fund (LSIF): tax incentives offered to investors and the fund gives venture capital to businesses

Commodity Pool: invests in derivatives or commodities unavailable to conventional mutual funds

The Hoss will give additional details on each of these fund types in the upcoming posts. In the meantime, hang onto the reins and enjoy the ride.

Stay on track,

The Hoss

Next Hoss Cents Free Financial Money Magazine Post: Exchange-Traded and Segregated Funds

Previous Post:Shares What Are They?

Shares, What are They?

From The Hoss's Mouth

Today Hoss Cents Free Financial Money Magazine will answer the question, Shares what are they?

Horses come in a variety of colors brown, black, chestnut and grey to name a few. Equities also come in various varieties. Common shares, Restricted voting share, Preferred share, Flow-through share and rights and warrants. Equities just like horses perform differently, some come with voting rights, some don't, some pay dividends, some don't, some allow share holders to elect directors, some don't. In all cases you usually have to pay a commission when you buy and/or sell shares. The only exception being rights and warrants not listed on a stock exchange for which there is no fee for their issue or exercise.

The Hoss has listed below various types of equities and a summary of each.

Common Share: Common shares come with the right to elect directors and in some cases vote on major corporate decisions. Depending on the companies performance and long term goals they may or may not pay a dividend. In the event of dissolution the common shareholders rank behind tax authorities, employees, creditors and preferred shareholders. You can make money in two ways; with the dividends you receive and if you sell the shares for more than what you paid for them(capital gain). You can also lose money by selling for less than you paid (capital loss). Risk is considered medium to high.

Restricted Voting Share: The same as a common shares except for voting rights.

Preferred Share: Check to see if still available. Preferred shares pay a fixed dividend. However, these fixed dividends may be reduced or suspended if the company falls on hard times or for some reason wants to preserve its capital. The price of a preferred share may decrease if other investment types become more profitable or if the company plans to reduce dividends. Preferred share prices usually do not fluctuate as much as common shares. Preferred shareholders may have the right to convert to common shares for a certain price or at certain times redeem their shares. Usually there is no voting rights. In the event of dissolution preferred shareholders rank behind tax authorities, employees and creditors but ahead of common shareholders. You profit through dividends and/or capital gains. Risk is considered medium to high.

Flow-through share: Oil and gas or mineral exploration firms issue these special types of common shares that allow certain tax deductions for qualifying exploration, development and property outflows to "flow through" to shareholders from the company. These are high risk and the tax legislation qualification requirements are very strict.

Rights and Warrants: You have the right to purchase additional securities from the company within a specific period of time for a specific price. Stock exchanges do list some rights but generally they are issued in proportion to the number of shares held by the shareholder. In some cases there may be restrictions on the exercising or resale of these rights. Warrants permit shareholders to acquire other securities of the company. The risk associated with Rights and Warrants ranges from very high to very low.

You or you and your advisor should do considerable research before purchasing any stock and even then there is no guarantee you will make money.

The Hoss can hear the dinner bell ringing so until next time,

Stay on track,

The Hoss

Previous Post: Equities

Next Hoss Cents Money Magazine Post: Investment Funds

Equities

From The Hoss's Mouth

Equities or stocks as they are more commonly known are shares in a business and are today's topic in Hoss Cents Free Financial Money Magazine. The purchase of an equity (stock) entitles you become a part owner in that business albeit sometimes a very, very small part. Depending on the type of equity purchased you may have a right to vote at shareholders meetings and to collect dividends. Dividends are that part of the company's profit that is shared with the stockholders. Not all profits are divided amongst the owners. There is any number of ways a company will use some of the profits for improving the business. Not unlike a consortium that owns a race horse, if they show a profit they may choose to buy another horse or horses or they may purchase a new barn to house their growing stable.

Stock exchanges are the place was stocks (equities) are normally bought and sold. They can be purchased through over the counter markets or alternative trading systems. You can also purchase them over the internet but you have to have an account with a brokerage company.

Investing in equities can produce a large return but it can also cost you a lot of money and in some cases you can lose most or all of what you have invested. You incur high risk for the possibility of a high rate of return.

You make money when a stock (equity) increases in value or if and when dividends are paid. When you sell a stock for more than what you paid for it you have a capital gain. If you sell for less, you have a capital loss. In each case you must report this on your tax return.

There is no guarantee that you will ever make money. Stock values often fluctuate and sometimes by huge amounts (can you spell Enron). Many factors determine what a stock is worth. The overall performance of the company, its size, economic conditions, competition and financial stability are but a few of these factors. If you are one of those people whose risk tolerance assessment shows you do not take kindly to these types of fluctuations in value The Hoss suggests you stay with Fixed Income Investments.

It's time for The Hoss to enjoy the company of Mrs. Hoss, so till next time,

Stay on track,

The Hoss

Next Hoss Cents Money Magazine Post: Shares, What are They

Previous Post: Fixed Income Securities