Mutual funds offer many advantages and should be included in your investment portfolio. Mutual funds are good investment instruments, and should be a part of 401k retirement accounts, but after such a tough year in 2008, many investors are not very sure about stock market and mutual fund investments. While it is always good to take a stock of things, suffices it to say that investments in mutual funds should be looked at as a long term strategy. For instance the battered stock markets have been rebounding in 2008. If you had bought into the market last year (2008) at its low point, you would have made some decent profits in mid 2009.

Mutual fund investment helps a new investor with limited knowledge and understanding of how to research stocks with good fundamentals. When you invest in mutual funds, you sit back and let the mutual fund managers do all the research work and investment on your behalf. So this is the best option for investors with limited knowledge, time and resources.

Investments in mutual funds for your 401k have tax advantages. It is important to construct a more balanced portfolio of stocks, one must note that most mutual funds take long positions. Such positions only make money when stocks gain in value, and loose when their value drops. There should be some place for short-biased stocks in your 401k stock portfolio, although it requires the expertise of knowledgeable portfolio managers.

Mutual funds help provided diversification for your investment. One must strive to maintain a more balanced mutual fund stock portfolio, by including stocks from different sectors, as well as those with different investment trading strategies. Investment in a balanced portfolio of mutual funds would help you in constructing a diversified portfolio of investments with limited volatility.

Reduction of Transaction Costs

Investments in mutual funds help investors reduce transaction cost or fees which are usually associated with stock market investing. For instance, when you buy one mutual fund you are automatically buying into a diversified portfolio, and the transaction cost is very minimal compared to the cost of buying individual stocks.

Conclusion

This article has outlined many of the advantages which come with mutual fund investing. Some mutual funds are better than others, A typical 401k stock mutual fund portfolio should consider including solid mutual funds such as Vanguard Prime cap fund, Fidelity Blue Chip Growth fund, American Funds American Mutual A, Vanguard Small Cap Growth Index, as well as Oakmark International. While all mutual funds lost money in 2008, these mutual funds’ losses were more moderate than many other funds, but consider the fact that 2009 may see some recovery from the battered stock markets. Many analysts believe that the markets have bottomed out when the Dow got to the range of 7,500. It has rebounded back and trading near the 8,900 range at the time of this writing. Buying into mutual funds with reputable managers is complementary to your overall investment philosophy.

A free market operates free of government intervention, where business transactions are mutually agreed upon by sellers and buyers. Though payday loan companies continue to thrive due to a steady market for their services, many argue that a payday loan company isn’t consistent with the free market due to its predatory lending practices.

Ultimately, however, every customer does business with a payday loan company willingly, knowing how they will be charged and understanding that they must pay back their short term loan on payday with interest. Most who utilize the service complete pay back the loan on payday without significant adverse effects on their finances, and both parties walk away from the deal reasonably satisfied.
Public backlash stems mainly from the high interest charges, though these are necessary for a payday loan company to operate. Payday loans make money from consumers who need quick cash between paychecks, by offering them a loan for needed cash at an obscenely high amount of interest (usually around the 300-400% annual range) in exchange. The idea is that you pay them back a few days later on payday, and they make a few bucks for the trouble.

If they charged a more normal interest rate, in the 10-30% range, they wouldn’t make any money since a 10-30% APR on a few hundred dollars over 3-5 days isn’t very much money. For example, a $300 loan, a typical amount for a payday loan, given at 10% interest would only accrue $0.25 in interest over 3 days. The suggested rate by many legislators, 39%, would yield a whopping $0.96 for the loan company’s trouble.

There’s no way a payday loan company could remain viable with such a return. The higher interest is in effect a daily fee for providing the service of the needed loan, and that discounts the fact that a payday loan company offers a unique service.

Regular banks would never offer payday loans to outside consumers, due to the risk involved with unknown customers (though some will allow payday cash advances for some loyal customers). And if regular banks ever did decide to roll out payday loans to the general public, they would charge a similarly high interest rate due to the risk of giving large sums of money to unknown customers, and to leverage the consumer into paying back such a loan as soon as possible.

Anyone who objects to the practice of payday loan companies may simply choose not to use them, and anyone who regularly faces situations where they need to use them needs to improve their budget management. Many consumers use payday loans in rare, absolute necessary cases, and understand that the high charges are a byproduct of the unique service. Those who don’t understand why payday loans cost so much don’t understand how such a mutual transaction fits the give and take nature of the free market, which belies their claims that a payday loan service isn’t consistent with a free market.

Finding real world advice on how to maximize our retirement income isn’t easy. Too much of that advice begins with the false assumption that we have savings or investments that can boost our retirement income simply through better investment strategies. That sort of advice is useless for millions of retirees living from one social security check to the next and whose only real asset may be a mortgage-free home. The reality is, among older workers ages 55 to 64, three out of four live in households with retirement savings of zero to $56,000, according to a 2002 congressional study. For the vast majority of Americans, it seems, maximizing our retirement income depends entirely upon finding ways to minimize our expenses. More and more retirees are finding that the easiest and most immediate way to minimize their expenses is via relocation to areas with a lower cost of living. The advice for this retirement migration could be, “Go South, old man!”

The Dallas Morning News reported that as many as one million U.S. citizens now live in Mexico; drawn there by a superior standard of living on their limited U.S. dollars. They found affordable housing that is less expensive to maintain, high quality and low cost medical and dental care, huge savings on their prescription drugs, a smaller tax burden, and substantial savings on things like health and casualty insurance. Consider how much further your retirement dollar can go where a dental visit is just $15 and your water, electricity, and telephone bills combined will average $75 per month. How about a haircut for $4 or maid services for $5 per day? It’s easy to see Mexico’s major attraction for one million U.S. retirees.

Of course, one doesn’t need to go so far as moving outside the U.S. to maximize their retirement income by minimizing their expenses. The advice, “Go South, old man!” is still apt. Many retirees are looking to the states in the Southeastern region of the U.S. (Arkansas, Georgia, Alabama, Kentucky, and Tennessee, for example) to find affordable housing, lower living expenses, and moderate taxes. The savings can be dramatic, especially for those moving from states in the Northeast or West Coast where the cost of living may be among the highest in the nation.

A single case in point is the Seattle, Washington couple who sold their modest three-bedroom home for $650,000, purchased a larger, more luxurious home in a gated golf community in Hot Springs, Arkansas for $250,000, and banked the rest of the money. With a cost of living that is 6.3% below the national average, they’ve happily reduced their monthly living expenses, too. And, the savings continue to add up. State and local taxes take a much smaller bite there, saving them almost one-half the yearly expense of their former Seattle home. With the financial pressures off, they say they are finally enjoying the sort of retirement they always dreamed of - a beautiful home in a nice climate, money in the bank, daily golf, and even a bit of travel.

Maximizing your retirement income through relocation may just be the easiest and best strategy for claiming the retirement lifestyle you’ve always dreamed of at a price you can afford. Over 200,000 retirees are predicted to move to the Carolinas to capture their dream in 2008 and similar migrations are expected by a dozen other states, as well. There is a wealth of information on the Internet that can help you decide whether retirement relocation is the right choice for you. Perhaps, 2008 will be the year when you, too, will claim the financial security and pleasing retirement lifestyle you’ve always wanted.

As a single you are best placed to manage your money properly, save significantly, and prepare for the time when you will no longer be the sole decision-maker. In time you will become married and have kids which will automatically increase the level of your financial responsibilities. Thus take this time as a unique opportunity to set your finances straight, pick up efficient financial habits that will help you in your marriage, and achieve financial independence. If by some chance you never get married, it is no big deal as you will still have significant savings that will come in handy any way you look at it.

Below are clearly defined steps that you should take as a single to prepare you for the future and old days:

1. Design a financial plan and set clear and well defined financial goals to support your plan

Nobody will do it for you, thus stand up to it. If you know what your mission is in life and where your priorities lie, it will not be difficult to set these up. The more precisely you are able to set and define your financial goals, the closer you will get to accomplishing them.

2. Get down to designing a budget so as to exercise better control of your money

Once you are clear on your financial goals, it will be easy for you to draw up a budget. The budget will help you exercise better control over your money and will enable you for more effective tracking of your expenditures. Budget will help you keep your expenses as a single to a minimum and enable you to do significant savings. Budgeting will also help you to differentiate between your wants and your needs.

3. Invest into buying your own place

Use the gift of singleness to save up money for buying your own place. Rather than being a tenant for so long and wasting your money down the drain, work at saving up money to buy your own decent place. It does not have to be large as long as it is a place to stay and live in. Having your own place not only saves you from paying the rent but also allows you to rent it in case of an emergency so that you could earn money off of it. Buying your own place can also serve as a stable investment for you. It is well-know that investments into real estate property never loose value but its value increases over time.

4. Get into the habit of saving

Your best way to save would be to cut down on your utility bills and gas expenses as they could be draining most of your paycheck away. If you succeed in cutting down the expenses of your current bills for ten percent, you will save significantly. This saving could help you when purchasing your own place.

Start with small things when trying to save. For example, if you are taking a shower, don’t use as much shampoo as you will have to use up more heated up water to wash yourself off. So, using less shampoo and soap is not only healthier for you but will save you unnecessary waste of money when it comes to the electricity bill.

5. Rely on cash when shopping for groceries or whatever

Relying on cash will enable you to escape paying high interest rates on credit cards and stream this money into your savings fund. This will enable you to maximize your saving and still get what you need.

6. Now is the best time to start preparing for your retirement

It is better to save now when you are young, able to earn money, and have the opportunity to do so. You will appreciate it when you get old. The sooner you start saving money for your retirement, the better of you will be no matter the amount of money invested. Thus, if you had not already done so, now is the best time to start saving for your retirement.

Some people will tell you that even one credit card is too many and if you have problems handling credit they are correct.

However, most people are able to safely handle credit cards, if they do not get too many of them.

What most people need is ONE all purpose credit card - either VISA or Master Card. Some places still do not accept Discover and American Express. Try to get a card with a low interest rate and a reward system.

If you do a lot of traveling and ONLY use one brand of gas, you might want to consider ONE gas card. This lets you get one itemized bill to pay off at he end of each month, which is very handy especially if you drive for business puposes. A few of them even give you a discount on the cost of gas.

If you do a LOT of shopping at a department store you might want to get that stores card. This will let you know about special offers and sales before other people BUT BEWARE! Most store cards have higher interest rates than other cards so be sure you pay these off each month if at all possible.

NOTE: When you apply for a loan, finance companies take a look at what the total amount you are able to borrow on all credit cards, not just how much you owe. Having too much “potential debt” can lower your credit score and your chances of getting that loan you wanted.

Of course, as I said at the beginning - if you have problems handling credit - get rid of ALL cards except for ONE “emergency card” and a debit card. Freeze the “emergency card” in a block of ice and keep it in your freezer. Before you defrost your “emergency card” - ask yourself:

1) Is there anyway I can pay for this without using this card?
2) Can I defer the purchase til later?
3) Is this a REAL emergency? What will happen if I do NOT charge this expense to my card?
4) Will I be able to repay the money in a reasonable amount of time?

There are times you need quick access to credit and having one card available is a good idea, but remember that a trip to visit a relative who is in the hospital and not expected to pull through IS an emergency. A new pair of shoes or an MP3 player is NOT!