Tuesday, February 13, 2007
Changes in Brokerage Firms
Brokerage firms constantly change their rules. There are two changes worth mentioning.
(1) Firstrade
Firstrade is going to cancle its no transaction fee policy on all mutual funds. Starting on February 15, 2007, a $9.95 commission will now apply to No-Load mutual fund trades. This move dropps Firstrade to the bottom of broker list.
(2) WellsTrade
Wells Fargo Investments made a positive move. Starting February 13, 2007, it offers 100 commission-free trades per year for account linked to PMA account, which requires a combined $25,000 balance in all linked accounts. It used to required $250,000 to get 50 commission-free trades. This change sure makes WellsTrade on the top of my list.
(1) Firstrade
Firstrade is going to cancle its no transaction fee policy on all mutual funds. Starting on February 15, 2007, a $9.95 commission will now apply to No-Load mutual fund trades. This move dropps Firstrade to the bottom of broker list.
(2) WellsTrade
Wells Fargo Investments made a positive move. Starting February 13, 2007, it offers 100 commission-free trades per year for account linked to PMA account, which requires a combined $25,000 balance in all linked accounts. It used to required $250,000 to get 50 commission-free trades. This change sure makes WellsTrade on the top of my list.
Labels: Brokerage
Thursday, January 25, 2007
Some Good Mid-Cap Mutual Funds
Large cap funds provides relative stable returns, small cap funds are more volitile but have better returns in long run, and mid-caps, as the name suggest, are in the middle. Thar's the reason I favor mid-cap funds. Again, several funds are closed to new investors.
(1) ADVDX
This is a relative new and unique fund, which takes the advantage of lower tax rate (15%) for dividends. It has a dividend rate of ~10%, and the fund itself did very well.
(2) Fidelity Funds: FDVLX, FLVCX
Fidelity offers too many funds, so many gems are buried. Fidelity Value Fund has tested by time and Fidelity Leveraged Company Fund has had excellent performance but it is slowing down as the fund gets bigger.
(3) JMCVX, SMCDX, TAVFX
These are several other good mid cap funds have performed well even in market dowturns.
(1) ADVDX
This is a relative new and unique fund, which takes the advantage of lower tax rate (15%) for dividends. It has a dividend rate of ~10%, and the fund itself did very well.
(2) Fidelity Funds: FDVLX, FLVCX
Fidelity offers too many funds, so many gems are buried. Fidelity Value Fund has tested by time and Fidelity Leveraged Company Fund has had excellent performance but it is slowing down as the fund gets bigger.
(3) JMCVX, SMCDX, TAVFX
These are several other good mid cap funds have performed well even in market dowturns.
Labels: Mutual Funds
Saturday, January 20, 2007
A Few Good All Weather Funds
To start to invest in mututal funds, one may feel more comfortable to invest in the all weather funds, thoses mutual funds that fare well in market downturns. Most of these funds fall into the "Moderate Assest Allocation" by Morningstar ratings. Some of the good funds has grown so big that they are closed to new investors, including OAKBX, DODBX, FPACX, LCORX, etc. Only a few open ones are discussed below.
(1) PRWCX
As mentioned before, T. Rowe Price Capital Appreciation Fund is an amazing fund that has not had a negative return for almost two decades, including the years after the tech bubble bursted. It is one of my favorites.
(2) OAKBX & OAKGX
Oakmark Equity & Income Fund is closed to new investors from other brokerage firms, but still allows new investment if one opens an account directly with Oakmark. This means one seperated account, which is against the Simple Principle.
Another fund from this company is Oakmark Global Fund. Although it suppose to only allow news investors who directly open accounts with the company, for some reason you can still purchase this fund from WellsTrade.
(3) LAALX
LCORX was closed, but the company offered a similar fund - Leuthold Asset Allocation Fund. The initial investment requirment is $10,000, but only $1000 for retirement account.
(4) TWEIX & TGIGX
Some Large Cap Value Funds are fairly resistent to market downturn as well, including American Century Equity Income Fund and TCW Dividend Focused Fund.
There are other funds like Bruce Fund and American Funds Income Fund with good past performance, but I did not do research on these funds.
(1) PRWCX
As mentioned before, T. Rowe Price Capital Appreciation Fund is an amazing fund that has not had a negative return for almost two decades, including the years after the tech bubble bursted. It is one of my favorites.
(2) OAKBX & OAKGX
Oakmark Equity & Income Fund is closed to new investors from other brokerage firms, but still allows new investment if one opens an account directly with Oakmark. This means one seperated account, which is against the Simple Principle.
Another fund from this company is Oakmark Global Fund. Although it suppose to only allow news investors who directly open accounts with the company, for some reason you can still purchase this fund from WellsTrade.
(3) LAALX
LCORX was closed, but the company offered a similar fund - Leuthold Asset Allocation Fund. The initial investment requirment is $10,000, but only $1000 for retirement account.
(4) TWEIX & TGIGX
Some Large Cap Value Funds are fairly resistent to market downturn as well, including American Century Equity Income Fund and TCW Dividend Focused Fund.
There are other funds like Bruce Fund and American Funds Income Fund with good past performance, but I did not do research on these funds.
Labels: Mutual Funds
Monday, January 01, 2007
Companies Offer Simple Mutual Funds
To buy mutual funds is a easy start to invest. Many mutual fund companies offer so many funds that investor get lost in picking the right funds to invest, including Fidelity and Vanguard. Some companies are able to limit the proliferation of numbers of fund. Good examples are Oakmark Funds and T. Rowe Price.
OAKMARK FUNDS
Small firm. Only seven funds, all highly rated with superb performance. OAKBX is great for asstet allocation fund, and OAKGX is great for internation exposure. The only problem is many funds are closed to new investors.
T. ROWE PRICE FUNDS
Large firm, still manage to keep small number of funds compared with other big mutual fund companies. It offers several good funds, including the Capital Appreciation Fund PRWCX. Forget about Legg Mason Value Trust Fund, which beat S&P 500 for 15 years only ending in year 2006. What about PRWCX never had a down year for 19 straight years?
OAKMARK FUNDS
Small firm. Only seven funds, all highly rated with superb performance. OAKBX is great for asstet allocation fund, and OAKGX is great for internation exposure. The only problem is many funds are closed to new investors.
T. ROWE PRICE FUNDS
Large firm, still manage to keep small number of funds compared with other big mutual fund companies. It offers several good funds, including the Capital Appreciation Fund PRWCX. Forget about Legg Mason Value Trust Fund, which beat S&P 500 for 15 years only ending in year 2006. What about PRWCX never had a down year for 19 straight years?
Tuesday, December 19, 2006
Simple Formula for Asset Allocation
Once decided to invest and opened an brokerage account, the next question would be how to allocation assets. It depends on individual styles and tolerance. One simple formula would be divide investment into equity and fixed income. Stock would be (120-age)%, and the rest in fixed income.
Stocks
Large Cap, Mid Cap, Small Cap, Internation, Specialty. Style would be value Vs. Growth. My favorite is Mid Cap Value, whith exposure to both Large, Small and International.
Fixed Income
CDs, US Savings Bond and Bond Fund. Unlike long-term capital gain and stock dividend that are taxed at 15% or lower, fixed income is taxed at the marginal tax rate, easily runs above 25%.
Stocks
Large Cap, Mid Cap, Small Cap, Internation, Specialty. Style would be value Vs. Growth. My favorite is Mid Cap Value, whith exposure to both Large, Small and International.
Fixed Income
CDs, US Savings Bond and Bond Fund. Unlike long-term capital gain and stock dividend that are taxed at 15% or lower, fixed income is taxed at the marginal tax rate, easily runs above 25%.
Monday, December 11, 2006
Simple Sequence of Investment Accounts
Tax takes a significant bite from the investment return, hence the difference in the sequence of putting money into different types of investment accounts.
(1) Roth Accounts
Includes Roth IRA and Roth 401(k). Roth Accounts will be on the top because the flexiblity and the earnings are tax-free.
(2) 401(k) and 403(b)
With or without employer match, these are tax-deferred accounts.
(3) Traditional IRA
May not be tax-deductable for higher income household. However, there is a reason to open this account before 2010. The tax law allows conversion to Roth no matter what income level. Do it while you can.
(4) College Savings for Children
This is the sequence I choose: 529 Plan, UTMA, ESA. Each type has its advantage and disadvantage, depends on income level.
(5) Regular Accounts
Offers no tax advantage. Aim for long term capital gains and dividends, which are taxed at 15%.
(1) Roth Accounts
Includes Roth IRA and Roth 401(k). Roth Accounts will be on the top because the flexiblity and the earnings are tax-free.
(2) 401(k) and 403(b)
With or without employer match, these are tax-deferred accounts.
(3) Traditional IRA
May not be tax-deductable for higher income household. However, there is a reason to open this account before 2010. The tax law allows conversion to Roth no matter what income level. Do it while you can.
(4) College Savings for Children
This is the sequence I choose: 529 Plan, UTMA, ESA. Each type has its advantage and disadvantage, depends on income level.
(5) Regular Accounts
Offers no tax advantage. Aim for long term capital gains and dividends, which are taxed at 15%.
Tuesday, December 05, 2006
Choose Simple Brokerage Firms
Merger after merger, there are less brokerage firms, now. Smart Money magazine has an annual broker survey. Here are some brokers I like.
(1) Fidelity
Likely one would have at least one tax-sheltered account with Fidelity, such as 401(k) or (403(b). For the principle of SIMPLE, Fidelity would be a good choice for brokerage account(s). The more important thing is Fidelity offers a wide spectrum of investment products and low commisions.
(2) Bank of America
Offers $0 commision for up to 30 stock trades per month, the catch is $25,000 in deposit accounts. This is a good deal if you are a frequent trader. Otherwise it not worth to freeze this much cash.
(3) Wells Fargo
Up to 50 free trades with $250,000 combined accounts. Downside is high price for option trading and less mutual fund choices.
(4) Firstrade
Best place for mutual fund investment, no transaction fee for all mutual funds, therefore the best place for one stop shopping. Commision for equity trading is only $6.95.
(1) Fidelity
Likely one would have at least one tax-sheltered account with Fidelity, such as 401(k) or (403(b). For the principle of SIMPLE, Fidelity would be a good choice for brokerage account(s). The more important thing is Fidelity offers a wide spectrum of investment products and low commisions.
(2) Bank of America
Offers $0 commision for up to 30 stock trades per month, the catch is $25,000 in deposit accounts. This is a good deal if you are a frequent trader. Otherwise it not worth to freeze this much cash.
(3) Wells Fargo
Up to 50 free trades with $250,000 combined accounts. Downside is high price for option trading and less mutual fund choices.
(4) Firstrade
Best place for mutual fund investment, no transaction fee for all mutual funds, therefore the best place for one stop shopping. Commision for equity trading is only $6.95.
Labels: Investments
