Since this is the gift-giving season, I thought it appropriate to share the Gift Of Equity in this investing term Tuesday.

The Gift Of Equity refers to the sale of a home to a family member at a price below the current market value. Sometimes it can be a sale to someone the with whom seller has had a relationship previously.

The actual gift of equity stems from the difference between the sale price and the market value – that’s the equity, and it’s being given to the buyer.

It’s perfectly legal and most lenders simply count the equity as part of a down payment on the home. It does require documentation however, in the form of a gift of equity letter that must be signed by both the seller and the buyer.

There may also be tax consequences and it could affect the asset’s cost basis for the home buyer and carry capital gains implication for the seller so be sure to research those aspects if you are considering giving the gift of equity this holiday season.

• Beware Target-Date Funds! Target-date funds were supposed to be the ultimate idiot-proof investment vehicle for retirement savings. The idea is that asset allocation is the single most important factor in determining investing success, and most people get it wrong. Many others never even try because they find the concept too daunting. Many people......
• Are Target Date Funds good, bad or just plain ugly? Target date funds have been in the news quite a lot over the past few years, though the nature of the news seems to have gone from great to bad over that time. Consider that when target date funds were first introduced they were heralded as the pinnacle in the......
• Free Trades From ShareBuilder For All Of 2010 ! ING is offering commission-free trades through its ShareBuilder service for the entire year, when you open an IRA with this promo code. Here are the details: All IRA plans are no-fee plans; no fees for a low balance, no fee for inactive accounts, no annual fee for being a member.......
• Top 5 Best Investors. Here are the top 5 Investors of all time, as picked by  Investopedia. But first, the criteria... The list is based on 4 factors: The investor is a long term performer - that is one with a long history of beating their bench mark index(es). The investor or manager must......
• NLY, a Dividend Paying Trust Worth A Look. With chatter about a bubble in bonds building, it may be a good time to look for alternative sources of investment income. One such source has long been dividend paying stocks, trusts and partnerships. Here are two such dividend plays - one is a Real Estate Investment Trust, and the......

• Remodel or Refresh? If you are thinking about completely remodeling your home, but your budget is pretty small, you may want to think about refreshing it instead. There are some definite benefits to both types of home renewal, but there are some downsides as well. Let’s take a closer look at both types......
• Mutual Funds - An Investment Vehicle For Small Investors Human beings from their very inception want to earn and save something for unwanted situations. In earlier stage he puts his earnings under the soil to keep it safe from being stolen. Later banking system was developed and subsequently different kind of instruments for investment is being used. Nowadays,......
• The Continued Slow Deflation of the Housing Bubble The stock market perked up last week. Does that signal the beginning of a return to the good old days? After all, the Obama economic team is feverishly pulling out all of the stops in its attempt to restart the residential real estate markets in a positive direction. Although the......
• Weekend Garage Sale Adventures Saturday morning I resumed my garage sale quest looking for bargain clothing for the kids. As I mentioned previously, during the last year I had slacked off on my thrift store and garage sale expeditions, and found myself needing to purchase the kids clothing in stores, sometimes at full price.......
• Investing 101: Options (Welcome to another informative and exciting edition of Investing 101!  We're going to go a bit beyond the basic investment classes like stocks and bonds, and into some of the more exotic investment and speculation opportunities.  Our subject for this article is options.) Q: I keep hearing about options in......

Morningstar has released it’s finalists for Funds Managers of the Year. Here are the highlights.

Fixed-Income Manager of the Year

• Phil Condon and Rebecca Flinn, DWS Strategic High Yield Tax Free (SHYTX)
• Farnham, Kane, Landmann, Nucci*, Metropolitan West High Yield Bond (MWHYX)
• Dan Fuss, Kathleen Gaffney, Matthew Eagan, Elaine Stokes*, Loomis Sayles Bond (LSBRX)
• Jeffrey Gundlach and Philip Barach*, TCW Total Return Bond (TGLMX)
• Mark Notkin, Fidelity Capital & Income (FAGIX)

Domestic-Stock Manager of the Year

• Bruce Berkowitz, Fairholme (FAIRX)
• Staley Cates and Mason Hawkins*, Longleaf Partners (LLPFX)
• Jeff Cardon, Wasatch Small Cap Growth (WAAEX)
• Dennis Delafield and Vincent Sellecchia, Delafield Fund (DEFIX)
• Bill Nygren*, Oakmark Select (OAKLX) and Oakmark (OAKMX)

International-Stock Manager of the Year

• Hakan Castegren and Northern Cross Team*, Harbor International (HAINX)
• David Herro*, Oakmark International (OAKIX) and Oakmark International Small Cap (OAKEX)
• Lee, Grace, Bepler, Denning, Lovelace, Kawaja*, American Funds EuroPacific Growth (AEPGX)
• Brent Lynn, Janus Overseas (JAOSX)
• Magiera, Tommasi, Coons, Andreach, Donlon, Gambill, Herrmann, Lester, Trotter, Manning & Napier World Opportunities (EXWAX)

* = Past winner.

Winners will be announced January 5th, 2010.

Read the full story and get a glimpse into why each manager is being considered here.

• Best ETF's For... Kiplinger has released their annual "best of" edition, where they rate the best of just about everything. One of the categories is ETF's. I thought I'd share the picks, and some thoughts on them here, but you should check out the complete issue if you get a chance. Best ETF......
• Beware Target-Date Funds! Target-date funds were supposed to be the ultimate idiot-proof investment vehicle for retirement savings. The idea is that asset allocation is the single most important factor in determining investing success, and most people get it wrong. Many others never even try because they find the concept too daunting. Many people......
• Top 5 Best Investors. Here are the top 5 Investors of all time, as picked by  Investopedia. But first, the criteria... The list is based on 4 factors: The investor is a long term performer - that is one with a long history of beating their bench mark index(es). The investor or manager must......
• Morningstar's Six Top Candidates for International-Stock Manager of the Year. Morningstar has their Morningstar's Six Top Candidates for International-Stock Manager of the Year available on their website. This is worth a look because if you're thinking of investing in international mutual funds, you'll want to make sure the fund has a good manager. One way to pick good funds is......
• Mutual Fund Share Class Comparison Gets Easier. Investors who own shares of mutual funds are probably familiar with the 3 most common classes of shares: A, B, and C. But recent market conditions have led over 400 mutual funds to eliminate class B shares form their offerings. The reason for the elimination is cost. It simply costs......

• Low Risk Municipal Bond Funds Municipal bonds and muni funds remain a source of concern for investors. Baby boomers and retirees like the tax-free income but significant risks remain. Although we like to think that a municipal bond fund balances those risks out through diversification, some funds apparently are doing a better job than others......
• Consider Municipal Bond Funds for Your Fixed Income and Cash Investments Warning:  Municipal bonds can be boring. But, if you are looking to squeeze a little more yield out of your fixed income and cash-equivalent investments, keep reading.  But while you are reading, be sure you monitor all of the developments in the market that have occurred in 2008 and 2009. Freddie......
• Roddick wins Brisbane International Andy Roddick won the Brisbane International this past Sunday at the Pat Rafter Arena by defeating the defending champ Radek Stepanek in two sets, but it wasn't easy. A tiebreak was needed both times. This was Roddick's first tournament after his knee injury last year that ended his season......
• Money’s 7 New Rules of Financial Security (Part 2) I'm reviewing Money Magazine's 7 New Rules of Financial Security. You can read Part 1 here. Rule No. 4: Borrowing Old thinking: Borrowing sensibly is a good way to build wealth. New rule: Borrow cautiously. You have to worry about the other guy's debt too. Money Summary: Credit was cheap......
• The Simple Dollar dips his toes into Mutual Funds - a must read. Trent over at The Simple Dollar has a great article up about beginning his investing in mutual funds...index funds to be exact. He outlines his fears as to why he has not been in them before, how we went about making his decision, and the fund that he ended up......

David Swensen has managed the Yale University endowment from 1984 to 2008 and during that time, the endowment returned an annualized 16.6% – 5 points better than the S&P 500 and a generic balanced portfolio of 60% in a stock index, and 40% in bond index. That equates to a 40 times a grow in wealth with 1/3 of the volatility.

Not too shabby.

That’s the rosy part of the picture though, since 2008 was a devastating year for just about all kinds of investments. From June 2007 to June 2008, the endowment is down an estimated 25-35%. But hey, no body’s perfect. And that’s still a hair better than the broader market. Besides, even when 2008 is factored into the equation, the Yale endowment returned an annualized 14%.

Here’s how you can create your own Ivy League endowment fund with a 10% allocation in each of these ETFs.

iPath S&P GSCI Total Return Index ETN (GSP)

GSP is linked to the GSCI (Goldman Sachs S&P GSCI Commodity Index) Total Return Index and provides exposure to unleveraged commodities. The GSP index is production-weighted, reflecting the relative significance of each commodity to the world economy. Crude oil is currently the dominant commodity in this nondiversified index.

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iShares Barclays TIPS Bond (TIP)

The iShares Barclays TIPS Bond ETF seeks results that correspond generally to the Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index (Series-L). This fund invests at least 90% of the assets in TIPS and at least 95% if the assets in U.S. government bonds. The remainder of assets can be in U.S. government bonds not included in the underlying index.

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PowerShares DB Commodity Index Tracking (DBC)

The DBC ETF tracks changes in the level of the Deutsche Bank Liquid Commodity index. This fund investments in a portfolio of exchange-traded futures on the commodities comprising the Deutsche Bank Liquid Commodity index. The index commodities include: Heating Oil, light, Sweet Crude Oil (WTI), Natural Gas, Brent Crude, RBOB Gasoline, Gold, Silver, Aluminum, Zinc, Copper Grade A, Corn, Wheat, Soybeans, and Sugar.

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SPDR Dow Jones Intl Real Estate (RWX)

The RWX seeks to replicate the Dow Jones Global ex-US Select Real Estate Securities index. The index is a float adjusted market cap index designed to measure the performance of publicly traded real estate securities in countries excluding the U.S..

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Vanguard Emerging Markets Stock ETF (VWO)

Like the name suggests, this ETF tracks the performance of the MSCI Emerging Markets index. The VWO is a passively managed investment fund which invests all or most of its assets in a representative sample of the common stocks included in the MSCI Emerging Markets index. The index currently includes around 781 common stocks.

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Vanguard FTSE All-World ex-US ETF (VEU)

The VEU fund tracks the FTSE All-World ex-US Index. The index is a free-float-adjusted, market cap weighting of nearly 2,200 stocks of companies located in 46 countries.

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Vanguard REIT Index ETF (VNQ)

This fund invests in U.S. based real estate investment trusts (REITs) and is perfect for income and moderate long-term capital appreciation. The fund typically invests 98% of its assets in REITs and tracks the Morgan Stanley Capital International (MSCI) US REIT Index.

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Vanguard Small Cap ETF (VB)

The VB ETF tracks the MSCI US Small Cap 1750 benchmark index that measures the investment return of small cap stocks. It’s a passively managed, broadly diversified fund of smaller U.S. companies’ stock.

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Vanguard Total Bond Market ETF (BND)

As the name suggests, the BND ETF invests the majority of its assets (no less than 80%) in bonds held in a broad, market-weighted bond index. The fund maintains a dollar-weighted average maturity consistent with that of the index, ranging between 5 and 10 years.

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Vanguard Total Stock Market ETF (VTI)

Vanguard’s VTI fund tracks the MSCI US Broad Market index. It’s passively managed and invests in 1,200-1,300 of the stocks in the MSCI US Broad Market index. It is often used as a proxy for “owning the entire U.S. Stock market.”

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• 5 Energy Stocks To Invest In. Introducing the "new, pragmatic approach to energy investing" (as it is called by SmartMoney) - also known as the having it both ways approach. It's a new way to invest in energy stocks, and it mimics what the big oil companies themselves are doing. It's a hedge, really. It's investing......
• 13 ETFs to Hedge Against Inflation. Inflation is in the news again, thanks to worries over the historic deficit spending in Washington today. If the Fed gets the timing wrong on the next round of interest rate hikes, then inflation could be a real problem. According to a recent working paper by the International Monetary Fund:......
• A Tale of 4 High Income Bond Funds. Bonds have gotten a lot of attention over the past year and it's easy to see why when you look at this chart. What you're looking at is a relatively smooth ride up until the world collapsed in October of 2008. The investorspeak for that smooth ride is "low volatility",......
• An Energy Infrastructure Stock To Watch - EPD: Enterprise Products Partners. Enterprise Products Partners L.P. (EPD) provides services to producers and consumers of natural gas, natural gas liquids, crude oil, and petrochemicals. It's clients are in the continental United States, Canada, and Gulf of Mexico. EPD also develops pipeline and other energy infrastructure, and it's got a high yield and has......
• A Sample ETF Portfolio for 100% Foreign Exposure. Exchange Traded Funds (ETFs) offer broad diversity in a single package, and if the ETF is an index fund then they carry added tax benefits when compared to actively manage mutual funds. When ETFs first hit the investment scene, they were simple index tracking funds. They mainly targeted passive investors.......

• Myths of Hedge Funds WSJ has a great article about Myths of Hedge Funds.Myth #1: Hedge Funds are all the same. There are up to 25 different hedge-fund strategies which include funds invested in equity (both long and short), bankruptcies, mergers and acquisitions, high yield debt, bank debt, currencies, commodities, convertible debt, mortgage backed......
• iShare MSCI Germany (EWG) - Confusion of the Acronym The iShare MSCI Germany shares are selling higher and have the largest output of money as shown on Wednesday, January 13th. iShare MSCI Germany stocks are being sold on strength which is the reason this company has topped the index charts. iShare MSCI Germany is a type of ETF; an......
• Why Index Funds are Bad Investments The entire personal finance blogosphere is in love with index funds, and I'm here to tell you why they're bad for your investment portfolio. This should go over well.  Black sheep anyone? I realize this thesis will not be a popular one, but from my perspective as an active investor......
• My Year End Financial Performance Review Mr. ToughMoneyLove has spent a good part of the past five months being critical of others who use poor judgment in matters of personal finance.  Many of my targets have been politicians, Wall Street investment bankers, and disciples of the almighty credit score.  Depending on your own attitude about these subjects,......
• Which Mutual Fund Company Is Best For Your IRA? I often hear people ask "Which mutual fund company should I open my IRA with?" There are many choices, but I'm going to narrow it down to three. Some companies not on the list, like Schwab or American Funds are also respectable choices, but in my opinion the following three......

The Gold Fix is the act whereby the price of gold is set, twice daily, by the 5 members of the London gold pool. This price is used as a benchmark for most of the global gold products and derivatives pricing.

This “fixing” of the gold price by the London gold pool is based on the ubiquitous economic principle of supply and demand. The gold fix is performed in the U.S. dollar, British Pound sterling and the Euro. It is done at 10.30am and 3pm, London time.

The first meeting of the London gold pool was on September 12th, 1919 at 11:00am. And the meetings have occurred ever since with the exception of the period between 1939 and 1954, when world war II led governments to control the price and the gold market was closed.

The historic high price of gold was reached on January 21st, 1980 when gold hit $850 per ounce. That number was not reached again until January 3rd, 2008 however, when index for inflation the 1980 is $2398.21 in 2007 dollars, so the 1980 record still stands as the historic high price of gold in real terms.

• Are Target Date Funds good, bad or just plain ugly? Target date funds have been in the news quite a lot over the past few years, though the nature of the news seems to have gone from great to bad over that time. Consider that when target date funds were first introduced they were heralded as the pinnacle in the......
• Best Funds To Invest In Now. These are peculiar times we find ourselves in. Here's a list of funds from Kiplinger that not only cover just about every bogeyman bandied about in the financial press these days, but hit upon some classic needs in a mutual fund as well. Inflation protection Sooner or later, the reckless......
• The simple 7 investment portfolio. Looking for an easy, diversified portfolio of stock funds that will grow your money over time, but won't take over your life with demands on your time? ladies, gentlemen and undeclared's, I present the simple 7 portfolio.. Each recommendation is either an ETF, or a no-load mutual fund. Some people......
• Top 5 Best Investors. Here are the top 5 Investors of all time, as picked by  Investopedia. But first, the criteria... The list is based on 4 factors: The investor is a long term performer - that is one with a long history of beating their bench mark index(es). The investor or manager must......
• An Energy Infrastructure Stock To Watch - EPD: Enterprise Products Partners. Enterprise Products Partners L.P. (EPD) provides services to producers and consumers of natural gas, natural gas liquids, crude oil, and petrochemicals. It's clients are in the continental United States, Canada, and Gulf of Mexico. EPD also develops pipeline and other energy infrastructure, and it's got a high yield and has......

• Tips for Investing Online The concept of doing your investing online through the use of an online web portal has truly revolutionized everything that financial trading is all about, especially in stock exchanges and in the FOREX market. Availability of resources like quick internet connectivity and portable laptop computers has made it even simpler......
• Top Investment Brokers For Mutual Fund Investing If you own mutual funds, it’s quite possible that you are paying more than you need to in mutual fund fees. This is according to Lipper, Inc. a large mutual fund research company. But by understanding what the various fees are that are associated with mutual fund investing, you’ll be......
• Demand For Gold Tops $100 Billion! Looks like I'm not alone in my enthusiasm for gold. For the first time ever, annual demand for gold exceeded $100 billion! According to the WSJ: Demand for gold surpassed $100 billion last year for the first time ever, amid increased industrial and jewelry consumption and investors' purchase of the......
• Gold Investing for Retirement I often ask myself whether I and other baby boomers should be investing in gold or gold stocks for retirement. On the one hand, a good financial plan needs an inflation protection strategy and precious metals are favorites as an inflation hedge. On the other hand, gold is notorious for......
• market correction madness! With all of the major indices – the Dow, the S&P 500, NASDAQ – off 10 percent from their 2007 highs, we are by definition in the midst of a market correction. Individual companies continue to announce frightening news stories: Countrywide: Tapping their line of credit for more than $11......

Picking a mutual fund can be a daunting task, but here are 5 things to look for that I hope will help make the process a little easier. This is part of my weekly Mutual Fund Monday post feature. If you find this interesting or helpful, please read more.

1. Fees.

Over the entire time you own a mutual fund, fees can sap returns without you even knowing it. Fees are also the single easiest thing for an investor to control. You can’t always choose the hottest performing fund, but you can choose the one with the lowest fees. Also, many fund companies don’t tie fees to performance, so your fund manager gets the same financial incentive whether he beats his benchmark or falls short.

Look for low cost index funds, or fund families like Vanguard, Dodge & Cox and American funds. Also, look for families that tie compensation to performance like Vanguard, Fidelity, Bridgeway and Janus.

2. Size.

Fees matter, and so does size when it comes to mutual funds. When a fund gets too large, the manager cannot buy and sell many assets without affecting the price of those assets by his actions. This makes it very difficult to perform well. Think of it as the difference between steering an 18-wheeler and a motorcycle. You want a fund that’s small enough to be nimble and not have to fight against its own momentum.

Look for fund families that don’t let their funds grow too big. Funds that aren’t afraid to close the doors to new investors when the fund reaches a certain asset size. Families like Dodge & Cox, Longleaf Partners fit into this category. Also watch out for funds that announce they will be closing well in advance as this often signifies that the management is looking to make a last minute asset grab, and does not have the best interest of the shareholders in mind.

3. Age.

Pay attention not only to how old the fund is, but also how old other funds form the same family are. For example, avoid companies that seem to launch funds targeting “what’s hot” at a given time – think tech stocks in 1999, or emerging markets in 2006.

Look for fund companies with a long history of concentrating on fundamentals and not simply trying to capitalize on fads. Companies like Longleaf, FPA, and Dodge & Cox fit this metric.

4. Taxes.

Some managers simply don’t care about your tax bill, and that’s fine if you hold those funds in a tax sheltered account like a 401(k) or IRA. But if it’s in a taxable account, it’s an unnecessary drag on your return.

Look for funds with low turn over rate, and a small difference between before and after tax returns.

5. Benchmark.

Lastly, you should pay attention to the benchmark of a fund. You’ll want to know what the fund is using as its benchmark as well as how it performs in relation to that benchmark. But most importantly, you should look at the absolute return on the money invested. For example, if the fund lost only 35% when its benchmark lost 38%, it’s really not getting you much, is it?

Look for how the fund performs is good markets and bad markets. Be sure you can handle that worst case scenario because you can rest assured that it will happen to you at some point in your investing life. Try and find funds that capture most of the upside of the market, while limiting the downside as much as possible. For example, a large cap stock fund that returns 75% of the S&P 500 during a bull market, and loses as much as 50% compared to the S&P 500 during a bear market would get you a smoother ride and potentially larger return, provided you are holding the fund through both periods.

• Best Funds To Invest In Now. These are peculiar times we find ourselves in. Here's a list of funds from Kiplinger that not only cover just about every bogeyman bandied about in the financial press these days, but hit upon some classic needs in a mutual fund as well. Inflation protection Sooner or later, the reckless......
• Mutual Fund Monday: Morningstar Announces their Choice for Fund Managers of the Decade. These managers were chosen by Morningstar as the best of the decade because the "deftly steered investors through good times and bad". That's saying something. Investing in the '80's and 90's was pretty clear cut, but the 1st decade of the 21st century was anything but easy. As with the......
• How to spot an investment scam. In a single day, investment fraud can take away everything you've spent your life building. Couple that with the knowledge that scam artists are most active when times are very good, and when times a tough. You don't need me to tell you that times are tough these days, and......
• Mutual Fund Monday: The Biggest Lies Mutual Fund Companies Tell. Chuck Jaffe at MarketWatch has a great piece that I thought I'd share for my (semi) weekly Mutual Fund Monday post this week. His article lists 7 ways that fund companies manipulate their stats to trick investors. It's all quite legal, since much of it depends on your the viewpoint......
• Are Target Date Funds good, bad or just plain ugly? Target date funds have been in the news quite a lot over the past few years, though the nature of the news seems to have gone from great to bad over that time. Consider that when target date funds were first introduced they were heralded as the pinnacle in the......

• Compounding and the Rule of 72 The reason why it is so important for you to start saving early is the magic behind the concept of compounding and the rule of 72. People who wait until they are later to begin saving are going to have to save much more and much more quickly in order......
• Preparing for the Unexpected Financially While many people do not like to talk about the idea of unemployment, being unemployed is a very real concept that can also become very damaging very quickly for anyone who is not adequately prepared. Due to poor planning and the natural process of denial, many people who were unemployed......
• What Does "Buy on the Dips" Actually Mean? Several folks have asked me over the last few weeks what does phrase "buy on the dips" actually mean. The official Investopedia definition is: A slang phrase regarding the practice of purchasing stocks following a decline in prices. After a significant dip in the price of a security or stock index, investors should increase......
• Swapping Mutual Funds For ETFs I've always respected Vanguard founder Jack Bogle, he is considered to be the "Father of the Index fund" and has saved investors many billions of dollars in fees by creating low cost index funds, starting a new industry within the financial services market. The natural follow on to index mutual......
• Good Debt, Bad Debt and Flawed Investment Return Data I can't tell you how often I hear or read someone argue that they have "good debt."   This "good debt"  argument is made to rationalize having a car loan, a HELOC or second mortgage balance, and even credit card debt.  The argument goes something like this:  "The money I have borrowed......

We’ve all heard that Cash is King when analyzing company balance sheets. This is especially true in times of recession, since companies without a cash cushion are less likely to be able to survive trying times. But cash is king for the individual investor as well. Here’s why.

1. Lower costs.

Not only will you be able to invest larger sums at a time, and thus incur lower transaction fees (as a percentage of your overall investing sum), but you’ll likely get preferential treatment too. Face it – financial planners and brokers are people too, and they’re going to treat an investor with $100,000 to invest differently than the average Joe with $10,000 to invest.

2. More flexibility with stocks.

Along with the lower fees you’ll pay per investment, the more cash you have on hand, the more you can spread out your investments and buy into the market as is declines. This allows you to spread the risk of buying low and selling lower around, thus increasing your likelihood of a decent return.

3. More bond options.

If you’re an investor with less than $100,000 looking to invest in bonds, you’re limited to bond funds. But once you have over $100,000 you can buy bonds directly. The reason is that to be properly diversified in bonds, you should invest at least $25,000 into each category of bonds – Treasury, municipal, corporate and high yield. The benefit is that you get a guarantee of the face value of the bond when it matures. This isn’t the case with bond funds, since manager are often forced to sell their holdings to meet the demand of people selling the shares of the fund.

4. Peace of mind.

Let’s face it – you’ll sleep better at night having enough cash on hand to meet whatever emergency or unexpected expense life throws your way. It’s impossible to put a price on this benefit of cash. Just be sure you don’t keep it in the mattress or buried in the back yard. Keep it in CD’s or money market funds, to keep ahead of inflation.

• Mutual Fund Share Class Comparison Gets Easier. Investors who own shares of mutual funds are probably familiar with the 3 most common classes of shares: A, B, and C. But recent market conditions have led over 400 mutual funds to eliminate class B shares form their offerings. The reason for the elimination is cost. It simply costs......
• Are Target Date Funds good, bad or just plain ugly? Target date funds have been in the news quite a lot over the past few years, though the nature of the news seems to have gone from great to bad over that time. Consider that when target date funds were first introduced they were heralded as the pinnacle in the......
• Top Morningstar Bond Funds for July 2009. Morningstar has released their top 3 Bond Funds for June-July. Here's the list: High-yield bonds. T. Rowe Price Spectrum Income (RPSIX) This is a fund of funds. The management team invests in up to 9 T. Rowe Price funds in order to get exposure to all of the sectors of......
• 5 Things to Do When You Have a Bad 401(k) Plan. 401(k) plans can be a great way to save for retirement and let your savings grow tax-free. But the plans are chosen by employers and managed by 3rd parties and don't always have the best options. IRAs give you the entire universe of investments to choose from, but most employers......
• How to spot an investment scam. In a single day, investment fraud can take away everything you've spent your life building. Couple that with the knowledge that scam artists are most active when times are very good, and when times a tough. You don't need me to tell you that times are tough these days, and......

• Mutual Funds Introduction It is really not much of an exaggeration for you to say that mutual funds are one of the best things that the middle class can take advantage of financially since the invention of sliced bread. What mutual funds do, is they allow for investors that have small amounts of......
• Earn Extra Money with Your Hobbies Many people long for a way to earn extra money with their hobbies. Isn’t finding a way to get paid for the things you love to do a dreamy idea? Maybe you already have a hobby in mind, but you’re afraid to take that first leap. Getting inspired to start......
• Target Retirement Funds Portfolio Composition And Expenses: Vanguard vs Fidelity vs T Rowe Price This is the first post in a series comparing and contrasting target retirement funds from three competing companies: Vanguard, Fidelity, and T Rowe Price. Today, I will be comparing the portfolio composition and expense characteristics of both the 2030 and 2005 funds from each company to get a good overview......
• Younger Investors Becoming More Risk Averse than Older Investors Some interesting, perhaps troubling, results from the Merrill Lynch Quarterly Affluent Insights Survey this morning. Younger investors are more risk averse than older investors. Those in their 20s and 30s are more risk averse than the 40s and 50s demographic because they been burned twice in the last decade. Older......
• Investment Pyramid - Speculation If you've spent any time reading through investment literature, you've probably noticed that there are many, MANY possible ways to invest that we haven't mentioned in our discussions of mutual funds and stocks. Most of these methods actually are really speculation; taking substantial risks in the hopes of generating even......

What will it look like if it does?

If you’re like many workers still lucky enough to have a job during this recession, you’ve probably seen your employer cut or eliminate the contribution match on your 401k plan. Mine did.

My company match on 401k contributions was the first thing cut, just after my bonus and any hope of a raise. That didn’t stop me from contributing though. In fact, I increased my contribution rate to offset the loss of company match, and I am convinced that it is a large part of why my 401k balance recovered so quickly from the crash of 2008.

Regardless of how you may have handled the loss of your company match, it looks like the match may be making a comeback in 2010….

According to this SmartMoney article:

companies are increasingly reinstating this beloved perk. In the next six months, 35% of firms that snipped away at their matching programs are planning to bulk them up again, according to a recent Watson Wyatt survey. That’s up from 24% two months ago.

That’s the good news.

The not so good news is that it likely won’t look like it did before the economic melt down. 13% of employers surveyed said they are planning to reinstate the match at a lower level than previous. Others are changing the criteria for matches, by making them based on company performance. Still others are changing different rules.

17% of the companies bringing back the 401k match say they will be basing it on corporate profits. This will make retirement saving variable and harder to anticipate, especially if you work for a large corporation and have little impact on the company profits.

Other companies are switching to a once per year, lump sum contribution. This change would essentially eliminate the dollar cost averaging aspect of the company match, and if most companies elect to contribute at the same time of year, say the first or second pay period of the new year, then you may even be buying high when your contribution is put to work at a time when millions of other dollars are also streaming into the market.

Some employers also said they are considering a vesting period for the lump sum contribution. This means you could earn your 401k match for two years straight, but if you find another job before the 3rd year (assuming a 3 year vesting period)you could be out your entire contribution altogether.

If enough employers make these kinds of changes, it may be the eventual death of the 401k, since without the company match it pales in comparison to an IRA.

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Have you ever wished there was a rating system for 401(k) plans?

I’ve had a reason to in the past. I was looking at two job offers recently and one of the things that set the two apart was the benefit package. Obviously, a big part of any benefit package is the retirement plan offered by the employer. I could see that both plans offered the same employer match level on contributions, but I had no idea what types of investments were offered by the plans, or what the fees were like. That’s where BrightScope comes in.

BrightScope is an independent 401(k) rating and analytics firm that quantitatively rates 401k plans from all 50 states in the U.S. and gives plan sponsors, advisors, and participants tools to make their plans better.

They rely on public documents and grade 401k plans based on administrative costs, company generosity, investment options, participation rate, salary deferrals and account balances.

It provides a very nice visual indication of how your company 401k rates, on a scale of 1 (horrible) to 100 (excellent).

BrightScope does not accept compensation in the form of revenue sharing from mutual fund companies or plan providers, so they don’t have a horse in the race and they are more likely to provide independent results.

They hope to have over 30,000 plans rated by the end of this year, but if your plan is not yet rated, your plan administrator can get your retirement plan rated for free – no matter how small your company is.

So far so good.

But there are some things I’m not so crazy about.

For example, the ratings consider things like employee participation rate. I’m not sure why this is important, after all it’s not a determinant of how your 401k will perform. I suppose the thinking is that more people participate in better plans than poorer plans. That may be true, but it may also be that the people participating don’t have much choice, or the financial knowledge to open an IRA on their own.

Still, that’s a relatively minor problem with the idea. The site is very well done and it’s free, so why not take a look and see how your company 401(k) plan rates!

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There’s a lot of uncertainty in the air over policies being proposed in Washington D.C. these days, and one of those policies with huge potential to affect business (and hence stocks) is the so called Health Care reform bill.

While it’s impossible to say for sure what the exact effect of a government take over of the health care industry would be, SmartMoney suggests that these 3 stocks are at least worth considering since they are more dependent upon larger health care trends than what Washington decides.

McKesson Corporation (MCK)

McKesson Corporation provides supply, information, and care management products and services for the healthcare industry. The corporation encompasses two divisions – Distribution Solutions and Technology Solutions. The Distribution segment distributes proprietary drugs, surgical supplies and equipment, and health and beauty care products to North America as well as providing consulting and outsourcing services for biotech and pharmaceutical manufacturers.

The Technology Solutions segment provides software solutions for clinical, patient care, financial, supply chain, and strategic management. It also provides software for pharmacy automation for hospitals as well as clinical auditing, and compliance management software.

McKesson is headquartered in San Francisco, but serves home care providers, physicians, hospitals, and retail pharmacies in North America, the U. K. and other European countries, and Asia.

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Teva Pharmaceutical Industries (TEVA)

Headquartered in Israel, Teva Pharmaceutical Industries develops and produces generic and branded pharmaceuticals, active pharmaceutical ingredients and biogenerics worldwide. R&D efforts are focused on therapies for diseases like multiple sclerosis, cancer, Parkinson’s and autoimmune diseases. Teva’s product list includes Copaxone and Azilect for treating MS and Parkinson’s disease. Through its acquisition of Barr Pharmaceuticals Inc., Teva added pharmaceutical products for women’s health to its list.

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Rehabcare Group Inc. (RHB)

RehabCare Group is headquartered in Missouri and provides rehabilitation program management for hospitals, outpatient facilities and skilled nursing facilities in the United States. These program management services are specialized for rehabilitation from strokes, orthopedic conditions, and head injuries,cancer, heart failure, burns, and wounds. Rehabcare Group owns and operates five long-term acute care hospitals and six rehabilitation hospitals.

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These stocks provide a nice diversification into the medical supply side, pharmaceuticals and long term care. Each of these healthcare segments is poised to experience signifiant growth as boomers continue to age.

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Chuck Jaffe at MarketWatch has a great piece that I thought I’d share for my (semi) weekly Mutual Fund Monday post this week.

His article lists 7 ways that fund companies manipulate their stats to trick investors. It’s all quite legal, since much of it depends on your the viewpoint and perspective applied to the facts and figures. For example, how far back do those “past performance” figures go? A fund may look great only because it has an explosive couple of years at the beginning of the period, and has been lack luster since.

Anyway, here’s a list of the ways but Chuck does a good job of explaining each in greater detail in the original article.

1. Past performance, Part I
2. Past performance, Part II
3. Past performance, Part III
4. Average Cost
5. Returns aren’t adjusted for taxes
6. Time-weighted performance measurement
7. Manager tenure

You will have noticed, no doubt, that the 1st three items on the list have a common theme. That’s because even though most investors know that “past performance is no guarantee of future results”, it’s still the single characteristic that carries the most weight with investors. Mutual fund companies know that, and they use it. A lot.

Here’s Chuck Jaffe, in his own words.

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