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Boulder City Magazine® February 2008 Issue
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Money Matters
by Wendell Whitman
Edward Jones
Match Financial Goals With The Right Investments
Over the course of your life, you'll almost certainly have many different financial goals - and to help achieve them, you'll need to use many different investments.
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How might you target specific investments for specific goals? Here are a few suggestions:
To save for a home, you might want to use certificates of deposit (CDs) or short-term, investment-grade bonds.
To enjoy a long and comfortable retirement, you'll want to accumulate savings in tax-advantaged vehicles, such as a 401(k) and IRA.
To save for college for your kids, you may want to consider a Coverdell Education Savings Account or a Section 529 savings plan, both of which offer a variety of investment options and tax advantages. Contributions are tax-deductible in certain states for residents who participate in their state's 529 plans.
These investments aren't the only ones available to you. But they help point out the importance of identifying your various goals - and choosing the right investments to help meet them.
When Choosing Mutual Funds, Look Past Short-term Returns
When you look at mutual fund ads, you’ll often see eye-popping performance figures. But a mutual fund’s short-term returns are not reason enough to reach for your checkbook.
You shouldn’t evaluate a fund on its short-term return because a mutual fund is a long-term investment. To assess a fund’s long-term performance, look at its annualized return — its return over a period of time other than one year. For example, a two-year return of 10 percent could be stated as an annualized rate of return of five percent.
Apart from a fund’s annualized return, you’ll also want to compare its performance against similar funds. Also, check out the fund's investment objectives as well as other important information such as the amount of expenses and fees associated with the fund. The higher these costs, the lower your return. Most of this information can be located in the prospectus, which you can obtain from your financial advisor. Be sure to read the prospectus carefully before you invest or send money.
By looking past a mutual fund’s short-term returns, you can make an informed investment decision.
Contact Wendell at Edward Jones www.edwardjones.com. |
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