Mutual funds are increasingly making use of Derivatives in its portfolio as a strategy to boost the returns from investment. Peruse your Fund's portfolio in the monthly and quarterly fact sheets to ascertain the exposure that your fund has taken in these Derivatives. Comparing these across periods will reveal the extent of churning that your fund manager dolls out in these funds.

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Many people think that the only way to reduce financial risks is to make more money. However many forget that it’s just as important, if not moreso, to manage the money you have. A friend once told me, “it’s not how much money you make, it’s what you do with that money that really counts,” and I truly believe that. Proof of this can be seen in the number of celebrities that earn large sums of money then end up declaring bankruptcy within a few years. Hollywood is filled with stories where people lived beyond their means and did not know how to handle all the money they had and as a result ended up in trouble.

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Bonds provide an stupendous medium of diversification. They could, on occasion comport as even more lucrative investments than equities provided one has accoutered the know-how of when to invest, i.e. Investing when the interests rates are postulated to fall in the future, and pulling out when the scenario is reversed.

The risks that are confederated with investing in bonds are several, the primary being the interest rate risk. Other risks are the risk from the change in the shape of the yield curve, credit risk, liquidity risk, inflation risks (which tend to diminish the real returns from one's investment), Volatility risks etc.

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This weekend I had the pleasure of meeting and sharing a round of golf with Jim Merkley from Morgan Stanley. Mr. Merkley comes from an impressive background that includes being named one of Business Journal’s Top 40 Under 40 for 2005! What is even more impressive is the time and effort Jim puts back into the community. Like Jim, the team here at 22Dollars believes in the importance of giving back to help out those in need. It was because of our recent donation to the Arc of Monroe Foundation that we came in contact with Jim and he was kind enough to offer a round of golf at the home of the 85th PGA Championship - Oak Hill Country Club (East course). A course that has been continually recognized as one of America’s top 20 golf courses.

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Most investors generally obliterate some essential inherent attributes of investing in a mutual fund. One of the primary factors that one should look into while appraising a fund is the expenses of the fund. The load expense is the price that an investor pays towards the sales and distribution commission, custodial fees and managerial fees.

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