Risk and Reward in Mutual Fund Investing

Investing in mutual funds and common stocks has its risks and rewards. Generally speaking, when investing in mutual funds, risk and reward are directly related.

The more risk you’re willing to take, the greater your potential reward. The less risky the investment, the less return you will receive. In a very real sense, the risk is not so much that you will lose money; it’s more that you will not make the return you should with a reasonable risk.

The least risky type of mutual fund investment is the money market fund, which pays a varying rate of interest on your money. You generally know about how much your fund will return, and there isn’t a lot of risk.

There is less risk involved in a money market fund than in just about any other type. However, while you don’t have to worry so much about losing money in a money market fund (the recent financial crisis being an exception), the fund may not produce enough reward for you to meet your long-term financial goals.

To receive a higher financial reward for investing your money, you need to take on additional risk.

Short- and intermediate-term bond funds offer more reward, but with slightly more risk than money market funds. Long-term bond funds and balanced funds are moderately risky and offer more rewards than short and intermediate bond funds.

Moving up to a higher risk and higher reward are growth and income stock funds followed by growth stock funds and aggressive-growth stock funds.

History has shown that investing in stocks whether directly or through mutual funds has rewarded investors with higher returns than investments in bonds, money market funds, or cash.

Before you invest, determine how much risk you are willing to take to reach your objectives. The further away those objectives are in time, the more risk you can assume in your investments.

If, for example, you’re investing for retirement and have 10, 20, or more years to go, you can choose more aggressive investments with potential high returns over time. Volatility is not a risk to the long-term investor. The market’s bias toward growth overcomes volatility with time.

Risk and Fund Types

Your appetite for risk should directly correlate with the types of mutual funds that you invest in. It wouldn’t make sense for conservative investors to put all their savings in an aggressive-growth fund.

Also, because the distinctions between types of funds have become increasingly blurred over the past few years, you can’t assume that a fund is actually what it bills itself to be.

That is, a fund with the word “balanced” in its name may or may not actually be a balanced fund in the truest sense of the term. Therefore, you need to carefully examine the fund’s prospectus and record before investing.

We recommend that you research the basic data of funds to learn more about ones that interest you. Perhaps check out a mutual fund newsletter to gather more information. By examining a fund’s portfolio and the division of its assets between stocks, bonds, and cash, you can usually determine whether a fund is following its stated objective.

If the balanced fund you are interested in actually invests 50% of its assets in small-cap foreign stocks, you’ll know that it isn’t truly a balanced fund, but rather a small-cap global aggressive-growth fund.

As far as stock funds go, choices between the two extremes of safety and risk, in ascending risk order, include:

• Fixed-income funds, offering yield and price stability.

• Stock income funds, primarily dedicated to producing a relatively steady stream of income.

• Growth and income funds, which give almost equal attention to both growth and income.

• Growth funds, with an orientation toward long-term capital appreciation.

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Camera Insurance – A Must Have for Professional Photographers

Cameras are essential tools for professional photographers to perform their job. A small malfunction or loss of any of the photographic equipment could potentially cause business interruption and financial burden. For a semi-professional or an amateur, cameras are expensive gadgets to replace.

Purchasing insurance before the worst happens is a sensible decision for photographers. This article discusses the importance of having insurance for your cameras. It also provides tips to choose the right kind of insurance policy.

Understanding the Need of Insuring Your Camera

Despite your best efforts to use your camera equipment properly, accidents and mistakes happen. A few factors that affect the functioning of cameras are as follows:

• Cameras of photographers, especially who shoot outdoors, are often exposed to different weather conditions. Exposure to extreme climatic conditions like too hot or cold weather may affect their functioning.

• Cameras are not that hard as they look. They have delicate parts – lenses, panels, shutter doors, etc. If it is a digital camera, it is more fragile. A little negligence in handling may lead to accidental destruction/damage. Your camera warranty may/may not cover such damages.

• Any loss or damage to cameras or any related equipment because of an accident, repair, or theft will be costly because all the things like camera lenses, tripods, flashes, etc. have irreplaceable value.

• Finally, theft is always a threat to expensive cameras. These goods have more return value. Therefore, the probability of getting your camera stolen is high.

With so many threats as said, isn’t it a good idea to have insurance in hand which acts as a financial tool to protect cameras and accessories from the risk of loss and damage? Of course, Yes. Let us see how to choose the right kind of policy.

Choosing Right Kind of Camera Insurance Policy

Having understood the importance of camera insurance, it is imperative to choose the right insurance policy that covers most risks involved in your profession. In general, you need to choose your policy depending on your level and purpose of your photography.

Those who have taken photography as a full time profession and are earning considerable income from photography need to go for professional photography insurance. Photographers who do photography as a part-time activity can go for semi-professional policy, while amateurs who pursue photography as their hobby can choose amateur insurance policy.

Every policy carries its own coverage and the rates vary depending on the coverage offered. Therefore, buy enough insurance which can cover all your risks.

Compared to part time and amateur photographers, full time professionals perform a wide variety of activities. Therefore, they need more coverage for their cameras. Some insurance covers are highly essential for them to get the true value from the insurance policy.

A few covers that are worth considering for your cameras are public and employers’ liability insurance. They cover the risk of liability from office premises and content, professional indemnity, business interruption, etc.

Make a Note on the Exclusions

Besides concentrating on all the covers included in your camera insurance policy, it is also important to check the exclusions i.e., the things that are not included/covered by your policy. In general, regular wear and tear, mechanical breakdown, etc. are not included in the policy. Make sure, therefore, that you are aware of all the exclusions before you purchase the insurance.

Insurance Brokerages Tailor Policies Based on Your Requirement

It is hard to choose the best insurance for your camera. This is because there are a large number of insurance products in the market. In such a situation, approaching a reliable insurance brokerage would be a time-saving and cost-effective solution.

Experienced insurance brokerages work with multiple insurers. They have the ability and expertise in tailoring the policy based on clients’ requirement. Compared to an individual insurance provider, they offer a wide range of policies from different insurance providers in the market. Thus, they help you make a choice that fulfills your insurance needs.

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Equipment Financing – How to Use Equipment Financing

Equipment Financing

Equipment financing is a loan specifically designed to pay for your larger business equipment needs. Some examples of this might include, commercial ovens, automated machinery, machine shop tooling, generators, chillers, large format printers, car wash equipment, trucks, trailers, commercial refrigerators, molders, agricultural equipment, or any other equipment that is or can be used by a business.

Deciding on Which Equipment to Finance

When you are looking to get equipment financing there are some factors to think about first. Commercial equipment financing is a loan to buy the equipment over a period of time. The lender uses the equipment being purchased as collateral. Financing the equipment is a sound option for expensive long-life equipment that is not going to become obsolete in the near future. This is because once it is paid off; you still get to use it as it still has value. Equipment you should not finance, for example, are computers and/or high tech machinery with short useful lives. This type of equipment is not a good option for financing because the equipment becomes obsolete very quickly, oftentimes just as or even before it is paid off. When it is paid off you may be left with a bunch an item, for example, that has little or no value.

Some Advantages

Large industrial/agricultural or low tech equipment are much better examples of things you should think about when seeking to get equipment financed. This is because these types do not become obsolete quickly and therefore do not need to be replaced often. The advantage of equipment financing is that once your equipment loan is paid off and you own the equipment outright, then your business’s monthly cash outlays plummet. If that equipment still has a useful life then while you are using it your profit margins will go up. Also, the tax advantages can be good because when you buy the equipment through a loan you get to depreciated its value and deduct that depreciation off of your taxable income. In addition, the interest can be deducted from your taxable income.

Some Disadvantages

The disadvantage of equipment financing through a loan is that while the fixed costs do drop in the future, they are high in the present. Not only do you have the monthly loan payments but a down payment is also usually required. If you are a new business without ready access to capital, it may be better to lease the equipment until you can afford to buy.

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Longer Survival For Home Business

Survival is one of the most sought for thing in the business world. We see business conglomerates collapse because of violent feuds inside the boardroom – on who would be the next boss or chairman. Medium scale businesses are haunted by problems like product effectiveness and expansion of market while small scale businesses, like other work at home business, are threatened by pre-establishment woes and consumer sustainability. The two larger types of businesses often seek out business management specialists and consultants to secure the longevity of their business. However, for small scale businesses, there isn’t an option like that because it would be too costly to hire such people hence their survival hangs in a balance. This is where business coaches could play a very vital role in the survival of small scale business.

Business coaches or mentors could help small businesses thrive because they could give tips and real education on how to establish a lucrative home business as well as running them like a pro. They often have degrees on business management so the quality of their service is almost the same as that of consultants or other specialists that work for larger types of businesses. Their only difference is that they chose to work for small businesses because the same business logic would apply and because there are far more numerous in numbers as compared to medium and large businesses. To enlist their help, you only need to visit their websites and subscribe to their mentoring programs. Apart from positive encouragement, you would also receive instructional materials, blueprints, and other materials that contain valuable business ideas that could push your home business forward.

Such ideas could be used to prevent your business from dying and it would give you the drive you need to continue running your business at an accelerated pace. This could give you an edge over other online entrepreneurs because, unlike them, you would be guided to neither run your business towards the uncaring arms of bankruptcy nor use lame business tactics. Moreover, there is the idea that you don’t need to be a business school graduate to start small businesses. As a consequence of this we can see that it is pretty much done and being tried by other people. Putting up an online business is slowly becoming a fad to those who wanted to have additional profits, and because it is easy almost anybody can do it. However, it does not mean that it is advisable to head out for business without enough knowledge about how things play out in the business field. Those business mentors would teach you how to be successful by directing you to do a hands-on learning – you apply their ideas to your business so that you can maintain business survival. Another bonus is that, the entire mentoring program would not take years away from you and you can learn at your own pace and at your own time. Also, the services of a business mentor cost less than a flashy business management degree.

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