MAX on Yahoo! Finance
MAXfunds co-founder Jonas Ferris explains why a boom in ETFs may be a bust for fund investors in this Yahoo! Finance/Fox News video (you'll have to sit through a short ad first).
Acute observers will note he's wearing the same tie as he did in last week's video.
Attempted Letter Bombing at Janus
Some nut has targeted Janus Capital in a letter bomb attack:
The first explosive device was found by an employee in an investment firm's mail room in Kansas City. The package contained a pipe bomb.
The second bomb was sent to Janus Capitol Group in Denver, but was rerouted to Chicago. Neither bomb exploded.
"This case is our top priority. We are very serious about solving this case. We put all of our top people on this investigation," said postal Inspector Paul Trimbur.
The person responsible for the bombs has identified himself as "The Bishop." He may be linked to other threatening letters sent to financial institutions over the past 18 months, officials said."
We sure hope it had nothing to do with Janus' appearance in our Six Annual Mutual Fund Turkey Awards this year:
Share The Wealth…And The Losses: Janus Olympus
Olympus merged with Janus Orion (JORNX), bringing with it billions in tax-loss carry-forwards from the tech crash. Now slightly less unfortunate Orion shareholders get to benefit from these Olympus losses. (The portfolio manager can realize gains and wipe them out with losses to minimize year end taxable distributions to shareholders). Both fund shareholders are now in a bigger fund that’s slightly more difficult to manage. What about fees? They remain the same. Chalk up one more tech-wreck track record swept under the rug. It’s win-win…for Janus.
Heck, they were only an honorable mention. ...read the rest of this article»
A Fund Fee We Love
Nobody hates mutual funds fees more than we do. At MAXfunds.com, we absolutely hate loads, deplore high expense ratios, and barely tolerate 12b-1 fees. So you'd think when the Securities and Exchange Commission ruled last year to continue to allow mutual fund companies to charge shareholders for selling shares of a fund (up to 2% in redemption fees) that we'd be hopping mad. But we're not. In fact, we're actually tickled pink. Redemption fees, you see, are the ones we absolutely love.
Redemption fees are charged by some funds if an investor sells a position held for less than a certain period of time. The amount of the fee and the redemption fee period varies from fund to fund, but a common redemption fee is 1% of sales made within 90 days after purchase.
Redemption fees do bear a strong resemblance to back-end loads (or contingent deferred sales commissions or CDSCs), which we hate. So why are we in favor of a fee that seems to do just about the same thing? Because redemption fees discourage short-term investing - the practice of hopping in and out of a fund to benefit from quick rises in NAV prices. ...read the rest of this article»
Regular vs. ROTH IRA
Brad O'Neil gives a clear and concise explanation of the differences between a regular and ROTH IRA:
First, a traditional IRA has the potential to grow tax deferred, while Roth IRA earnings have the potential to grow completely tax free, provided you've had your account for at least five years and you don't begin taking withdrawals until you're 59-1/2.
And second, contributions to a traditional IRA may be tax deductible (depending on your income and whether you or your spouse have access to an employer-sponsored retirement plan), while Roth IRA contributions are never deductible.
On the other hand, the traditional and Roth IRAs share some things in common. Both have the same contribution limits ($4,000 in 2007, or $5,000 in 2007 if you're 50 or older) and both can be funded annually with virtually any type of investment - stocks, bonds, Certificates of Deposit."
See also:
Ask MAX: Can I convert my regular IRA to a Roth IRA?
Ask MAX - Are Roth IRAs Too Good to be True?
Ask MAX: A Fee-Free IRA?
Ask MAX: A Fee-Free IRA?
Randy from Ohio asks:
I want to get an IRA started for my wife and I this year. I understand we can contribute $8,000 between the two of us. I have read several sources stating that a self-directed IRA will allow me to keep more of my money.
I have had no problem finding brokerage firms to set up IRAs, but how do I go about doing this without paying a broker? Also, many mutual funds have minimum investments of over $8,000. Are these funds out of the question for me?"
Individual Retirement Accounts were established by an act of congress in 1974, and have been confusing the heck out of individual investors ever since. With no less than eleven distinct varieties of IRAs, ever-shifting contribution limits and distribution formulas you need a degree in advance mathematics to understand, it’s no wonder we're all occasionally left scratching our heads. ...read the rest of this article»
Ask MAX: Can I convert my regular IRA to a Roth IRA?
Holly from Santa Fe asks:
Can I convert my regular IRA to a Roth IRA, and should I?"
First, let's tackle the "can you" part of your question, then we'll move on to the "should you".
Can You? The answer to this question is relatively simple to determine. You can convert from a regular to a Roth IRA if your adjusted growth income is below $100,000. That figure applies to both single filers, married couples filing jointly, and heads of household.
If you're married and you're filing separately, you're out of luck. Rules concerning conversions specifically forbid married persons filing separately from converting their IRAs.
That's about all there is to the "can you" part. But now things get a bit more complicated. ...read the rest of this article»
Ask MAX - Are Roth IRAs Too Good to be True?
Daria from North Carolina asks:
I can't seem to find a clear description of how the tax implications work with Roth IRAs. I understand that what I put into the ROTH is never taxed. Please correct me if I am not understanding that correctly.
My confusion is in the capital gains and distribution of dividends into the ROTH account. Are gains taxed? It would seem like too much of a plus for the investor if they (gains) were not taxed. I have been to several web sites to find a clear definition of the ROTH itself before I commit to opening an account."
Roth IRA's have only been around since 1997, when the Senate passed the Taxpayer Relief Act. The differences between a regular IRA and a Roth IRA are significant, and choosing the one that's right for you could have a big impact on how much money you end up with in your golden years. Please keep in mind when reading this that IRAs are a concept originated by the United States Government and hence are rife with ins, outs, and what-have-yous.
Are Roth IRA's too good to be true? Well, they are pretty terrific. ...read the rest of this article»
Ask MAX: Should I sell based on Cramer's warning?
Yehuda from Brooklyn asks:
I'm 25 and live in Brooklyn. Jim Cramer said the market is going to crash with the economic news of the last three weeks. Should I sell all my stock funds and buy bonds?"
Take your hands off your keyboard and step away from your E*TRADE account. Jim Cramer is probably wrong, and is definitely not the guy to go to for sound investing advice.
We love watching Cramer's new show as much as the next guy. We love his sixteen-cups-of-coffee delivery, his aggressive-as-a-rabid-Pit Bull stock picks, even the dopey sound effects. 'Mad Money' is unquestionably the liveliest show on the toned-down, post-Enron, post-Nasdaq 5000 CNBC.
But while Cramer is a bright guy with a lot of real world investment experience, his show is first and foremost entertainment. We wouldn't base our investment decisions on Cramer's television rants any more than we would on the advice Uncle Earle gives us at Thanksgiving dinner. Okay, Cramer is probably a safer bet than Uncle Earle, but you should be wary of all famous (and oft-wrong) market prognosticators. ...read the rest of this article»
Ask MAX: What should I do with my old 401(k)
CW asks: 'A while back you helped me with my 401(k). Although it's only been a short time I was very satisfied with your services. I have since moved on to another company and I hope once again you can assist me with my new 401(k) options. Do you have any advice on what I should do with my old 401(k)?'
Would you leave your personal belongings in your old desk? Take your retirement money, along with the pictures of the kids, when you move on to bigger and better things.
The best choice for your old 401(k) is to roll it over into a low-fee broker like Firstrade where you can buy any number of funds, or to a fund family like Vanguard with a wide selection of low-fee funds.
Moving your old 401(k) plan – or 403(b) – is better than leaving your 401(k) at your old employer with their limited selection of often high-fee funds or even moving the old plan to your new employer’s plan, as the new plan will likely have the same shortcomings.
While you can't combine this old 401(k) with a ROTH, you can combine it with other traditional IRAs and maintain the account’s tax-deferred status. The downside of combining it with other accounts is that you can’t move it back to a 401(k) at a later date – it’s been sullied by the other money, so to speak. ...read the rest of this article»
MAXadvisor Powerfund Portfolios Update
Note to subscribers of the MAXadvisor Powerfund Portfolios: this month's portfolio performance data update and commentary has been posted. Subscribers can log in by clicking here.
The MAXadvisor Powerfund Portfolios is a collection of seven model mutual fund portfolios ranging in risk from very safe to quite aggressive. Each portfolio is made up of a group of terrific, no-load, low-cost mutual funds that are carefully chosen to work together to lower volatility and increase returns. You can learn more about the MAXadvisor Powerfund Portfolios (and sign up for a free trial if you like what you see) by clicking here.