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»

Imagine getting an FDIC-insured 6.5% return with zero risk! Too good to be true? With Callable CDs you can get mouthwatering returns without the ups and downs of stocks. Trouble is, you can’t have your cake and eat it too.

CDs (certificate of deposit) are appealing to risk-averse investors. They are FDIC-insured against loss (unlike mutual funds) and readily available with just a few thousand dollars at your local bank – seemingly without sales charges or commissions.

With interest rates on the rise, CDs are becoming more attractive, particularly to those worried about stock market gyrations and low dividend yields from stocks.

Because of the safety, CDs typically don’t yield much – the best CDs yield slightly more than government bonds for similar maturities. As interest rates have climbed in recent weeks, investors can typically get around 4% - 5.5% on better CDs, depending on the term. ...read the rest of this article»

It's a match made in mutual fund marketing heaven.

AARP, the organization dedicated to the interests of persons who aren't quite as young as they used to be, launched its first three mutual funds and the end of 2005. And you don't have to be over 50 – the minimum age to join AARP – to invest in them.

AARP's Conservative, Moderate, and Aggressive Funds are geared toward investors with risk tolerances ranging from, well, conservative to aggressive. Each fund invests in a different mix of three underlying index funds managed by State Street Global Advisors. Those indexes track U.S. stocks through the MSCI U.S. Investable Market 2500 Index, international stocks through the MSCI EAFE Index, and U.S. Bonds through the Lehman Brothers Aggregate Bond index.

According to AARP, the aim of the new no-load funds is to make the investment process easier in hopes of encouraging people to increase the amounts they invest. ...read the rest of this article»

Part of our job at MAXfunds is to get you excited about investing when everybody else is not, and fearful of investing when everybody else is excited.

To us, “everybody” refers to mutual fund investors. The tens of millions of fund investors have a nasty habit of getting most excited about investing close to the top of market cycles, and getting negative at exactly the worst time – when stocks are close to bottoming out.

As you’ve been reminded every few minutes by the financial news media, or just every few hours by regular news channels, or every day by newspapers, stocks (or rather the Dow Jones Industrial Average) are always within spitting distance of an “all time” high.

While the bear market ended in late 2002, to some the market is not “over” the bubble era until the stock indexes pass their old highs. Today, many stock indexes are way past their old highs – larger-cap and tech indexes are the only ones still below the high water mark. These were the areas fund investors over-loved in the past – the higher they rise, the harder they fall. ...read the rest of this article»

Newly elected socialist/populist Bolivian President Evo Morales sent military troops to natural gas facilities on May 1st, claiming state control over the country’s resources. Oil companies were given 180 days to renegotiate contracts with the country – almost literally at gunpoint.

Such a move is bad for the global “oil imperialists” of the world like Exxon Mobil, Petrobras and Total S.A. It doesn’t bode well for investors in Latin American mutual funds like T. Rowe Price Latin America (PRLAX) – our current Latin American fund category favorite.

When socialism is on the march it’s best to get your money out of the way. ...read the rest of this article»

A lot of good has come out of the exchange traded fund (ETF) revolution. ETFs have drawn billions of hot money dollars out of ordinary mutual funds, helping longer-term mutual fund investors’ returns by giving the fund manager a more stable asset base. ETFs are more tax-efficient than ordinary mutual funds. Even better, low-cost ETFs have put some pressure on fund fees. ...read the rest of this article»

Andrew from Minneapolis asks: 'I'm a mutual fund investor who was hit with taxes on my fund holdings this year (after a few years without paying any). Frankly, I'm not entirely clear on what a capital gains distribution is. I asked my accountant and he didn't seem to be able to explain it to me. Can you help?'

In most cases, mutual fund investors haven't had to worry about their fund’s tax bills since 2000. Weak market returns from 2000-2002 meant that there weren't any capital gains to distribute in the early part of the decade, and the losses many funds realized offset some of the gains made in the following years. But strong performance of many funds from 2003 to 2005 has finally caught up with fund investors, creating a rough tax burden for many of them this year. In 2005 Lipper estimates fund investors paid a whopping 58% more in taxes on fund distributions than in 2004.

We love mutual funds. Mutual funds provide cheap and easy investment diversification, they're easy to get in and out of, they're highly regulated, and they allow investors access to expert financial guidance at a low price. As investments go, we think that mutual funds are far and away the best available for the vast majority of investors in America.

But there are a couple of things about mutual funds that we don't like: Fund investors never know exactly what they're invested in, some mutual funds charge excessive fees, and worst of all, mutual funds sometimes hit investors with large and unexpected taxable distributions. ...read the rest of this article»

Ron from Atlanta asks: 'I'm 62 years old and am not married but I have lived with my girlfriend for over 17 years. She is the main benefactor in my will (which includes a house and a decent-sized mutual fund portfolio), and I plan on leaving her my IRA assets. Will she be required to pay taxes on those assets?

Stuffy old Uncle Sam still doesn't give his full blessing to unmarried couples.

When married people die, they may leave their spouse an unlimited amount of assets free of federal estate taxes. That's called the marital deduction.

Unmarried couples do not receive an unlimited marital deduction, and therefore your girlfriend could be due a nasty tax bill after you leave this mortal coil.

Your estate is the total value of all of your assets, less any debts, at the time of your death.

If you died tomorrow and your assets total less than $2 million (the current federal estate exemption, increasing to $3.5 million in 2009), your girlfriend won't have to pay anything by way of taxes.

If you want to leave an IRA or property in excess of the exemption, it will trigger the dreaded estate tax - currently as much a 46% of the estate's value. ...read the rest of this article»

George Mason did very well in the NCAA playoffs: the underdog college basketball team got all the way to the final four. Few thought it was possible – the odds of the Patriots winning started out at a long shot 150-to-1. Such odds, which are set by experts and betting behavior, meant that almost nobody thought the Patriots would do as well as they did.

In fact, the Patriots were this year's Cinderella team – even beating favorites like UCONN and North Carolina. With sports, big upsets are quite rare. With mutual fund investing, the favorites often lose.

There is a high correlation between past performance and future performance in sports. Chances are, Tiger Woods will beat most other golfers this year. Mike Tyson, in his prime, was a near-guaranteed winner. Just having Michael Jordan on your team practically assured an NBA championship. ...read the rest of this article»

In the first part of this article, we’ve talked about the S&P500 index in general and the current, somewhat paltry yield. Funny thing is, when you look at the actual stocks in the index, things look a little brighter.

Here are the top 10 stocks and dividend yields in this market cap-weighted index:

Note that almost all of these stocks pay larger dividends than the S&P500 as an index (1.7%). How is this possible, when these stocks make up some 20% of the index? ...read the rest of this article»