My Personal Finance Blog

Investors who bet that bond funds would be the best investment for 2010 were not disappointed with their investment choice. Since smart investors look down the road six months or more that begs the question: will bond funds be the best investment for 2011 and what are the risks?

Just a glance at average annual rates of return for the 3-year period ending in mid 2010 helps explain the popularity of bond funds. Money market funds paid between 1% and 2% a year on average paying virtually nothing for the last 12 months. Stock funds had a wild ride with many of them LOSING 10% a year or more. Many high-quality BOND funds returned over 6% a year. Under one possible scenario these INCOME funds could be the best investment for 2011, or at least the best mutual funds. But don’t overlook the risk factor.

Bonds offer a fixed yearly income based on a fixed interest rate that never changes for the life of the investment. When you own shares in a bond fund you own a small part of a large portfolio of these income producing securities, which trade in the open market like stocks do. Your total return from bond funds includes both interest income and gains or losses in the value of the securities in the portfolio. Hence, risk is a factor.

Bond funds are also referred to as income funds because that’s their major attraction… higher interest income than you can get from other popular investment options or other mutual funds. They have been good investments in recent times and the best investment for 2010 for investors in search of higher returns without high risk. There are two basic reasons for this. Interest rates have been falling and inflation has been tame. Falling interest rates make the fixed interest income from existing or older bonds more attractive than that of new issues coming to market. Investors bid the price (value) of bonds up in the market because they are willing to pay more for the higher income.

Lower inflation makes a bond’s fixed income payment more attractive, as the future buying power it represents will not be significantly diluted by a higher cost of living. Negative inflation is referred to as DEFLATION, where the cost of goods and services actually declines. If interest rates continue to fall and inflation follows suit and/or goes negative, bond funds are a candidate for the best investment for 2011. Some economists and professional money managers believe that this scenario could definitely happen.

On the other hand, interest rates are presently near historical lows due at least in part to the government’s efforts to keep rates low to stimulate a lackluster economy. The question is whether or not the powers that be and/or the markets will push interest rates up in 2011? When rates go up inflation generally does as well and this is a formula for losing money in fixed income investments like bond funds. Higher interest rates and inflation make the fixed income from their securities less attractive; and investors in the bond market send bond prices down by selling.

Income funds have been some of the best mutual funds over the past 10 years and three years when things have been dicey for stocks and stock funds. Don’t assume that this trend will continue. Watch the economic and business news. If interest rates continue to creep downward and inflation stays low or turns negative (deflation), bond funds could be your best investment for 2011 and beyond. If the opposite occurs it’s time to lighten up on, or avoid bond funds altogether.

The best investment and the best mutual funds will again be on the mind of average investors as 2011 unravels. For most folks the best investment strategy centers around investment packages called funds. In case you’ve been confused or mislead in the past, here’s an investment guide written in plain simple English that spells out your basic options.

The only real difference for 2011 and beyond in the world of mutual funds is that there will likely be more variations of the same old basic investment options. Don’t stress over finding the best investment from a list of hundreds or thousands of fund options. Let me make things simple for you by taking you back to the basics, because there are still only 3 basic types of funds you really need to understand; and your best investment strategy should revolve around owning some of each. In this investment guide we start with the most popular funds that have been around the longest – stock funds and bond funds. And we keep it simple.

Stock funds are also called equity funds because they invest your money in stocks, which are also called equities in the investment world. Equity implies ownership, complete with the potential of higher returns as well as higher risk. Even the best stock funds are risky compared to the other two investment options. But over the long term stocks have rewarded investors with higher returns, along with greater volatility in price.

Your best investment in stock funds for 2011 and beyond in simplest terms boils down to your feelings about risk. The best stock funds for conservative folks are those that invest in large, well-known companies that pay good dividends. The best stock investment strategy for the more aggressive types: include growth funds and smaller-company funds as well in your portfolio. They don’t pay much in dividends, but they can fly when the economy hits on all cylinders.

Bond funds hold long-term interest-paying debt (bonds) issued by government entities and/or corporations in their investment portfolio. These funds have usually been viewed as the average person’s best investment for earning relatively high interest income with only moderate risk. In 2011 be careful because you CAN lose money in even the best bond fund if interest rates go north. Your best investment here if conservative: short-term bond funds. If more aggressive your best investment strategy would include intermediate-term bond funds as well. Avoid long-term funds unless you want to gamble that interest rates won’t go up in 2011 and beyond. If rates go up big time, long-term funds will go down in value likewise. That’s the way bonds work.

Money market funds are the last of your three basic fund investment options, and were the last of the three to be offered to average investors. In the early 1970s they began their climb in popularity as interest rates soared. Money funds are safe and pay dividends (interest income) earned from safe short-term money market debt securities. These are your best safe investment when interest rates go up because the interest income they pay automatically follows the trend in interest rates. Today’s rates are super low, but don’t ignore these funds because the interest rate trend could change. The best investment here for average-income folks are general taxable money funds. For high income people tax-exempt money funds are the best investment choice.

A fourth type of mutual funds is gaining in popularity. They have been around for a long time under the label of balanced or hybrid funds. Today there are simply more variations including asset allocation, lifestyle, and target retirement funds. Basically these funds are a package deal consisting of some combination of the above investment options: stocks, bonds and money market securities. Often they are simply funds that hold the 3 types of funds we just covered. Their best investment feature is that they come in conservative, moderate, and aggressive risk versions. The problem is that their definition of risk might vary from yours.

For 2011 and beyond I suggest that you stick with the 3 basic investment options in the mutual fund universe and put together your own best investment portfolio. Be less concerned about finding the very best mutual funds in each category within the 3 basic fund types. Pay more attention to how you divide your money across the 3 types of funds. Your best investment strategy for 2011 is one that makes you comfortable in the risk department.

Don’t overlook mutual funds in your search for the best investment for 2011 and beyond, because these investment packages offer most people advantages not found elsewhere. View your investment goal as putting together the best investment portfolio possible, one that doesn’t require your constant attention. Use mutual funds as your building blocks.

Every balanced and diversified investment portfolio consists basically of three parts: stocks, bonds, and money market securities (safe, liquid investments). Every investor who wants to sleep at night needs a diversified portfolio, and the best investment portfolio for 2011 and beyond will include alternative investments like gold and real estate as well. This can be a tall order if you scan the financial tables in search of the best investment in each category every year. Or you can approach things in a sensible fashion by simply investing with the biggest and best mutual fund companies.

You don’t need a stock brokerage account to invest in stocks and bonds, a commodities broker to invest in gold and silver, or a real estate broker to invest in real estate. Nor do you need a personal banker to find a place to stash some cash and earn interest with high safety. You can do all of the above by simply opening a mutual fund account with one or more of the biggest and best mutual fund companies in America. Then, at your fingertips, you’ve got all of the investment options you need to put together a truly diversified personal investment portfolio.

After all, mutual funds were designed for the majority of people who don’t have the time, expertise or inclination to manage a portfolio of individual investment securities like stocks and bonds. That’s what these funds do – they manage a portfolio of securities for their investors in the form of stock funds, bond funds, and money market funds. By investing in all three categories you can put together you own personal best investment portfolio for 2011 and for many years to come with relative ease. To add alternative investments to your portfolio, just add specialty stock funds that specialize in areas like gold or real estate.

Now, everyone wants to know who the best mutual fund companies are for obvious reasons. This is debatable; but the biggest and most popular are: Vanguard, Fidelity, and American Funds. They are clearly the largest in terms of assets managed and/or number of investors serviced, and they’ve been around for decades. All three have risen to the top by offering a wide array of quality funds and good service. The fund company picks the stocks, bonds, etc. and does the day to day portfolio management. You as an investor simply pick which funds to invest in and how much to invest in each.

Spend some time getting up to speed on mutual funds because they can greatly simplify your investment life. Face it, you’ll never find the single best investment for 2011 or for any year that follows. What you really need in these uncertain times is a truly diversified investment portfolio. Diversification is the key to investing for the future, and is also the signature of mutual funds. If there’s a better way than a collection of mutual funds for the average person to put together his or her best investment portfolio for 2011 and beyond, I’d sure like to know about it.

Lucknow property is attracting both the big and aspiring investors. However it is the commercial property in Lucknow to gain more importance. Buying and selling the commercial real estate Lucknow properties is an extremely advantageous business. You can invest a good amount in properties other than residential and single family homes.

This gives the investors the option of owning the invested Lucknow properties like office space and buildings. Commercial investment gives multiple options along with wide diversity to the investors which in turn increase the return as well.

One of the main advantages of investing in commercial property in Lucknow is that one can earn through many ways apart from just the buying and selling. An investor can after purchasing wait to gain equity and then sell it to make profit on the same. Another option can be to lease or rent the property to maintain a rental monthly income. You may also purchase a building to run your office from the same and rent or lease the other floors.

On the other hand, investing in a commercial Lucknow property is one of the most profitable ways to add properties from the investment view. Commercial properties are a far better option as compared to the residential property in Lucknow. Commercial Lucknow property adds options variety and to the investment portfolio.

This is because the commercial properties are available in all areas whether developed, developing or under developed. It is important from even the business view that you keep your all options open so that you get you can further numerous investment options. Although you might have to struggle a bit to find the perfect or promising commercial property but then once you find it, you can be assured to be digging gold.

However, before one gets in to the commercial property investment he must very carefully study the market and do numerous surveys to gain the market flow and strategies. However, if you are not thinking on the commercial grounds, then it is time that you do so. The commercial property investment is the never ending project and is growing rapidly. It is advised to attend seminars, join the groups dealing in property so that you can gain as much as possible before investing your money in this field.

Property in Lucknow is a promising field which is sure to give great return to the invested amount no matter what the invested form is. You may also hire a real estate agent who will help in providing you with the latest updates regarding the various projects ready for the sale.

Personal investment software can help you decide what’s what in stock market and find profitable trading opportunities without your having to commit to the time-consuming assignment known as analytical work.

Because these programs have enabled first time traders to make the same kind of money that professional traders make a without devoting the time to it, their popularity has spiked in the recent years since it came out and continues to improve. I’ve tested a number of personal investment software options first-hand, enough to know that some are definitely better than others, and some programs are simply outright scams. For all of this, here is my essential three point guide to selecting the very best personal investment software for casually investing in making the kind of money that you want from this market regardless of your experience.

First, check and see what sort of customer support the publisher behind the personal investment software offers. Phone support is obviously ideal, but lacking that you’ll find that you can learn a lot about publishers simply by sending them a test e-mail and gauging their response time accordingly.

Secondly, I recommend limiting your search to personal investment software which offers full money back guarantees on it. This sounds like a no-brainer, but any publisher who doesn’t stand by their product enough to offer a money back guarantee doesn’t deserve your time. It also enables you to move on to step number three.

Finally, using the money back guarantee I completely recommend that you test any personal investment software you’re interested in. This sounds overwhelming and daunting but it’s one of the easiest things you can do as all you’ve got to do is get the software, receive a handful of stock picks, then follow their performances along in the market. It’s as simple as that and I found that many publishers encourage you test their programs in this way as I have with dozens of options on the market today.