3 Key Advantages Of A Large Stock Investment Fund

There are vast differences between large investment companies and the smaller ones in terms of fund size, return performance and the management team. How stock investors could benefit from investing through a large stock mutual fund? Just to name 3 key advantages here for investors’ reference.

1. Lower Expenses for Diversification

The more obvious advantage of an investment fund rests on the mere fact that it has much more capital than any but a few individuals own. It can diversify into a reasonable number of stocks with reduced percentage of expenses over your total investment sum.

An investor wanting to reduce the gamble in owning common stock must hold stock in a good many companies. Momentarily ignoring the existence of investment companies, suppose a man decides that for adequate diversification he should own stock in fifty companies, and for the companies he selects the average price per share is $30. Conceivably he could buy ten shares in each company at a total cost of $15,000, plus at least $3,000 expenses.

In return for his money, the first things he gets back are fifty stock certificates, which he must keep safe. When he sells a certificate at any time in the future Uncle Sam requires that he know when he bought it and the cost. Also, in the course of a year he will receive some 200 dividend checks, for a total of perhaps $60. The whole thing sounds silly, doesn’t it?

This example suggests three negative points about an investor’s obtaining diversification without using an investment company:

(A) He must pay out at least a few thousand dollars, and not many investors start with that amount of money.

(B) The expenses incurred in making small, direct purchases of stock may be higher than on the same total amount bought through an investment company, especially if a buyer figures in the fees for later sale of the stock.

(C) Even if an investor has capital enough to buy many times 10 shares in each of fifty or more companies, he still takes on a lot of work in selecting and keeping track of so many companies, and in handling his certificates and dividends.

2. Professional Investment Manager

Another advantage of having considerable capital in one pool under an investment fund is that a large fund can afford to pay the salaries of a competent portfolio manager and research deputies. Aside from the sales charge, most of the expense incurred in a typical investment company is the fee paid to the group responsible for keeping the fund invested. Usually this fee is fixed at a rate equivalent to 0.5 to 1 per cent of the fund’s assets each year. Suppose a fund’s capital is a mere $500 million; 0.5 per cent of this is $2.5 million, which the fund can pay for its investment managers, assistants, and operations expenses. A fund far smaller than this may be able to hire a skilled manager, because he expects a rapid growth of the fund’s assets, and consequently of his management fee. Or the same management organization may be in charge of more than one fund, with some of the assets of each fund invested in stock of the same companies, thus reducing the work for each fund.

It appears that in 2005 the investment companies with the best performance records are apt to have total assets of at least $300 Billion either in one fund or in a group of funds under the same management.

3. Fund Maturity and Track Records

Large size also implies maturity. It is practically impossible for a fresh investment company to accumulate $3 billion of assets, let alone 100 times that much, until either the fund has been in existence for a good many years, or else its management group has an established reputation strong enough to draw capital rapidly into a new fund. In 2005 most of the funds, or groups of funds, with $300 million assets or more, are at least twenty-five years old. So a fund with a good performance record is apt to have age as well as size. The giant of the industry Fidelity Investments was founded around 1930 by Edward Johnson II.

These comments on size may cause a reader to wonder: “How does a new investment company get started?” One answer is that many investors are so careless that a salesman with colorful prospectus can sell them shares in a fund with neither size, age, nor reputation. Or a buyer inclined to gamble may want to “get in on the ground floor,” whatever that means.

Of course, a fund can be large and still have poor or mediocre management. Large size merely gives a fund its perceived stability and the opportunity for a fine performance.

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7 Benefits Of Playing Video Games

Video games can help kids develop a lot of good skills provided they play these games in moderation. Parents focus more on the dangers of these games. What they need to do is consider the possible benefits of playing them on smartphones, PC and other platforms. As a matter of fact, video games can make kids develop certain skills that can help them a lot in their lives. Given below are some of the benefits that kids can enjoy if they play games in moderation.

Problem-solving Skills

As far as the brain development of kids goes, video games play a great role. For instance, the game Legend of Zelda requires its players to plan, negotiate, search and use various approaches to go to the next levels. Aside from this, many latest games like Defenders of the Core and Bakugan trigger problem solving skills.

Interest in Culture and History

Some video games spur on kids to research and read. For instance, Age of Empires, Civilization and Age of Mythology may encourage a kid to take interest in ancient cultures, international relations, geography and world history. Often, these games let kids design or swap maps and different types of content. As a result, they acquire a variety of technical and creative skills. At the same time, they have lots of fun.

Make New Friends

Unlike parents, kids take videos games as a type of social activity. As a matter of fact, these activities allow kids to make new friends to hang out with. According to research studies, boys tend to play with a big group of their online friends.

Encourage Exercise

In a research study, boys learned new moves from video games, especially ones in the sports category. The beauty of it is that they were able to practice the moves on skateboards or in the basketball courts. Aside from this, some players adopted new sports when they played new video games.

The Sense of Competition

For boys, competition is a great thing, especially when they have fun at the same time. So, computer or smartphone games is a great way of triggering the sense of competition in kids. The great thing is that these games are a safer way of expressing their competitive urges.

Chance to Lead

When played in groups, kids take turns based on their skill levels. According to some experts, kids that play online games in groups tend to gain leadership skills like motivating and persuading others. As a matter of fact, multi-player games give boys a chance to take part in the affairs of a mixed-age team.

Opportunity to Teach

Kids help each other play a new game. As a result, they develop another important skill: teaching. Teaching is an art and not everyone is a good teacher. Another benefit of these games is that they help kids develop communication and social skills.

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