Retirement: Mutual Funds

Retirement Growth & Dividends

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A successful and validated method of retirement investment growth is investing and reinvesting in IRA mutual funds having gains in good times and minimal losses in bad times. IRAs (Individual Retirement Accounts) are saving accounts to help individuals save money for retirement. IRAs provide tax breaks that will help you to build and enlarge retirement savings at an accelerated pace. IRAs are investments that you manage and control. There is no churning of your accounts.

MUTUAL FUNDS: Mutual funds are security investments of companies that collect funds from the investor and pool the assets for the purpose of building a portfolio of securities according to established objectives. The mutual fund portfolio categories (objectives) include large-cap, small-cap, mid-cap, equity income, specialty, real estate, technology, balanced, bonds, etc. Top mutual funds vary month-to-month, year-to-year. The valuable ingredients that makeup a successful mutual fund consist of performance, fund category rank, income distribution, return, and long-term gains. As of September 11 , 2015, there are 24 Equity mutual funds with a 3-year average annual return of 12.74% and 8 Bond mutual funds with a 3-year average of 3.40%.

1. Daily Performance: percent of change in a mutual fund's net asset value (share price). The change compares the opening share price to the closing share price. The change is then added or subtracted from the year-to-date return percentage. Year-To-Date Performance: A comparison of the current market closing share price vs. the opening share price as of the first market day of the year. The analysis reveals percent of gain or loss of mutual fund's net asset. EXAMPLE: As of July 6, 2015, the closing net asset value (share price) of a mutual fund was $20.00 per share. The next market day; the closing N.A.V. is $20.50. The opening market of July 8, 2015 would show $20.50 share price and 2.50% gain for year-to-date. Every mutual fund is assigned to a fund category. If, for example, a mutual fund's objective is Flexible Portfolio, the fund investment category is Flexible Portfolio. Presently, there are 577 funds in this category. If a mutual fund's rank (return comparison) is 10%, the mutual fund is in the top 58 year-to-date performances.

2. Dividend Distribution The dividend (capital gain and/or income) earned by a mutual fund is distributed to the shareholders. A capital gain occurs when a mutual fund sells an investment security for a higher price than originally paid. A capital loss is realized when the fund sells an investment security for a lower price than originally paid. If the investment security is held by the fund for more than one year, the gain or loss will be a “long-term” capital gain or loss. Mutual funds that hold a investment security for less than one years is a “short-term” capital gain or loss. Mutual fund gains and losses are netted together and when the fund has a net gain, that gain is usually distributed to the share holder once a year. By law, mutual funds must pay out income and realized capital gains to shareholders. The distributions are taken from the mutual fund’s assets which results in a net asset value reduction of the same amount.

3.Reinvesting all distribution in the Individual Retirement Account results in dollar-cost-averaging, tax avoidance and mutual fund shares being increased. Income distribution is quarterly (March, June, September & December). The shareholder receiving a mutual fund distribution has the option to either reinvest the income or receive payment in full amount. 3. Return on Investment: The return of a mutual fund includes all income, capital gain distributions, and the performance for year-to-date. Therefore, the return on investment is analyzed for one year, three years, five years and 10 years. If you are not satisfied with the performance of an IRA or 401(k) account from a previous employer, rollover the account into another successful investment. A good rule to follow before making an investment, is to compare the 3-year, 5-year, and 10-year return performance of a mutual fund.

INDIVIDUAL RETIREMENT ACCOUNT: Knowing which mutual fund investment returns are most successful, in bad & good times, is always beneficial.

*IRA Benefit 1: Establishes the foundation for building and strengthening a prosperous retirement nest egg.

*IRA Benefit 2: Investments can include mutual funds, stocks, bonds, CD's, etc. "Can not" invest in Life insurance or collectibles.

*IRA Benefit 3: Annual success of achieving goals is assigned to a Mutual Fund Trustee. Individual investor has complete control and direction of the account. Unsatisfactory investments can be rolled over.

*IRA Benefit 4: Mutual Fund account, Professional Investment Team daily monitors the perspective assets and objectives to achieve goals.

*IRA Benefit 5: Dollar-cost-averaging achieved, mutual fund income distribution is reinvested regularly. Shares are added to the account at the low price.

*IRA Benefit 6: Taxes on gains and income are deferred until reaching age 70½. However, no early withdraws from account can be made.

*IRA Benefit 7: No churning of investment. Investor has complete control of account. If IRA is unsuccessful, it can be rolled over.

*IRA Benefit #8: Saving a total of $10,000 and invested at 5% average return for 5 years = $12,762.60; 10 years = $16,288.90; 15 years = $20,789.20; 20 years = $26,532.90. Tax deferred until reaching the age of 70½.

Mutual Interest Data Service, Ltd.
P.O Box 55365
Trenton, N.J. 08638