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Here’s Why You Should Invest in Mutual Funds – NextAdvisor

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Mutual funds allow you to create a well-diversified portfolio without the burden of choosing individual stocks and bonds. Whether you’re investing in a retirement account or a taxable brokerage account, mutual funds might be the right tool to help you grow wealth.

But as with any investment, it’s important to do your research and understand just what you’re getting yourself into. Keep reading to learn how mutual funds work, how to add them to your investment portfolio, and a few potential downsides to be aware of.

What Is a Mutual Fund?

A mutual fund is a type of pooled investment that allows investors to gain exposure to many different assets through a single investment. The fund pools money from its investors and uses it to buy stocks, bonds, and other securities. Each investor benefits from their small percentage of each underlying asset without owning them directly. It’s an efficient way to build wealth and plan for financial independence. 

How Do Mutual Funds Make You Money? 

There are three ways you can make money with mutual funds. The first is through dividends, which are regular cash payouts from the underlying stocks and bonds. In fact, some mutual funds are designed to provide a regular source of income for investors.

The second is capital gains, which means selling a fund that has increased in price. At the end of the year, these funds distribute the capital gains to its investors. “You earn money the same way you’d earn money investing in most other ways,” says Erin Lowry, the author of Broke Millennial Takes on Investing. “If the value of your investments has increased by the time you sell, then you’ve made money.”

The third way is through net asset value. Mutual funds trade at the end of trading day and this is when their assets are valued. These assets are known as NAV, or net asset value. It’s the price per mutual fund share. As these funds increase, the price to purchase shares does too. There are no immediate distributions but you’d make money should you decide to sell it. 

“Mutual funds are often products that are purchased for a longer time-horizon (fancy investing jargon for time until you need the money and therefore sell your investment) instead of a quick buy and sell as soon as the price of the fund has increased,” Lowry said.

Can you lose money in a mutual fund?

While it’s definitely possible to grow wealth in a mutual fund, it’s also possible to lose money. Stock mutual funds, in particular, are closely tied to the performance of the stock market

As an example, look at the Vanguard 500 Index Fund (VFIAX), which tracks the performance of the S&P 500. In 2018, the fund actually had a negative return of -4.38%. And during the recession in 2008, it had a negative return of -37%. But over long periods of time, the index has gone steadily up. There hasn’t been a single 20-year period in its history in which the S&P 500 posted negative returns, according to data compiled by Measure of a Plan

The name of the game when investing in mutual funds is long-term. Investors don’t want to worry about downturns in the market, because the goal is for mutual funds to make money for future goals such as retirement. 

“All investments are a risk no matter the type,” Lowry said. “That holds true for real estate, art, stocks, angel investing — you name it. So yes, mutual funds can lose money. It’s important to remember though that you haven’t actually ‘locked in your losses’ until you sell.”

What Are Different Types of Mutual Funds?

Mutual funds generally fall into four categories depending on the type of asset they invest in.

First, equity funds invest in the stocks of publicly traded companies. These funds might track the performance of a particular stock index like the S&P 500 or the Dow Jones Industrial Average. They could also invest in a particular sector or type of stock, such as healthcare industry mutual funds or growth mutual funds.

Another type of mutual fund is a bond fund, which invests in bonds and other debt securities. Bond funds can hold both corporate and government bonds, though they often specialize in one or the other.

Next, money market mutual funds invest in short-term debt securities that are of generally high quality. In fact, these funds are legally required to only invest in these high-quality investments, and so they tend to be lower-risk investments.

Finally, a target date fund or lifecycle fund can hold a variety of different securities, including stocks, bonds, and more. These funds often identify a particular retirement year. For example, a target date fund for investors who plan to retire in 2060 would start with a more aggressive investment approach, but reduce the fund’s risk as the predetermined retirement date nears.

Active vs. Passive Mutual Funds

Mutual funds are either actively or passively managed. A passive fund, more commonly known as an index fund, tracks the performance of a particular market index. For example, you could invest in an index fund that tracks the performance of the S&P 500.

In the case of actively managed funds, there’s a fund manager who regularly buys and sells assets within the fund. With these funds, the goal isn’t simply to match the performance of the market. Instead, they’re trying to beat the market.

“A managed fund is predicated on the notion that there can be investment management acumen that you can pay for that will deliver better results,” said Jill Schlesinger, CFP and the host of the Jill on Money podcast. “Study after study shows it’s very difficult to beat the performance of an index, partially because those managed funds cost money. You may be able to beat the index, but then you factor in the cost of the management and the numbers don’t look so hot.” 

Experts say passive funds are the way to go.

How to Get Started Investing in Mutual Funds

For most investors, their first exposure to mutual funds is through a retirement account like a 401(k) or an individual retirement account (IRA). Many employer-sponsored retirement plans offer these investments because of the simplicity and diversification they provide.

But you can also invest in mutual funds through a taxable brokerage account. No matter what type of account you use to invest, the process is as quick as logging into your account and selecting your investments.

Pro Tip

When it comes to investing, the most important step is getting started. Mutual funds offer a well-diversified portfolio to help you build a complete portfolio in just a few investments.

But it’s important that you do a bit of research upfront. Pay attention to the objectives of the fund to ensure it fits with your investment goals. Additionally, be sure to look at what fees the fund charges. The higher the fees, the less of your returns ultimately remain in your portfolio. You want funds that have low expense ratios. Typically a low expense ratio falls somewhere near .2%. Expense ratios with 1% are on the higher side and experts agree those are the ones you should stay away from. 

“The lowest barrier to entry is to just choose either a target date fund which targets the date in the future you’ll start to need some of your money,” Schlesinger said. “If you took a stock index fund and a bond index fund and an international index fund and those were your three baby steps, that would be a nice place to start.”

But according to Schlesinger, the most important thing is simply to get started. While it’s important to choose a fund that fits with your goals and risk tolerance, don’t let fear of the unknown prevent you from investing early and often. Do your research and start investing as soon as you can.

“As much time as people spend on investments, I wish we spent more time talking about the habit of getting into the habit of saving,” Schlesinger said. “The most important thing investors can do is just get into the habit of saving and investing consistently over time.”

Mutual Fund Pros and Cons

Mutual fund investing comes with some major advantages. First, because of the number of assets they invest in, mutual funds make it easy to create a well-diversified portfolio with just a few holdings. And because a professional manages the fund on investors’ behalf, you don’t have to worry about choosing your own investments.

Another advantage of mutual funds is that they often have low fees, especially in the case of index mutual funds. It’s not uncommon to find index passively-managed funds with expense ratios below 0.05%.

That being said, there are also some downsides to mutual fund investing. First, while index fees tend to have low fees, actively managed funds can have higher fees. The reason for these higher fees is that there’s a fund manager taking a hands-on role in building the fund. 

“An actively managed fund will cost more than a passively managed fund,” Lowry said. “That’s not necessarily a reason not to purchase an actively managed fund, but a consideration.”

For some investors, mutual funds may also lack the control they prefer. Mutual funds also trade at the end of the day. For investors who want more control over when a trade happens and the price they pay, exchange-traded funds (ETFs) might be a better fit.

Mutual Fund FAQs

How much can you earn in a mutual fund?

There are literally thousands of mutual funds on the market, and the average return is different for each fund. That being said, a total stock market index mutual fund could expect to see average annual returns of about 10%.

Can you lose money in mutual funds?

It is possible to lose money in a mutual fund if the value of your shares decreases after you purchase them and you sell the investment before recovering your losses.

How much does it cost to invest in mutual funds?

The cost to invest in a mutual fund depends on the particular fund you choose. While actively managed funds have expense ratios that near or exceed 1.0%, passively managed funds can have fees below 0.05%. Some total market index funds carry no fees at all.

Are mutual funds a safe investment?

Any time you invest, you risk losing your money. That being said, because mutual funds are diversified and give you exposure to many assets at once, they’re generally considered safer than investing in individual stocks.

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International export offices worth the investment, according to Saskatchewan government – Global News

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The Saskatchewan government is moving full steam ahead on its plan to open four new international export offices.

The offices will be opening in London, United Kingdom; Dubai, United Arab Emirates; Mexico City, Mexico; and Ho Chi Minh City, Vietnam.

The move will give Saskatchewan a stronger presence in those regions, by expanding the province’s international network, according to the government.

Read more:
Sask. eyes nuclear reactors, international offices, major tech investment in growth plan

The province says the establishment of these spaces is being implemented in an effort to facilitate investment trade efforts to grow and diversify Saskatchewan’s exports, assisting in COVID-19 economic recovery.

“Now we’re going through the process of hiring managing directors for those offices and we hope to have two of them open in November and two more in the first quarter of the calendar year,” said Jeremy Harrison, Saskatchewan Minister of Trade and Export Development.

The number of international offices will be doubling as the province already has a permanent presence in Japan, India, Singapore and China.

The offices in Japan, India and Singapore were open for businesses earlier this year, whereas the one in Shanghai, China has been operational since 2010.

Staff at the offices work full-time for the provincial government to promote trade and economic interests.

Harrison says despite the pandemic, Saskatchewan companies are able to export approximately 65 per cent of what they produce.

Some popular export items include potash, oil, wheat, canola seeds, lentils, canola oil, peas, canola meal, soya beans, and barley.


Some popular items Saskatchewan exports.


Canada Trade Data Online

Just like the cost to export these products, operating those international offices isn’t cheap.

Read more:
Saskatchewan opening 3 trade offices in Asia with the help of Stephen Harper

“It’s about a million dollars per year, per office, our entire international engagement will be about $9 million this year with the eight offices and the administration associated with that, but I mean with the return on investment being over $30 billion of international trade last year…” Harrison explained.

“Of course the offices aren’t responsible for every dollar of that trade, but that being said, having that long-term, on-the-ground presence really has paid significant dividends to the province, we would view it as being a tremendous return on investment,” he added.

Harrison also says with Saskatchewan negotiating its own deals, rather than the Canadian government, the province has been able to secure lower tariffs.


Click to play video: 'Tension with China grows with blow to Canadian canola farmers'



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Tension with China grows with blow to Canadian canola farmers


Tension with China grows with blow to Canadian canola farmers – Mar 5, 2019

The trade and export development minister goes on to say the Saskatchewan government decided to take trade matters into its own hands, opposed to relying on the federal government because it believes it can secure better deals overall.

In 2019, the minister, with the help of former Conservative Canadian Prime Minister Stephen Harper and his company called Harper and Associates, lobbied senior officials with the government of India to lower tariffs on Saskatchewan peas and lentils.

Harper and Associates is being paid for its role in assisting with the establishment of the international offices. The contract is yearly, and is renewed annually.

Harrison said the meeting resulted in the province temporarily reducing the tariff from 30 per cent to 10 per cent from June to August in 2020 and onwards.

Read more:
Saskatchewan prepares for trade with United States under Biden administration

Jason Childs, associate professor of economics with the University of Regina explains why the provincial government may have felt enticed not to leave trade matters to federal government officials.

“I think the perception that Saskatchewan feels underrepresented abroad and our interests aren’t being served, I think that says a lot about what’s going on,” Childs said.

He adds international offices are not uncommon among provinces in Canada, and they are supported across party lines.


Click to play video: 'International trade essential to Alberta’s food trade: Minister of Agriculture'



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International trade essential to Alberta’s food trade: Minister of Agriculture


International trade essential to Alberta’s food trade: Minister of Agriculture – Mar 26, 2020

By Saskatchewan being at the helm of its own trading decisions, Childs says the province can head trade missions that are dedicated to vouching for the specific agricultural products the province has to offer the rest of the world.

“So, the products we produce here in Saskatchewan, are going to be radically different than say the products produced in Quebec or southern Ontario, which are much more manufacturing-driven,” Childs said.

He says if the Canadian government was making these deals, then time government officials spend on having to represent the other jurisdictions across the country would be split.

Childs continues to say there are some notable benefits to Saskatchewan having its own international trading partners to advocate its own interests to, rather than other Canadian provinces or somewhere else in North America.

“Sheer population, sheer market size, the Canadian market is only 38 million people, whereas some of the countries we’re talking about Vietnam, China, India and the U.K., there’s hundreds of millions, billions of people involved, right so it’s a much larger market,” Childs said.

Harrison says these exports will bring numerous job opportunities to residents.

—With files from Mickey Djuric

© 2021 Global News, a division of Corus Entertainment Inc.

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Israeli developer of popular apps for creators nabs $130m investment – The Times of Israel

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Lightricks, a Jerusalem-based software startup that makes photo and video editing apps, raised $130 million in a Series D investment round at a valuation of $1.8 billion, the company announced on Sunday.

The round was co-led by New York-based global private equity and venture capital firm Insight Partners and Hanaco Venture Capital, with participation from existing investors Goldman Sachs Asset Management, Clal Tech, Harel Insurance and Finance and Greycroft. New investors Migdal Insurance, Altshuler Shaham and Shavit Capital also participated in the round.

Founded in 2013, Lightricks developed a number of photo and video editing tools that are widely popular with content creators on social media networks, especially Instagram, the highly visual content platform owned by Facebook. The company’s suite of 11 apps including Facetune, Facetune Video, and Videoleap has over 500 million downloads worldwide across Android and Apple users, Lightricks has said.

Facetune, the company’s flagship app used to enhance and retouch photos (think tooth whitening and blemish removal) has previously earned accolades such as Apple’s App of the Year and Google Play’s Best of the Year. The app VideoLeap, which offers powerful editing tools for video content, is one of the most widely used tools to create Tik Tok content, the company indicated.

The apps are geared for individual consumers, beginners and professionals, as well as businesses and brands. Lightricks uses a freemium model for the tools, which offers some functions for free while other features require payment to unlock.

Dr. Zeev Farbman, co-founder and CEO of Lightricks, told The Times of Israel on Sunday that business and brand customers present a huge opportunity for the company as it establishes itself “not just as a toolmaker but also a service provider for content creation.”

“We are looking to help people and businesses draw in their audience and engage with them,” he said.

The company said in a statement that it will use the fresh funding to expand and create new platforms and tools for content creators in an effort to “become a one-stop-shop for resources including creative tools, services, and monetization opportunities.”

Farbman said the funding is a sort of “war chest” with which to acquire similar or related companies and startups to leverage their user base for Lightricks’s growth.

He estimated that the company might be “ready for IPO [initial public offering] in about a year.”

Lightricks’ Facetune app. (Courtesy)

“Our mission has always been to continuously strive to bring creators the most advanced technology and help them find new ways to express themselves,” Farbman said in the company statement. “The rise of the creator economy has only exacerbated the need of mobile users to streamline the content creation and monetization processes. With this latest funding, we’re able to help elevate our users’ creativity and capabilities with continued advancements to our technology and offering.”

The creator economy — an industry of bloggers, influencers, brands, photographers and videographers monetizing their online presence — has an estimated total market size of $100 billion and has seen $1.3 billion in funding for US creators in 2021 alone, according to New York-based research firm CB Insights.

Lightricks reported “tremendous growth” over the past year with the COVID-19 health crisis driving people to tap their creativity “to express themselves and earn income during the pandemic.” The company says it saw a 90 percent increase in app usage across its creativity tools in the US alone.

Worldwide, it says, its users develop over a billion creations per year on the company’s apps.

Farbman confirmed that Instagram is the biggest platform for users of Lightricks’ tools “with Tik Tok playing a bigger part overall and Snap seeing a resurgence.”

“The creator economy has changed the way we, as a society, experience social networks,” said Pasha Romanovski, co-founding partner of Hanaco Ventures. “Audiences constantly consume information through the different content channels daily. Lightricks’ platform enables creators to have a broader, more professional and higher-quality set of tools to optimize content.”

Lightricks was founded by Farbman, Nir Pochter, Yaron Inger, Amit Goldstein, Itai Tsiddon, almost all with a computer science or artificial intelligence background. The company is headquartered in Jerusalem with offices in the UK. Most recently, Lightricks opened an office in China to focus on tapping into the country’s huge potential user base. The company employs approximately 500 people.

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Applications now open for 2022 Halton Region Community Investment funding – Oakville News

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Community organizations can now submit applications to the Halton Region Community Investment Fund (HRCIF) for non-profit human service programs and initiatives that enhance the health, safety and well-being of Halton residents. Applicants must describe how they will incorporate the latest COVID-19 public health guidance and how their program or initiative aligns with Halton’s overall approach to community safety and well-being.

“We are pleased to support the important work of local non-profits through the Halton Region Community Investment Fund,” said Regional Chair Gary Carr. “I would like to thank these organizations for delivering vital services to some of our most vulnerable residents and working alongside us to keep Halton a safe and healthy community.”

Funding is available in single year and multi-year grants through two categories:

  • Category One: Provides up to one year of funding, to a maximum of $30,000. Non-profit, charitable or unincorporated community organizations can apply to fund short-term, small capital and/or innovative projects.
  • Category Two: Provides up to three years of funding to registered charities for programs and initiatives.

Organizations that meet eligibility criteria may submit one application in each funding category. The initial application deadline for both categories is Monday, November 1, 2021 at 2 p.m. Additional opportunities to apply for HRCIF funding will be available in 2022 for programs and initiatives that help respond to emerging community needs.

The Region will host three virtual information sessions to help community organizations learn about the HRCIF and the application process:

  • Friday, September 24 from 10 a.m. to noon
  • Wednesday, September 29 from 2 to 4 p.m.
  • Tuesday, October 5 from 6 to 8 p.m.

For more information about HRCIF guidelines, upcoming virtual information sessions and the application process, please visit the HRCIF webpage on halton.ca or call 311.

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