How to Buy Mutual Funds Automatically

Many of us don’t have to monitor the stock market nevermind spending time researching it. This is where mutual funds are so great, you get a professional fund manager that works for a credible financial institution that most likely has a track record with some success. If you don’t have time to invest but still want to invest, then you should definitely look at investing in mutual funds.

Choosing the Type of Fund
First things first, you need to consider what kind of fund you are going to invest in. Do you want something really safe like a Money Market or a T-Bill fund? Or do you want something that provides income such as a Fixed-Income or a Corporate Bond fund? Or do you want equity exposure and want to buy a mutual fund that invests in stocks of stock markets around the world?

It really depends on your risk tolerance and how much you can deal with the ups and downs in the market. The more risk, the more volatility you will see in your mutual funds and but the greater the potential returns that you will see. So think it through before you buy a fund.

Choosing the Fund Company
A reputable firm will most likely be the safest but won’t necessarily guarantee the best returns. Just because a fund manager works for a major bank or investment firm, doesn’t mean they can consistently beat out the markets. However, if the firm is large, it could mean that the management fee could be lower than other firms. Management fees are something you should definitely consider when you are looking for a mutual fund since a couple percent could make a big difference in the long run.

Investing Automatically
To invest in mutual funds, you will need an account with a brokerage firm. Any brokerage firm will do, and most of them should let you setup automatic contributions from your bank account. Just like an automatic savings plan, this will help you stay disciplined in investing your money for your financial future.

Usually you can choose the amount you invest. Once you invest the initial amount which could be anywhere from $500 to $5,000 or more you should be able to invest in small increments ranging from $25 to $100. This isn’t too much and you should be able to invest a small amount every paycheque.

Dollar-Cost-Averaging
By being able to invest your funds automatically you are essentially dollar-cost-averaging your trades and creating wealth at the same time. You will buy at the lows and highs of the market and average out your cost base and when the time comes (if ever) to sell the mutual fund you should be looking pretty good especially in a bull market.

Mo2 Thinks
Automatic investments plans are an integral part of being financially responsible. It can help you understand what a few dollars can do in the long run if you invest it consistently. If you can stay disciplined without touching the money that you invest, you will definitely come out on top in the long run. Especially with the times that we are going through now, if you can put away money in the deeply undervalued stock markets, you could potentially come out with huge gains in the years to come, while racking in decent dividends, if you buy stocks with decent dividends.

How to take Advantage of DRIP – 3 Great Things About Dividend Reinvestment Plans

After talking about creating the Ultimate Portfolio and thinking about dividends, I thought it would make sense to write about Dividend Reinvestment Plans (hereafter DRIP). DRIPs are where companies with stocks allow you reinvestment your dividends back into the shares of the company. There could be fees involved and sometime the company that you are buying dividends for allows you to buy more shares at a discount. One thing you should keep in mind is that even though you are not receiving the dividends in cash, you are still required to pay taxes on the dividends.

Feature #1
The best thing about DRIP is that you can buy more shares of a stock without incurring brokerage fees for the purchase. You can save a significant amount of money if you plan on buying more shares of a company since every purchase can cost you anywhere up to and over $100 if you buy through a full service brokerage firm also depending on the amount of shares that you buy. Obviously, you can buy shares of a company for much cheaper through online discount brokerage firms and you can often make purchases for less than $10 per trade.

Feature #2
Another great feature of DRIP is that you may be able to buy the shares of a company that you like at a discount. Some companies give discounts of 5% off of their market share price so that investors will buy more of their stocks. So basically you are saving the commission fee of buying the stock and you also get to buy the stock at a discount, that’s not too bad!

Feature #3
Yet another great feature of DRIP is that you can dollar-cost-average you cost base of the stock. Over time when the stock pays its dividend, you will be able to add to your stock base with the increase of shares from DRIP. This only makes the deal sweater, be sure you read my article about Dollar-Cost-Averaging to get a better idea of what this entails.

Things to Consider When Investing in DRIP
Because you get more shares every time the company pays a dividend, you have to remember that your cost base changes. When this happens you have to keep track of the change because if you sell the shares that you own, you will have to use that new cost base for the purpose of your taxes. Also, remember that you can always opt out of DRIP if you eventually decide that you want cash. Every company may have different rules regarding opting out but it really should not be that complicated as long as you give it some time for the switchover.

Mo2 Thinks
DRIP is a great way to increase the value of your portfolio especially if you don’t need the dividends right away. Many of you might say that you actually do need the dividends, but in reality, most of you don’t. Money that you don’t see, you probably won’t need and by locking away the funds into DRIP it will only help you in the long run by keeping the money safely out of your hands. Until you really need to start taking money out of your portfolio to supplement or replace your current employment income, it’s probably best for you to help your portfolio grow on its own by utilizing DRIP. Remember, your end goal is financial freedom, and it does no good by taking money out of your portfolio on a regular basis. Even if you are getting cash dividends I would suggest that you reinvest in one form or another, even if it isn’t the same stock.

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How to Create Income that Doesn’t Require Any Work

Most of us have a daytime job, we trade our hours of hard work for a wage and that’s usually the main source of our income. But wouldn’t it be nice if you could create a source of income without having to actually work? It isn’t easy but it certainly is doable, let’s look at some options.

Investment Income
A recurring theme on Mo2thinks.com is creating income from your investment portfolio. This could be in the form on interest, distributions, and dividends. By creating a solid investment portfolio you can expect to have continuous income without having to put much work into the portfolio itself. Obviously you have to monitor the portfolio and its performance as well as the stocks within the portfolio, but that definitely beats out having the commute and grind out 8-10 hour days (or more).

Be sure to read my article about “Creating the Ultimate Investment Portfolio.” This series of 3 articles will definitely give you a better insight about creating a investment portfolio that will help you reach you financial goals and provide an income that will supplement and possibly replace the income you have now, meaning you will be financial free.

Creating a Website for an Income
Initially a website is a lot of work and most websites never really go anywhere. It takes a lot of dedication and hard work for a website to really make any money. But once you get the ball rolling, a website can become a very good source of income. There are some on the Internet that make 6 digit annual incomes from their websites and they’re usually passively writing when they have that amount of money rolling in.

I hope to reach that level one-day, but in the meantime I have my work cut out for me. But more importantly, I actually enjoy writing and it’s a wonderful feeling to have readers come back time and time again to see what I have to say, so I can’t thank you enough for taking the time out of your day to come here and read what I am writing, it really means a lot to me.

Other Sources of Income
A great passive source income is Royalties. You have something and other people you to use that “something” over and over and you really don’t have to do anything more. The money just keeps rolling in. A good example of this is music. Imagine how much the Beatles have made over the years with “Yesterday” or “Eight Days a Week” being aired countless times over and over.

There are affiliate programs on the Internet where you can get commission for a lead or sale. These programs can also lead to generating a decent source of income if you have a good reader base. You can get a set dollar amount or a percentage of a sale and this can easily rack up as you have more and more people visit your website.

Mo2 Thinks
In life we all have different goals. But financial freedom is one of those goals that most of us probably have. Wouldn’t it be nice to be able to wake up in the morning and not have to worry about commuting to work, better yet not have to worry about paying bills? It’s possible if you keep working at it not in terms working hard hours at work but working at creating supplement and passive income sources.

If you can get to the point where those passive income sources can replace your current employment income and can maintain your current lifestyle, then you can quit working and do things that you really enjoy doing. It isn’t done easily but it definitely is worth it in the long run, just chip away at it slowly but surely and you will definitely be happy you did in the long run! Be sure to read my article about “Creating the Ultimate Investment Portfolio”! Thank you as always for reading my articles!