Posts Tagged ‘Mutual Funds’ – Account Update

I posted about investment service couple of weeks ago, compared their website with others and recommended to check it out. I also mentioned about their $25 bonus offering for account opened with $250 initial deposit.

I just want to post an update about my experience and performance of my portfolio so far since I opened my the account. I know it has just been couple of weeks and cannot expect so much growth but to my surprise, I saw a 1% growth for 10 days even with stock market rollergoaster ride. That’s the advantage of investing in ETF’s and index funds which are so diversified.

Anyway, let me share my experience as likes and Dislikes.


  1. I got the $25 bonus amount same day I opened and initiated my $300 first deposit.

  2. As I said in my earlier post, their website interface is very easy to use, fast and really understandable even for non-financial saavy consumer which they are targeting. They really spent good amount of time and research to study and design the website.

  3. Fast money transfer with quick bank authentication and also provides easy way to setup automatic savings.

  4. Summary page delivers the overall picture of the portfolio as soon user logs in with amount invested and amount earned figures for the allocation model selected.

  5. Activity page gives the monthly activity like composition of various securities purchases. Below is the composition for securities for my initial deposit with allocation model set to 100% stocks.

  6. I used their advise tool to change my allocation and it was easy to use compared to TRoweprice and other investment companies tools I come across. As a guy who passed CFP exam, I have seen some complication diversification strategies but this one makes it easier for ordinary consumer. It allows to set you goals and name it as well to identify them accordingly.

  7. I like the quick and dirty performance charts with comparison options to keep us updated on the analysis section.


  1. The important thing missing is better user security. In this day and age where identity theft is all over the place, any financial sites like this one should have more security to make users secured. They need to improve their user authentication process to follow the federally mandated security procedures to add more steps in user login. Most of the investment companies these days needs more than just username and password.  I did notice they have session time out feature which alerts if the session is idle of for few minutes which is good.

  2. They limit setting only one goal for an account. May be they can take this to another level by allowing users to add different goals and set allocation to those accordingly and split their deposit to those goals monthly. That would be good one for people who multiple long term goals.

  3. It would be better to show the current portfolio allocation/diversification on the Allocation page instead of just giving them in activity page. 

Over all, likes out weighs the dislikes and I should say I am really satisfied choosing to go with as my another vehicle to save for retirement goal. I hope they keep their promise by diversifying the portfolio regularly by adding more ETF’s to keep returns coming to our portfolio. I am little skeptical about their long term survival but if I can guess the future with past knowledge, these smaller investment companies are good take over candidates by bigger fishes which sometimes spoils the party.

We just have to wait and watch…

Happy Investing!!

Efficient Mutual Fund Investing by Avoiding Taxes

Mutual funds have been one of the safest avenues for many American to invest for the future whether its for retirement or kids education. Mutual fund companies have gained their reputation by showing good returns and solid growth. Many mutual fund companies have evolved strongly by good fund analysis with strong results and catering to various needs of the investor gaining investor sentiment from novice to veterans.

Many of us invest in mutual funds because it is bit safe and saves time as the fund managers are paid to do the job of portfolio analysis, effective investment by incorporating diversification and asset allocation strategies according to each fund’s goal. Another main reason, mutual funds are less expensive for amount of diversification and assets involved in the funds. If someone has to do the same kinda of diversification, it would cost more on transaction fees alone not to add other cost. So it is not prudent unless you have big asset to handle.

Above all, we look for good, solid return and performance. On the downside, we really don’t pay attention to the taxes on mutual fund earnings. We all know not all mutual funds are made equal but all them have the tax component associated with it. Taxes can be biggest drag on the funds performance. Every year many investors lose certain percentage points of fund returns because they don’t try to lower their taxes.

It is not a big science or need to learn lot of tax codes to implement it. Just by keeping certain aspects of tax saving concepts in mind and adapting them which will help you portfolio. Here is the list of 3 simple strategies/concepts you can follow while trying to invest in mutual funds.

1. Low Turnover Ratio – Check for a fund’s portfolio turnover ratio which is the percentage of its assets that were sold during the most recent quarter or year. If the fund has high turnover ration mean it is a more aggressive fund. For example, a turnover of 500% means a fund sold the equivalent of its entire portfolio of securities five times during the year. That raises a fund’s expenses, and the likelihood of capital gains taxes. It is a good idea to limit your tax consequences by avoiding funds that trade most of their holdings in a given year. That means being wary of turnover ratios above 50%.

2. After-tax Return – Like you calculate any material cost after taxes, calculate fund tax return after taxes. So look beyond a mutual fund’s pretax return is wise thing to do. After tax returns will give the right picture of profit margin after all the tax deductions. The tax-adjusted return accounts for capital gains, dividends and interest.

3. Capital Gain – If you are worried about big tax bill, it is good idea to analyze a funds possible capital gain exposure before you buy it. Possible exposure tallies capital gains that haven’t been distributed to shareholders and divides that number by total net assets.

If you don’t want to go through the head-ache of analysing every funds, you have option to go with tax-efficient funds or ETF’s.

Tax Efficient funds, also called as Tax Advantage  funds, are structured and operated on reducing the tax liability faced by its shareholders. It uses variety of techniques to keep the taxes low by purchasing tax-free (or low taxed) investments such as municipal bonds, Low turnover ratio, Offsetting gains by selling other stocks at a loss and Investing in lower-dividend-paying stocks to minimize passthrough dividends.

In conclusion, mutual fund investment can really reap better rewards if you give little bit of attention every year and plan accordingly by lowering taxes.

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Good news for Small Investors from Vanguard

Vanguard is always considered to be best among the bunch on mutual fund arena. They maintain their high standard in many ways by giving expense ratio less on their fund, high minimim fund required to open an account, knowledgeable managers doing good job analyzing the market well enough to manage the fund and so much more. 

If you are wondering what I mean Target funds? Target funds have been famous for some years now for retirement and education portfolios. The fund is diversified to have different asset classes depending on the target year. It uses sliding asset allocator model. They usually start with aggressive on stocks and become more conservative with bonds over time.

For example, if you are 35 and you selected the target year for retirement to be 2041 and chose 2040 target fund. The asset allocation in the fund will be more aggressive with stocks 90% and bonds 10% as an example. Once the years progress,the asset allocation changes to 50-50% and later to 20%-80% and so forth

Until last week, they had minimum $3000 required to open any funds including Target Retirement fund. Since last week, they relaxed the requirement and made a big move to cut down their minimum open fund needed. Now an young investor who like to take advantage of the vanguard Target Retirement portfolio, they only need $1000. It is a smart move by them to attract young, small time investors.

Check out more details at

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