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Learn how funds work and how to set up a well balanced portfolio that's right for you.August 2007
In this tutorial you'll learn how funds work and how to select the right funds for your goals. We've also included tips on record keeping and tackling your taxes. Finally, you can look over examples of well balanced portfolios of good performing funds in Kiplinger's portfolio picks.
Why Mutual Funds?Funds offer plenty of benefits for busy investors. Here's a quick review of how they can work for you.
Sales Loads and Other ChargesLearn about the expenses funds charge and which ones you can avoid.
Focus on CategoriesA fund's performance depends on what it buys. Each category carries its own level of risk ... and reward.
Build a Solid PortfolioA balanced collection of funds will serve you better than a collection of the latest high fliers.
Plus: Kiplinger's Portfolios
Start Your SearchFrom first choice to final check, here's how to find the best funds for you.
Tips for the New Fund OwnerWhat paperwork to keep, how to track your investments and when to say "sell."
Hang onto Your ProfitsKeeping careful records, and understanding cost-basis rules will prevent you from overpaying your taxes.
Adapted from Kiplinger’s Practical Guide to Your Money, by the Editors of Kiplinger’s Personal Finance magazine (Kaplan Publishing. Copyright 2005 The Kiplinger Washington Editors, Inc.) Available wherever books are sold or direct at kiplinger.com/store/books.
Carmakers have introduced a fresh marketing strategy to attract your business: lower sticker prices.
By Jessica L. AndersonSeptember 22, 2010
Retailers have long manipulated consumers by marking up merchandise, then promoting sales to clear inventory. Car dealers know how to play the game, too. Their marketing ploys often take the form of manufacturer's cash rebates and low-rate financing. But car companies hate offering these incentives because relying on them to sell vehicles lowers long-term resale values across the product line.
So carmakers have introduced a fresh marketing strategy to attract your business: lower sticker prices. For the 2011 model year, several redesigned vehicles feature more amenities at prices that are the same as or less than prices for the outgoing models. This follows a trend that began with the 2010 model year (see my column from last year).
Biggest bargains. The starting price of the redesigned 2011 Volkswagen Jetta drops by $1,590, to $16,765, including the destination charge. A sharply creased exterior bids adieu to the prosaic design of the past, and added length gives the Jetta a bigger backseat but doesn't hurt its classic German-engineered drivability. A smaller engine in the base model improves fuel economy to 34 miles per gallon on the highway (24 mpg in the city). The savings top out at $2,180 on the SE model ($18,965).
Savings on the sixth-generation BMW 5 series range from $900 (on the top-of-the-line 550i, now $60,575) to $1,650 (on the mid-level 535i, now $50,475). Despite the lower prices, the 5-series models get a design upgrade that echoes the sleeker lines of the 7 series; they're also more powerful and have better fuel efficiency. The 3.0-liter six-cylinder engine in the 528i (starting price: $46,825) boosts the car's mileage to 32 mpg highway, 22 city; the 550i now has a turbocharged V8, which bumps its highway mileage (with automatic) to 25 mpg and its city mileage to 17 mpg. The new 5-series cars also earn a coveted Top Safety Pick award from the Insurance Institute for Highway Safety.
More aggressive pricing moves come from Suzuki and Lincoln. The Suzuki SX4 SportBack is nearly $1,500 cheaper -- even without a redesign this year. The compact hatchback, which has more power and legroom than a Honda Fit, now starts at a more palatable $17,244, and Suzuki has added standard rear side airbags. The new Lincoln MKZ Hybrid sedan has the same price as the gas-engine model ($35,180), erasing the average hybrid premium of $5,500. Mileage is 41 mpg in the city (36 on the highway) versus the gas-engine's 18 mpg city, 27 highway.
Utility reborn. The Ford Explorer dumps its truck heritage and reinvents itself as a crossover for 2011. The V6-powered version gets 20% better fuel economy and starts at $1,100 less ($28,995) than the outgoing model; an optional four-cylinder EcoBoost engine -- similar to the one offered on the Taurus SHO and Flex -- improves mileage by 30%.
The redesigned Kia Sorento also moves to crossover construction for 2011. Kia adds a four-cylinder model for 2011 and drops the starting price by $1,505, to $20,790. The Sorento has a sleek new shape and a roomier interior that now seats up to seven. It is also an IIHS Top Safety Pick.
A more luxurious and spacious interior graces the redesigned Jeep Grand Cherokee. Fuel efficiency improves to 23 mpg on the highway (city mileage stays the same, at 16 mpg). Its starting price is $30,995 (nearly $500 less than last year), and the price drops by up to $1,160 for the rear-wheel-drive Limited (now $37,100). The Grand Cherokee wins IIHS Top Safety Pick honors.
Seating up to eight, with oodles of storage, the third-generation Toyota Sienna is taking on the dull-minivan stereotype head-on with ads touting it as the "swagger wagon" (search for it on YouTube.com). The Sienna wins an IIHS Top Safety Pick, and it, too, is cheaper than it was last year: The CE starts at $25,070 ($280 less) and the LE starts at $26,155 (a $720 savings).
A mediocre or nonexistent credit history could cost you hundreds or thousands of dollars. Learn the secrets to build a stellar score while you're young.By Erin BurtFebruary 22, 2007
How much do you know about your credit score? That three-digit number is tied inseparably to our financial lives, yet many young adults haven't given it the attention it deserves. Your score can play a role in your ability to rent an apartment, qualify for a loan or even get a job. It can also affect how much you'll pay on interest charges, insurance and even cell phone contracts.
Make building a stellar score a priority while you're young and you could actually save hundreds or thousands of dollars over your lifetime. However, if you don't take your credit seriously, a bad score -- or even a nonexistent score -- will cost you.
Your credit score is basically used to predict the possibility that you won't pay your bills. They are compiled by Fair, Isaac & Co., and are sometimes called FICO scores. The top possible number is 850, but topping 800 is probably unrealistic. A median score usually falls in the 720-to-725 range, meaning half of consumers fall above that point, half below. Even if you haven't given your FICO score much thought, there are plenty of others who have or will, so you'll want to aim for the mid-700s to make the best impression on:
1. Lenders. This group is the one most people associate with their credit score. Having a good rating can help you qualify for the best rates on a mortgage, car loan, credit card and even a small business loan if you've got that entrepreneurial spirit. A nonexistent score can make it impossible for you to qualify for a loan or credit card at all. (Learn how to overcome this obstacle below.)
2. Insurers. The majority of auto insurance companies use your credit score when determining your rates, and the practice is also common among home insurers. A recent survey by Consumer Reports among eight popular auto insurers found that drivers with top scores could pay up to 31% less on their premiums than if credit scoring wasn't factored in, while those with bad scores would pay as much as 143% more.
3. Landlords. Increasingly, you may need a good credit score to rent an apartment. Landlords view your credit rating as a measure of your responsibility to pay bills on time. If your rating is below par or you don't have a credit score yet, you may have to find a friend or relative to co-sign your lease, or you could be required to pay a higher rent or security deposit.
4. Employers. When you're applying for a job, potential employers can pull your credit report as long as they notify you first. And, in fact, about 35% of them do, according to the Society for Human Resource Management. Why? Bad credit can be a signal of irresponsibility, or employers might be worried you'll spend more time fretting about your financial woes than concentrating on the job.
5. Cell phone carriers. Even cell phone service providers may check your credit before signing you up for a plan. They want to make sure you're responsible and will pay your bill each month. Some utility providers may pull your report as well. If you have credit issues, you may not qualify for the best plan rates, you could be required to pay a deposit, or you could get turned down.
So, how much does your credit score affect your finances? Say we have two friends, Jim and Mark. Both took steps right out of college to start building a credit report by getting their first credit cards and an auto loan. Jim made all his payments on time, never maxed out his credit cards and often paid more than the minimum required. Mark, however, frequently paid late, overextended his cards and applied for new credit to bail him out of his mismanaged debts.
Now both are ready to buy homes, and they each apply for a $250,000 30-year mortgage. Through Jim's responsibility, he's been able to build a score of 750, qualifying him for a loan with a 6.2% interest rate, according to Fair Isaac, a credit scoring bureau. Mark's score comes in around 650, netting him a rate at 7.3% interest. Jim's monthly mortgage payment is $1,536 while Mark pays $1,718 -- a difference of $182 per month. If they both live in their homes for ten years before selling or refinancing, Mark will pay $21,840 more in monthly payments than his friend. Ouch.
Mark also gets burned on a new auto loan -- paying $1,332 more over three years on a $20,000 loan than Jim. Plus, Mark probably paid much more for his car insurance than Jim.
Even if you don't plan on applying for a loan, or getting a new apartment or a new insurance policy anytime soon, it's a good idea to start building your credit score now so it's there when you need it.
When you're starting from scratch, a good place to begin is in college where lenders hand out credit cards like candy. But don't rush to indulge. Janet Bodnar, Kiplinger.com's Money-Smart Kids columnist, advises students to get just one card their junior or senior year, use it occasionally and pay off the balance each month. It's much easier to qualify for a credit card while you're in school than after you graduate (lenders figure that Mom and Dad will bail you out while you're in college if you can't pay your bill).
If you're already out of school, or you don't trust yourself with a full-fledged credit card yet, a secured card will help you get off on the right foot. This card allows you to make a deposit with a lender (such as your bank or credit union), and the amount usually becomes your credit limit. The issuer takes on zero risk because if you don't pay on time, it can dip into your account to cover the bill. Most issuers require a deposit of $300 to $5,000. You build a history just as fast with a secured card as with a regular one. And after making payments on time for a year with a secured card, you should have an adequate history to switch to an unsecured card and get your deposit back.
A new scoring system from FICO may soon help young adults trying to build a credit history. It is based on alternative data such as whether you pay your electric bill on time and maintain a clean checking account (learn more.) So you'd do well to keep all areas of your finances in tip-top shape.
Knowing what goes into your credit score can help you manage your debts well. Here's how to make the best impression on your credit history:
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