GDP and stock market values are not always correlated. But when there is a recession during which the GDP contracts, pessimism grows resulting in falling stock prices. Investors tend to move their assets around during such uncertain times as traditional investments start to lose strength. Investors try to find no load replacement high yield mutual funds that can reward with the same returns but maintain the same level of risk. This is not always possible but might be approximated with some good research.
As would be expected, high yield mutual funds are offered by regular physical and online brokerages. One point to note is that the low cost (sometimes known as no load) index funds spend as little money as possible on the talent of the fund manager, preferring instead to adhere to a trading philosophy guided more strictly by performance averages and historical yields. Loaded index funds work differently in that the manager makes many decisions buying, selling and holding a mix of stocks. The manager is usually compensated well.
The second place to look is a brokerage that offers exchange traded funds (ETFs). These are slightly different in structure but a few differences. One of them is that ETFs can be traded all day just like a stock on the exchange. They are also baskets of stocks that are indexed in some way, representing no load index funds. Furthermore, there are usually no minimums to buy ETFs unlike no load index mutual funds that sometimes have minimums in the tens of thousands of dollars.
Besides high yield mutual funds what are some other options for investors during such times?
Checking and savings accounts infrequently offer the best available yields encouraging investors to turn elsewhere. Undoubtedly investors will encounter the money market account that are similar to typical bank accounts but offer more lucrative rates. Investors who are concerned about the reliability of online banks should be comforted as long as the banking institution is licensed, it is insured by the FDIC in the event of a serious collapse. Money market accounts must not be confused with a money market fund which invests in a portfolio of such instruments, and accordingly are not federal government insured.
Investors may benefit from GNMA mutual funds. The partially-government owned organization Ginnie Mae is responsible for financing the housing loans of a safer subset of home buyers. In the time of the financial crisis perpetrated at least partly by the property meltdown of 2007, Freddie Mac and Fannie Mae fell victim to hemmorhaging drops in revenue forcing a declaration from the Treasury to prevent investor panic. GNMA funds discovered that it was in a much better condition, showing little sign of being in need of help. SEC rules still demand that GNMA-titled funds to contain more than 4/5ths of assets in GNMA-related securities.
If the government conducts its operations it is required to in some way finance it enough taxes are collected to reward employees. The loaned money is in the form of a bond which is essentially an IOU to return the borrowed money in addition to some extra interest. Personal investors, companies and even sovereignties invest in bonds offered by the American government on account of perceived trustworthiness and robustness of the U.S. economy. Some brokerages offer bond funds as no load index funds.
As would be expected, high yield mutual funds are offered by regular physical and online brokerages. One point to note is that the low cost (sometimes known as no load) index funds spend as little money as possible on the talent of the fund manager, preferring instead to adhere to a trading philosophy guided more strictly by performance averages and historical yields. Loaded index funds work differently in that the manager makes many decisions buying, selling and holding a mix of stocks. The manager is usually compensated well.
The second place to look is a brokerage that offers exchange traded funds (ETFs). These are slightly different in structure but a few differences. One of them is that ETFs can be traded all day just like a stock on the exchange. They are also baskets of stocks that are indexed in some way, representing no load index funds. Furthermore, there are usually no minimums to buy ETFs unlike no load index mutual funds that sometimes have minimums in the tens of thousands of dollars.
Besides high yield mutual funds what are some other options for investors during such times?
Checking and savings accounts infrequently offer the best available yields encouraging investors to turn elsewhere. Undoubtedly investors will encounter the money market account that are similar to typical bank accounts but offer more lucrative rates. Investors who are concerned about the reliability of online banks should be comforted as long as the banking institution is licensed, it is insured by the FDIC in the event of a serious collapse. Money market accounts must not be confused with a money market fund which invests in a portfolio of such instruments, and accordingly are not federal government insured.
Investors may benefit from GNMA mutual funds. The partially-government owned organization Ginnie Mae is responsible for financing the housing loans of a safer subset of home buyers. In the time of the financial crisis perpetrated at least partly by the property meltdown of 2007, Freddie Mac and Fannie Mae fell victim to hemmorhaging drops in revenue forcing a declaration from the Treasury to prevent investor panic. GNMA funds discovered that it was in a much better condition, showing little sign of being in need of help. SEC rules still demand that GNMA-titled funds to contain more than 4/5ths of assets in GNMA-related securities.
If the government conducts its operations it is required to in some way finance it enough taxes are collected to reward employees. The loaned money is in the form of a bond which is essentially an IOU to return the borrowed money in addition to some extra interest. Personal investors, companies and even sovereignties invest in bonds offered by the American government on account of perceived trustworthiness and robustness of the U.S. economy. Some brokerages offer bond funds as no load index funds.
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