The Perfect Mutual Fund
The Perfect Mutual Fund is the one you build yourself!
The perfect Mutual Fund you build should have the objective of owning no more than 12 to 15 companies; owning shares in 12 companies would allow the diversity needed to sleep well at night and would provide a cash dividend every week of the year.
The 12 companies (with staggered dividend payout dates) in your perfect Mutual Fund should not only provide a cash dividend every week of the year, the companies should also have a historical record of raising their dividends every year for at least the past 8 years (to eliminate risk).
The perfect Mutual Fund would have no fees attached, every cent put into the Fund would work toward your return on investment (ROI).
There would not be any commission fees, load fees, management fees or advertising fees, and there would be no illegal trading practices, hidden fees abuses or any type of hidden fee. The perfect Mutual Fund would benefit you and your family and no one else.
The perfect Mutual Fund would require a savings plan to add to your holdings every quarter, until retirement. This would allow your perfect Mutual Fund to dollar-cost average (buying the same stock at different prices through the years) into your holdings every quarter (your dividends from the companies would be doing this for you, automatically, commission free; your quarterly investments would also be commission free).
With this in mind, every dividend received from a company in the Fund would be higher than the previous dividend from that company (as long as the company, at least, maintains their dividend and in the perfect Mutual Fund every company has a history of raising their dividend every year).
In the perfect Mutual Fund, when prices of your stock holdings in the Fund decline, the cash dividend income from the Fund simply accelerates. The reason for this is simple - the lower the stock prices the higher the dividend yields. A company, for example, may pay a dividend of 50 cents a share. Whether that company's share price is 70 dollars a share or 40 dollars a share, the company pays 50 cents a share. At a lower stock price your reinvested dividend and quarterly investment purchases more shares.
In the perfect Mutual Fund your money is not spread too thin. For example, putting $5,000.00 into, lets say, the S&P 500 Index Fund, you would end up owning around $10.00 worth of 500 different companies. Other than the obvious fact that your money is being spread too thin, any dividends from the companies in the Fund could possibly be eaten up by management and other Mutual Fund fees.
The perfect Mutual Fund is real and you can build one for yourself!
For more excerpts from the book 'The Stockopoly Plan - Investing for Retirement' visit http://www.thestockopolyplan.com
Charles M. O'Melia is an individual investor with almost 40 years of experience and passion for the stock market. The author of the book The Stockopoly Plan - Investing for Retirement; published by American-Book Publishing. The book can be ordered at: http://www.pdbookstore.com/comfiles/pages/CharlesMOMelia.shtml
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