As a woman, you have financial needs that are unique to your situation in life. Perhaps you would like to buy your first home. Maybe you need to start saving for your child's college education. Or you might be concerned about planning for retirement. Whatever your circumstances may be, it's important to have a clear understanding of your overall financial position.
Children are a special blessing and their arrival brings boundless love and joy into our lives that you can't put a price on. But adding a child to the household impacts the family budget--and women especially—in very measurable ways. Whether this is your first child or your fourth, here are some financial matters to think about and plan for before and after baby arrives.
A home inventory is a complete and detailed written list of all your personal property that's located in your home and stored in other structures like garages and toolsheds. It should include your possessions as well as those of family members and others living in your home. You should prepare an inventory whenever you move into a new home. To keep track of new additions and discarded items, be sure to update it every year.
When investing in a mutual fund, you may have the opportunity to choose among several share classes, most commonly Class A, Class B, and Class C. This multi-class structure offers you the opportunity to select a share class that is best suited to your investment goals. The only differences among these share classes typically revolve around how much you will be charged for buying the fund, when you will pay any sales charges that apply, and the amount you will pay in annual fees and expenses.
Understanding fees and expenses
Before you can compare share classes, you need to understand the costs that are associated with mutual funds, since these costs are usually deducted from the money you've invested and can affect the return of your investment over time.
Typically, mutual fund costs consist of sales charges and annual expenses. The sales charge, often called a load, is the broker's commission deducted from your investment when you buy the fund or when you sell it. The annual expenses are asset-based fees that cover the fund's operating costs, including management fees, service fees, and 12b-1 fees (which cover distribution and marketing expenses). The expenses are generally computed as a percentage of your assets and then deducted from the fund before the fund's returns are calculated.
So which share class should you choose? The answer to that depends on two factors: how much you want to invest and your investment time horizon.
Class A shares
Class A shares may appeal to you if you're considering a long-term investment in a large number of shares. When you purchase Class A shares, a sales charge, called a front-end load, is typically deducted upfront, reducing the amount of your investment. Suppose you decide to spend $35,000 on Class A shares with a hypothetical front-end 5% sales load. You will be charged $1,750, and the remaining $33,250 will be invested.
However, Class A shares also offer you discounts, called breakpoints, on the front-end load if you buy shares in excess of a certain dollar amount. Typically, a fund will offer several breakpoints; the more you invest, the greater the reduction in the sales load. For example, a mutual fund may charge a load of 5% if you invest less than $50,000, but reduce that load to 4.5% if you invest at least $50,000 but less than $100,000. This means that if you invest $49,000, you'll pay $2,450 in sales charges, but if you invest $50,000 (i.e., you reach the first breakpoint), you'll pay only $2,250 in sales charges.
Comparing Share Classes
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