Question

What are the advantages and disadvantages of both REST and Student Super Professional Super Funds in terms of investment options, returns and risk allocation, associated fees and insurance premiums? Which fund will make a young person better off in the short term and better off in the long term?

Answer 1

Ans.

Every person have to go their finance strength strongly then achieve their financial goals some times to take help from   friends, relatives and financial advisors. They help to put the money various financial sectors. But person may think and wise put the amount safety in measures are involved.

A well-chosen managed fund can help you achieve your financial goals. As there are thousands of funds to choose from, research is critical. You can get essential information regarding fund objectives, fees and expenses in the prospectus that all fund companies are required to provide.

The investing a amount diversifying portfolio Putting all of the money into one type of financial product is risky because if that investment devalues, so will entire portfolio. By sprinkling the funds across different investment opportunities, to reduce your risk of loss. One way to get instant diversification within a single investment is to buy a managed fund, also known as a mutual fund.

Mutual funds contain a variety of securities that tend to target a specific industry or investment style. For example, some managed funds invest only in bonds or income-producing securities, whereas others invest primarily in stocks.

A seemingly endless array of funds are available, such as high yield or government bonds, or small-cap or foreign stocks. Some managed funds invest in both stocks and bonds; these are called balanced funds.

In order to lower the risk of owning any one individual security, managed funds spread out investor funds over tens, hundreds or even thousands of different investments, thereby providing market access to investors who might not otherwise be able to participate. However, not all funds are good investments for all investors; the funds you choose should match your financial goals

Advantages:-

Diversification

Most investors don’t have enough money to buy tens or even hundreds of different types of investments to achieve true diversity. By pooling funds with other investors, a mutual fund buyer benefits from this vast pool of money by accessing a wide array of securities.

Easy for Novices to Get Involved

You don’t have to be a sophisticated investor to buy a managed fund. So many different types of funds are available that it can be relatively easy to find one that matches your investment needs.

Convenience

Mutual funds are essentially an all-in-one package. Rather than buying numerous individual bonds, stocks, exchange-traded funds or other investments, one mutual fund can hold them all for you. You can track the price every day in the newspaper or online, and it’s as easy to sell a fund as it is to buy one.

Professional Management

One of the prime benefits of a mutual fund is that, for a minimum investment, even a novice investor can have access to a professional money manager. A fund manager will watch your investment on a daily basis and make strategic moves to help achieve the fund’s objectives on your behalf.

Disadvantanges:-

Lack of Control

Although you might not have the time or investment knowledge to pick your own securities, it can be discomforting for some to hand over complete control of their money to a stranger. If you have a great fondness for stock, for example, there’s nothing you can do to stop your manager from selling it if that’s his decision.

Taxation

Mutual funds are required by law to pay out any dividends and capital gains they earn to shareholders, and those distributions might be taxable. Even if you reinvest those distributions into more shares of your mutual fund and never receive the cash in your pocket, you’ll still be responsible for the tax.

Performance Is Not Guaranteed

Although your money is professionally managed in a mutual fund, there are still no guarantees. In a bad market cycle, even the best of managers can lose money, regardless of their past track record.

Fees

Because a professional money manager to invest funds for person, expect to pay fees when you buy a mutual fund — even if the fund loses money. It can be confusing to understand exactly how much paying because there are many different ways a mutual fund can cost — from front-end sales charges pay at the time of purchase to ongoing annual fees and back-end loads pay if you sell a fund.

Beware of these funds there is in market risks. long term investment the amount of returns is high better than short term investment.The risk is more and return also more.

Next situation insurance sector. The plans are varying with different categories the plans like to take the insurance plans like general or life insurance plans premium value of a policy differs from the policy’s gross premium value, which takes into account future expenses. The calculated difference between net premium and gross premium equals the expected present value of expense loadings, less the expected present value of future expenses. Thus, a policy’s gross value will be less than its net value when the value of future expenses is less than the present value of those expense loadings.

Since the net premium calculation does not take into account expenses, companies must determine the amount of expenses that can be added without causing a loss. Types of expenses that a company must take into account include commissions paid to agents who sell the policies, legal expenses associated with settlements, salaries, taxes, clerical expense and other general expenses. Commissions typically vary with the policy’s premium, while general and legal expenses may not be tied to the premium.

premiums and gross premiums are helpful in figuring out how much an insurance company owes in taxes. State insurance departments often tax the income of insurance companies. Tax laws, however, may allow companies to reduce their gross premium by figuring in expenses and unearned premiums. For example, if the state of Ohio imposes a tax on gross premiums written by Ohio insurance companies, but the tax does not apply to amounts deducted for reinsurance, it also won't apply to gross premiums not earned because the insurance company or policyholder canceled a policy before it expired.