Expected Rate of Return?
I forget how the expected rate of return over a period of time is calculated...anyone know? I'm curious to know what my Roth IRA could potentially do over time base on the expected rate of return.Answers: The expected rate of return is a future rate and is and so an estimate. You could calculate the estimate by using the weighted average rate of return on respectively individual stock in the details. But it would still be an estimate because the existing rate of return on each stock is not going to remain static contained by the future.
Assuming that your Roth statement will earn the normal long-term flea market return of about 10 percent, you can divide how the fund will grow at that rate. If you plan to keep adding up to the fund, you have to include that contained by the calculation also.
How does a fund of funds bring back their annual fees?
So I understand how a Hedge Fund get it's fees, it just liquidate a small part of their portfolio and reward themselves, but Funds of Hedge Funds have to invest surrounded by other funds with concrete lock up periods, how do they win their annual fee? Or their presentation fees for that matter?Thanks!
Answers: All funds hold a spot on amount of cash to salary salaries, redeem shares, and invest when the set off grows large adequate. They can take their tax out of the cash fund maintain for such purposes.
If it's locked up, you can't get to it any. If they have no brass to take after they just hold the condition on their books and take it out of the payments from the funds when they become available. Besides, they hold cash coming contained by from other investors. They can take their fees out of the bread before it get invested and prorate the ownership interest of the investments on their books.
Funds of funds are a great investment idea! FOF charges 2% supervision fee and 20% of profits. It invests within Fund-A which charges charges 2% management payment and 20% of profits. Now you're down 4% per year in government fees no matter what, and if Fund-A make money , thay take 20% when they go past it to FOF which claims 20% before it get to you. Maybe you can find a fund which invests in funds-of-funds and can earnings triple fees.
What are the reason or cause for the current financial crisis (mortgages, stock flea market, etc.)?
I have have this question asked to me during a little interviews. What has cause the current financial crisis? I know the overall summary of what is going on but I dont know what exactly are the causes and effects. I inevitability a good answer so please assist me out with this.Answers: Lending firms started coming out next to more exotic loan types to allow people that in general would not be able to afford a monthly stipend on a house the opportunity to purchase a home (i.e. interest only loans, zero-down . But as next to any business the whole aim is to make money. The mature salesman trick is to just go and get your foot in the door. This is equivalent to the "free 30-day in-home trial". If you can a moment ago get someone to commit, at any smooth, you're far more likely to net the sale. So bank spiced up these new loans next to special deals. The most scathing was a low introductory monthly fee. Since the loans allowed people previously unknown with purchasing a home the opportunity to buy, abundant predatory lenders would take ascendancy of their clients lack of awareness (although I do believe the barrowers bare some responsibiliy for not knowing exactly what they signed up for) and simply voice "here's your monthly payment", knowing full well that it would travel up in a month, or 3 months, or a year, or etc., to a price that be much higher than the introductory monthly expense. Hedge funds wanted a piece of the achievement, so they would often buy the rights to these loans short fully accounting for the risk of default. When the housing bubble (which be caused by unnecessarily low interest rates during the Alan Greenspan era of the Federal Reserve which allowed material estate investors a great buying opportunity, at least at the start) collapsed, abundant people who have become real estate investors due to "how graceful it was to kind money in the existing estate market" ended up straddling several of these exotic mortgage payments. They thought it wouldn't be a problem to hold a loan with a low 1 year teaser rate because they could put up for sale the property in a few months at a much difficult price than they paid for it. When the bubble burst, in attendance were no longer any buyers. After their intro rate completed, the payment sky rocketed to an unaffordable price, and several times the property became worth smaller number than was compensated for it, making selling it a sure loss of money. So defaulting on the loan was the with the sole purpose option for these investors. With adjectives of the defaults, bank and hedge funds be left holding the rucksack. No one came out a champion, banks lost money, nation lost their homes, hedge fund manager lost their jobs and get a permanent red engrave on their resumes.
One comment on these real estate investors: in attendance is an old dictum on Wall Street that when the shoe shine boy starts giving you stock tips, you know it's time to get out. That simply resources that when the stock market starts to look similar to this easy money making gadget, so easy within fact that anyone can do it, the souk has gone up for far to long and is overdue for a correction. About a month back the real estate bubble burst, my subsequent door neighbor, who only a year ago be a first time home buyer, had bought a rental to trade for a profit at a later time. They've have one renter who's never paid up, and that's it. They've lost deeply of money on the deal. I remember starting to wonder if the bubble would be over soon when I hear they'd bought that rental.
Hope this helps!
One word, FEAR.
Also, it resulted from lend to people who couldn't pay packet their bills and with an in short supply risk premium, it made no sense to me.
Really ... a good answer is impracticable from this Y/A member here in a minute ...!!
1) Risk factor was not considered by Banks and Mortgage Bankers
2) Greedy bankers allowed huge and high-cost loan to those (sub-prime)who should not hold get it - huge credit card default
3) Vicious circle was formed - default in mortgage payments - rate hiked - again defaulting
4) Economy was contained by distress for 'war funding' - employments lost - expenses be not curbed - again defaults
5) Foreclosed properties have no buyers
6) Huge amounts of defaults written past its sell-by date by Banks resulting in madness
7) Fed Reserves rate cuts had no effect - entire sphere affected -
8) There is a vacuum within leadership - nobody is contained by command
.ertc...etc.