Welcome to BurnhamFunds.com
Burnhamfunds.com is a website that wants to help you invest your money more wisely. We will help you to understand how different types of financial instruments work and if they are a good choice for you.
The first and most important secret that we want to teach you is to avoid unnecessary fees. It is almost never worth paying a high management fee for a managed index fund. Nor is it worth paying high fees to a financial advisor. Low fee index funds and high-quality dividend stocks are usually the best longterm investments. Very few managed funds outperform index funds when viewed over an extended period. 10 years or more. You will usually end up with more money by investing in simple low fee options. Make sure to choose an index fund that charges a fee of 0.25% or less and use cheap online brokers to buy company shares.
Avoid all high-risk investments. Only make long term low-risk investments. This will make you wealthy over time.
I recommend that you refrain from:
- Binary options trading: Binary options are a type of financial instrument that can be equated to betting. You either win and earn a high return or you lose all your money. The options can not be traded or liquidated once they are bought.
- Forex trading: Forex (FX) trading is another word for currency trading. Buying and selling currencies for profit. The forex market is the largest market in the world. Forex trading can be very profitable but 75-80% of all retail investors who try Forex trading end up losing money. Forex trading can be profitable but you will need to be able to devote a lot of time and energy to the trade to become successful. Forex trading is best left to those who can work with it full time. Most retail traders should avoid forex trading. Learn more about how to trade forex and why you should not do it.
- CFD trading: CFD trading is a type of trading that allows you to trade stocks and other assets with high leverage. The trade is very high risk and you can lose more money than you invested. You can read about how CFD tradings work on our page about CFD trading.
Why invest in an investment fund
Investing in an investment fund can be an appealing alternative to investing directly in company shares or other financial instruments. There is a multitude of different investment funds to choose from, and the laws governing them will vary from one jurisdiction to the next.
It’s important to remember that when you invest in a fund, you don’t become an owner to the assets of the fund. So, even if the fund owns shares in Company XYZ, you don’ get any voting rights and are not a shareholder of Company XYZ.
One reason why many people chose to include investment funds in their investment portfolio is that it can be a quick way to achieve diversification even if you don’t have a lot of money to invest.
Example: Eric has decided to start saving $100 a month and investing it. With just a $100 it is difficult for him to reach his desired degree of diversification, especially since making several different share purchases will cost him quite a lot in fees. Instead, he has selected three different investment funds and puts $33 into each of them every month. Before picking these three specific funds, he checked their diversification profiles to make sure they lived up to his desired standard. Also, he picked three funds with three different focuses when it comes to industries and geography.
Before you select a fund, always check the costs. Funds have expenses; the fund will, for instance, pay one or several fund managers for their work with the fund. The costs can add up quickly and take a huge chunk out of your investment. You are not only paying right now; every dollar that goes to costs is a dollar that doesn’t get invested and doesn’t yield you any profits.
One of the advantages with funds is that, if properly managed, they can usually get the transaction costs down to far below what it would have cost for each individual investor to make these investments on their own.
What’s the difference between open-ended and close-ended?
- An open-ended investment fund is continuously open for new investments and new investors. Each time someone puts money into the fund by buying shares/units, new shares/units are created. The price you pay to purchase a share/unit is based on the net asset value of the fund.
- With a close-ended investment fund, a certain number of shares/units are created in the beginning, and new ones are only created under special circumstances. If you want to buy shares/units, you need to find someone who is willing to sell theirs, because new ones will not be created just to satisfy your demand. Exactly when new shares/units can and will be created varies, and this is something you should always check out before you invest in a close-ended investment fund since it can have a huge impact on the future price of shares/units.