Silber Bennett Financial
Rebecca Dawson is an experienced, independent financial advisor offering personalized wealth and investment management guidance to a select group of individuals, families, and businesses in Southern California and around the country. Her mission is to be a trusted advisor to her clients by partnering with them to identify what is most important in their financial lives while providing tailored solutions to help achieve their goals.
For over 20 years, Rebecca has served as a financial advisor. She has developed highly refined methods for evaluating client's needs and formulating successful investment strategies. She and her staff provide an exceptional level of service to her clients, who are typically worth well in excess of $1 million and include some of the most prominent people in the United States.
Before joining Silber Bennett, Rebecca managed her own independent brokerage office since 1999. Prior to that she held similar positions with PaineWebber, Merrill Lynch, and Alex.Brown & Sons.
Her clientele have included corporate presidents, and officers, charitable foundations, pension funds, business owners, and wealthy retirees. Her affiliation with Silber Bennett Financial provides her clients with full service wealth strategies.
BA, Liberal Arts, University of Texas at Austin
SECURITIES AND ADVISORY SERVICES OFFERED THROUGH SILBER BENNETT FINANCIAL, INC.
DOI: CA 0H72697 | MEMBER: FINRA / SIPC
Rebecca Dawson ONLY
Mutual funds are either closed-end or open-ended funds.
- Closed-End Funds
This type of fund has a set number of shares issued to the public through an initial public offering (IPO). These shares trade on the open market, also the fact that a closed-end fund does not redeem or buy new shares like an open ended mutual fund, subjects the fund shares to the laws of supply and demand. As a result, shares of closed-end funds may trade at a discount or a premimum to net asset value.
- Open-End Funds
An open-ended mutual fund means that the fund does not have a set number of shares. Instead, the fund will issue new shares to an investor based upon the current net asset value and redeem the shares when the investor decides to sell. Open-end funds always reflect the net asset value of the fund's underlying investments because shares are created and destroyed as necessary.
Open ended mutual funds have a minimum initial investment which can vary with most in the $1,000 - $5,000 range. The minimum initial investment may be substantially lowered or waived altogether if the investment is for a retirement account such as a 401K, traditional or Roth IRA, and/or the investor agrees to automatic, reoccurring deductions from a checking or savings account to invest in the fund.
Closed end funds typically get priced on the IPO somewhere between $20 and $25 per share. So depending on the current selling price the minimum investment is usually around 100 shares.
The price of a bond and interest rates have an inverse relationship. If rates go up the price of the bond goes down and vice versa. There are two risks associated with individual bonds: interest rate risk and default risk.
- Interest rate risk: If you hold your bond to maturity interest rate risk will not be a concern. Although if it is a long term bond and you find yourself needing the cash then you may have to sell at a loss if interest rates have gone up from the time the bond was purchased. Conversely, if interest rates have gone down since you bought your bond then that could create an opportune time to sell your bond and take the appreciation in the price of the bond as well as the income you have already received. You would want to do the math to see if it makes since to sell versus collecting the remaining income on the bond. Also, if rates are lower where will you reinvest those funds to get a similar yield.
- Default risk: This has to do with the quality of the issuer and/or if the bond is insured. If your issuer defaults on the bond by not making the payments then the price will certainly be reflected and you could lose most or all of your principal.
So the best time to sell a bond versus letting it mature, would be if rates have gone down from the time it was purchased and this will be enhanced if it is a long term bond.
As an investment, there are many ways that you can buy oil commodities. You can also buy various securities that give an indirect exposure to oil. You can even buy actual oil by the barrel.
Crude oil is the world's most actively traded commodity. It trades on the New York Mercantile Exchange (NYMEX) as light sweet crude oil futures contracts, as well as other commodities exchanges around the world. Since oil is a commodity that is produced and in large quantities that are costly to transport, it trades in futures contracts. Futures contracts are agreements to deliver a quantity of a commodity at a fixed price on a fixed date in the future.
Oil options are another way to buy oil. Options are contracts which give the buyer or seller the option to trade the oil on a future date. Options often have cash settlement, meaning that on the exercise date of the option, the buyer and seller just pay each other off based on the current price of oil rather than delivering the real physical oil to each other. If you choose to buy futures or options directly in oil, you will need to trade them on a commodities exchange. You can open a managed account at a brokerage firm. With a managed account you can ask your broker to make the trades for you and advise you in the various risks associated with trading commodities.
The more common way to invest in oil for the average investor is to buy an oil Exchange Traded Fund (ETF). An oil ETF is a fund that trades in real time price changes on major stock exchanges. It is designed to closely track the movements of the price of crude oil. What the fund does is maintain various investments in the above mentioned oil futures and options markets, and then sells shares of its fund to smaller investors. Some common oil ETF stock ticker symbols are OIL, USO, UCO, and DBO. You can buy into or out of these funds any time during normal market hours, and you can buy shares in small quantities as opposed to the hundreds of thousands of dollars you need to invest in futures and options.
Finally, you can invest in oil through indirect exposure by owning various oil companies. These companies tend to own large amounts of oil and therefore their stock prices move in approximate correlation to oil's price.
Having a diversified portfolio in order to minimize risk by buying shares of a mutual fund or an exchange-traded fund that is reflected to several companies under a market index, industry sector or market cap. So for instance, if you wanted to invest in the S&P 500 or a basket of large cap growth stocks, there is most likely a mutual fund or ETF for you. If you had to choose between a S&P 500 ETF or S&P 500 index mutual fund, what would be the advantages. Although they mirror the same index, here are differences:
- Fees: Fees for mutual funds are higher than ETFs because mutual funds have more operational and management costs. The expense ratio for mutual funds can typically cost anywhere from 1% to 2% and includes management fees, transaction fees, distribution fees, marketing costs and other expenses. You will pay even more if you are investing in a mutual fund that comes with a upfront sales load. Conversely, the expense ratio for an ETF is typically around 0.5%. ETFs do not have any 12b-1 or load fees, but you will pay a commission to buy or sell them.
- Taxes: Due to the different structures of ETFs and mutual funds, the tax consequences will also be different. With an ETF, you can decide when to take a capital gain or loss by selling it whenever you want. Because ETFs are traded on an exchange, no underlying stocks need to be sold to raise cash for investors who want to redeem shares. Although with mutual funds, the fund manager can sell securities at any time to rebalance the fund or accommodate other investors who want to redeem their shares. Even if the fund is losing money overall, shareholders will own tax on any gains from these sales.
- Accessibility: ETFs do not require an initial minimum investment like most mutual funds do.
- Trading Flexibility: In regards to trading, ETFs behave much like stocks. With mutual funds, you do not know what price you bought or sold them at until the end of day when the net asset value is calculated. Mutual funds trades only take one day to settle, in contrast to ETFs which take three days after the trade date to settle.
You are still young enough to have to time to contribute to your Roth IRA, which you may want to continue to contribute to. If it is not performing well then that needs to be confronted and perhaps you should look at some better performing long term investments alternatives. You can leave it in cash or CDs in the interim if you like until you make those decisions. I would look at some discounted no load index mutual funds.
Saving for a down payment in order to buy a home is also important. If you could achieve that goal early in life then you would essentially be contributing to your net worth over time with mortgage payments versus paying rent. Especially if it is important to you to own your own home. That is if you plan on staying in the same area for the long term.
I would make the down payment a higher priority but continue making Roth IRA contributions.