Investing Advice

Why is the prospectus hard to understand?

When you read the prospectus, you will see lots of gibberish. I will quote from one of my favorite and highly recommended funds, the Legg Mason Value Trust:

"Principal Investment Strategies
The fund invests primarily in equity securities that in the advisor's opinion, offer the potential for capital growth. The advisor follows a value discipline in selecting securities, and therefore seeks to purchase securities at large discounts to the advisor's assessment of their intrinsic value. Intrinsic value, according to the advisor, is the value of the company measured, to different extents depending on the type of company, on factors such as, but not limited to, the discounted value of its projected free cash flows, the company's ability to earn returns on capital in excess of its cost of capital, private market values of similar companies and the costs to replicate the business. Qualitative factors, such as an assessment of the company's products, competitive positioning, strategy, industry economics and dynamics, regulatory frameworks and more, are also important"

Why do mutual fund companies write this way, are they trying to impress us?

This should be translated to something like

"We invest in solid companies whose stock we believe is priced too low, when considering the company's financial strength and its future growth potential"

or even better,

"We invest in good companies when their stock price is a bargain".

Maybe someday

Other Stock Market Basics Topics:

  1. Mutual Fund Advantages
  2. History of Mutual Funds
  3. NAV
  4. Dollar Cost Averaging
  5. General advice about choosing a fund
  6. Mutual Fund Ratings
  7. Evaluating Mutual Fund Investment Risk
  8. Mutual Fund Share Classes
  9. Mutual Fund Fees
  10. The Mutual Fund Prospectus
  11. How important is the manager's length of experience?
  12. Why is the prospectus hard to understand?
  13. Mutual Fund Annual Report
  14. Comparing your fund to the competition
  15. Comparing funds on an after-tax basis
  16. Average Return on Investment
  17. How Not to Pick a Mutual Fund
  18. Cashing in Your Fund
  19. When to Sell Your Fund
  20. Mutual Funds and Asset Allocation
  21. When to get started with a mutual fund
  22. Types of Mutual Funds
  23. Value Stock Funds
  24. Growth Stock Funds
  25. Small and Micro-cap Stocks
  26. Mid Cap
  27. Large Cap Companies
  28. Income Stock Funds
  29. Mutual Fund Index
  30. Enhanced Index Funds
  31. Sector Mutual Funds
  32. Stock Market Sectors
  33. Defensive Stocks
  34. International Funds
  35. Real Estate Mutual Funds
  36. Socially Responsible Funds
  37. Balanced Funds
  38. Tax-Efficient Funds
  39. Bond Convertible Funds
  40. Junk Bond Funds
  41. Mixtures of stock types
  42. Closed End Funds
  43. Exchange Traded Funds (ETF’s)
  44. Stock Picking Strategy - Picking your own stocks?
  45. Fund names, and what they really invest in
  46. How to get started
  47. Where can I start investing with no money?

Did you find the information you were looking for?
 
After reading the above article, what is still your biggest question?



Get Weekly Investing Advice
Receive free practical investment advice and tips delivered weekly to your email box with contributions from financial planners, investors, and financing and loan professionals.
  I want to ask a question and receive investment tips.
  I only want to ask a question and don't want helpful advice.
E-Mail Address:  
Your Name:  


To find more investing and stock related websites input the phrase "investing advice" directly into the search box below or simply type in your own search phrase to see over 1 million other investing, stocks and online trading websites.
Google
Who's Not Investing?

Millions marry and start families each year without taking basic steps to make sure their future, as well as their children's, is financially secure.

According to a recent survey by Princeton University and the Consumer Federation of America, 70% of households with incomes under $50,000 a year have retirement savings of less than $5,000. This same report said "most Americans are living paycheck to paycheck".

Learn more about how you can plan, save and invest smart for your family's future.

 Investing Money Sections
arrow Why Invest Money?
arrow Investment Basics
arrow Saving Money
arrow Stock Market History
arrow Stock Market Basics
arrow Stock Market Indexes
arrow Stock Market Investing
arrow Mutual Funds
arrow Investing Advice
arrow Retirement Planning
arrow Saving for College
arrow Financial Planners
arrow Investment Opportunities
arrow Financial Charts
arrow Investment Terms

arrow

Return Home
 

 Home | Contact Us | Privacy | Site Map | Legal notices
 Copyright A to Z Investments © 2005. All rights reserved.