The USA is considered the credit card country par excellence. Everything that goes beyond small amounts in payments is not paid with cash, but only with a credit card. Even for essentials such as rental cars, a credit card is necessary when staying abroad. Accordingly, in our experience, you won’t get very far on vacation in the USA without a card. However, there are a few things to consider when choosing a credit card before traveling abroad.

We have compiled the most important tips and advice for you here to answer the most frequently asked questions and to make payment transactions easier during your trip abroad.

What a credit card is?

In the USA, payment by credit card is common. Without a credit card, you are considered, quite literally, unworthy of credit.

In the USA, payment by credit card is common. Without a credit card, you are, quite literally, not considered creditworthy.

The credit card is a widely accepted means of payment, but in Germany it is only used by about one third of the population. Like the EC card, the card is usually made of plastic, has the same format as the latter and is often used to pay larger amounts without cash or to carry out online transactions. Often the credit card is the only means of payment accepted when it comes to booking a hotel in the USA or a flight online on the Internet or renting a rental car. In addition to the “real” cards, virtual credit cards are increasingly being offered. Basically, credit cards from different merchants can be divided into the categories standard, gold, platinum or platinum and black credit cards. The platinum credit card is the most highly endowed credit card, which can be freely applied for at the merchant.

Basic differences between credit cards

There are generally four different billing methods for credit cards.

These are:

Charge Card: the charge card is the credit card most commonly issued in Germany. With it, the user is provided with a defined credit line and the balance is debited from the agreed current account at the end of the month of use or at the beginning of the following month. After settlement, the credit card is back to zero.

Revolving Card/Credit Card: The revolving card is the classic credit card and is widely used in the USA. With these revolving credit cards, you can pay off your credit either all at once or in monthly installments. So, for example, if you spend $2,000 in January and have agreed with your bank to repay it at 25 percent per month, only $500 will be charged in February and relatively high interest will accrue on the outstanding balance. In addition, it is possible to fully utilize the given credit limit month after month, even if the amounts from the previous months have not yet been settled when the statement is issued. A fact that repeatedly leads people into the debt spiral. Therefore, when using a revolving card, it is recommended to switch it to full repayment to avoid the interest.

Debit Card: The debit card is not a credit card in the true sense of the word, as the linked account is debited immediately upon settlement. This means a debit card can only be used if the linked account is funded.

Prepaid Card: The prepaid card is also not a real credit card. This is because you can only access the credit linked to the card and must first ensure that there is also credit on the card by making a transfer. Prepaid cards are not linked to the checking account, but to a separate account.

Which credit cards are suitable for the USA?

In this section we have listed the credit cards that are particularly suitable for use in the USA. Mostly the different credit cards differ by the annual fee, but also by the costs of a cash withdrawal and a payment with the credit card.

Why you absolutely need a credit card in the USA

The USA is considered the credit card country par excellence. It is not uncommon to even pay for your Starbuck’s coffee or other small items like a candy bar for just a few cents with a card. Credit cards ALWAYS work as a means of payment after entering the country during travel, whether the payment is for purchases in stores, gas, booking a rental car or hotel, using Uber, or making the smallest purchases for just a few cents.

In contrast, without credit cards, one is often limited in making payments after entering the country. Not all companies, for example, allow you to pay the deposit for rental cars in cash or with a prepaid card. Even booking a flight online without having a credit card is hardly possible nowadays. It is also much easier to leave a deposit at the hotel and pay at the gas station with a credit or debit card. Because with it you can pay at the gas station directly at the pump. And even to be able to travel to the USA as a European, you need a credit card. This is because it is one of the conditions for submitting the ESTA application.

In addition, credit cards offer a decisive advantage over cash, not only during your vacation in the United States of America, but worldwide. The advantage is that if they are lost or stolen, they can be blocked once lost or stolen, preventing financial loss.

These are the most common credit cards in the U.S.

Visa and Mastercard are the most common credit cards in the U.S. and have a high acceptance rate. Cards like American Express and Diners are slightly less common and have lower acceptance. So if you want to be on the safe side in terms of acceptance, you should therefore choose either Visa or Mastercard and rather avoid cards like those of Diners Club.

What you should consider when choosing your credit card?

Even small amounts are paid with a credit card in the USA.

Even small amounts are paid by credit card in the USA.

There are many credit card providers, so it is sometimes difficult to choose one for your stay abroad. As a future cardholder, it is important to compare thoroughly before entering the country and to pay attention to the price-performance ratio. You can make a comparison quickly and free of charge via a credit card comparison.

Above all, make sure that there are no hidden costs. Ideally, only a small annual fee is due for the credit card or it is even completely free of charge for the cardholder and therefore free of charge. It is often also worthwhile to compare possible extra services for the trip and, especially for travel to the USA, to pay attention to possible foreign currency fees (foreign transaction fees), which may be charged on the turnover.

In case of doubt, your bank will certainly be happy to help you. There you can usually also apply for well-known credit cards such as Visa and Mastercard. Another well-known alternative is the credit card of DKB, with which you can pay worldwide free of charge and make cash withdrawals. As an active customer, there is also no foreign transaction fee with DKB.

The Barclay’s Bank credit card offers similar benefits, and also allows interest-free payment for up to 60 days. You can apply for this card directly from the provider.

Free credit cards are often applied for while abroad. However, the annual fee is not everything and what sounds free or at least cheap at first, does not have to be at second glance. For cards without an annual fee, pay attention to what costs, if any, are incurred for payments in foreign currency (foreign currency fee/foreign transaction fee) and for cash withdrawals.

In addition, check exactly what the foreign transaction fee is and which additional services are really important to you and which are not. This applies to insurance, for example.

Cards with no annual fee that are well suited for travel to the U.S.

Hanseatic Bank Genial Card

DKB Visa Credit Card

Santander 1plus Visa Credit Card

Mastercard Gold free of charge

Barclaycard Visa

Each of the cards from Santander to DKB has its advantages and disadvantages. When it comes to the billing model, the charge card is the best choice in most cases for the aforementioned reasons.

Cards without a foreign currency fee (foreign transaction fee) are for example the cards DKB-Cash, the 1plus VISA-Card, the Fidor SmartCard, the Eurowings Credit Cards Gold and the Barclaycard. In addition, with the Eurowings Credit Card Gold, no annual fee is charged in the first year.

Carry out a credit card comparison

If you want to be on the safe side and make sure that all your desired transactions are carried out in the USA, then you should choose a credit card from VISA or MasterCard.

If you want to be sure that all your desired transactions will be carried out in the USA, then you should choose a credit card from VISA or MasterCard.

Credit cards for travel to New York or any other destination in the land of opportunity, there are countless. With the amount, it is difficult for travelers to keep track of them. To solve problems like this, travelers can compare credit cards, such as those offered free of charge by Check24. In addition, you can often find good tips for worthwhile credit card offers on the Internet or in good travel guides.

It is best to first check the points on which you place particular value and then services that you do not necessarily need, but which are nice to have and play a role in your decision. These can be insurance packages, for example. Such insurance packages often include in their insurance benefits travel insurance that can be beneficial for your stay. However, sometimes the insurance benefits also include travel insurance that you do not necessarily need or insurance benefits that you may already have from another provider.

Then choose your personal test winner after studying the comparison and, if necessary, reading additional tips.

Do you need a second card? If so, why?

The second card, also known as an additional or partner card, is intended for the second user of an account. Thus, the secondary card has advantages but also disadvantages. The responsible party is always the primary cardholder.

You must meet these requirements to apply for a credit card

In order to apply for a credit card for your trip to the U.S., as a German citizen you must generally meet the following requirements to become a cardholder:

• You must be at least 18 years old.

• You must be a resident of Germany.

• You must have an account with a German credit institution.

• You must have a regular monthly income.

• You must have a valid mobile phone number.

In addition, most credit card providers perform a Schufa check in advance, which means that a Schufa entry will prevent you from receiving a credit card in most cases. If you are not sure whether you have a Schufa entry, then you can check your Schufa score for free at Schufa. You can find more information on this topic at finanztip.de.

However, there are also providers who do not require Schufa information. Prepaid cards are also generally issued without a prior credit check.

This is how the application for a credit card usually works

Pay attention to which credit card is best suited for your trip to the USA.

Pay attention to which credit card is best suited for your USA trip.

Applying for a credit card for your USA trip is very easy. The best way to do this is to contact your local bank, such as the Sparkasse, or directly VISA, American Express or another credit card provider of your choice a few weeks before your departure from Europe. Find out beforehand which provider offers the best conditions for your purposes.

The application itself is quickly filled out. In addition to personal data, your occupation and employer as well as your monthly income must usually be stated. In addition, you will be asked how long the current account has already existed. In the case of Barclay’s Bank, you will receive the information whether the application has been accepted or not directly after submitting the online form.

Withdrawing money with your credit card during your trip to the USA

Many credit institutions offer cash withdrawals from ATMs abroad free of charge. Therefore, to save money, it makes sense to choose a card for travel that allows cash withdrawals from ATMs without fees. For cash withdrawals in the U.S., use an ATM (automated teller machine) where you can withdraw money in American currency using your credit card and PIN.

In the United States of America, almost all banks charge fees for ATM cash withdrawals. The fees for withdrawing cash from an ATM here range from $2.50 to $5. In a 2013 test, San Francisco Federal Credit Union was the only provider that did not charge ATM cash withdrawal fees. It is possible for house banks to reimburse third-party fees. One bank that offers this is DKB. In many cases, however, it is cheaper to pay in American currency with a credit card. In any case, apart from a small sum for initial purchases, it is worthwhile to exchange euros into American foreign currency (US dollars) only in the land of unlimited opportunities, as the conditions are usually better here.

Whether you can use your EC card to withdraw money from ATMs in New York or elsewhere in the U.S. after entering the country depends on the logo printed on the EC card. This is because the service is only available if there is a Maestro logo on the card. However, before using your EC card in the U.S., it is best to ask your bank’s customer advisor what fees apply and whether there are any cooperation agreements with banks in the U.S.. Nevertheless, the credit card is usually the preferred option. This is because transactions are often more favorable and the use of the card also offers various other advantages or the card is even mandatory for bookings.

Conclusion: Having both an EC card with the Maestro logo and a credit card avoids problems and provides more security.

Paying with the card is easy. The card is simply inserted into the reader or swiped on the side of the device. This is followed by the credit card holder entering the PIN. The amount is authorized and the receipt is printed. Sometimes a signature is required instead of the PIN. This depends on the procedure used by the counterpart, such as the store where you go shopping.

It is best to familiarize yourself in advance with the current exchange rate and the fees that may be charged on the transaction, such as the foreign transaction fee. This will help you avoid unpleasant surprises when you receive your credit card statement. You can calculate the exchange rate with the major providers such as Visa or Mastercard directly on their website.

Tipping in the restaurant in cash or with the credit card?

In the USA, people often pay by credit card in restaurants. Often also the tip. For this purpose, there is a field on the receipt where the tip can be entered by hand. If you prefer to give the tip in cash, you should cross out the fields in any case, so that nothing can be entered later. Sometimes the tip is already included in the bill. For this reason, pay attention to corresponding notes on the invoice.

This credit card limit is recommended for the USA vacation

Which credit card limit is recommended for a trip to the USA cannot be answered in a general way and depends of course mainly on criteria such as your own liquidity and vacation funds. If you would like to increase the credit limit beyond the actual credit, you can run the card into plus in advance.

Important! Remember that hotels and rental car providers often block amounts beyond the actual date and calculate this accordingly. If the limit is too low, this can otherwise lead to difficulties!

These costs are associated with the use of a credit card

Compare before you choose a credit card for your USA trip.

Every credit card is a little different, but at the end of the day, it’s always the case that banks want to “make money” on cards. The cost of a credit card should be limited to the one-time issuance fee and a manageable annual fee, if applicable, and completely waive cash withdrawal fees.

Whether the countless additional services that are offered for a fee, such as insurance for rental cars, other insurance, bonus programs, discounts on refueling and many more, play a role for you and are among the criteria by which you select a card, you must decide individually. Compare the individual offers and additional services thoroughly here and choose the card with the best price-performance ratio for your needs.

For example, DKB, which was again named test winner in the “Best Current Account” category in 2018, offers up to twenty percent off online cashback, while airline providers such as Lufthansa and Eurowings often entice customers with bonus miles.

What to do if your credit card is lost

In the unfortunate event that your card is lost or stolen, you should call the emergency number listed on the card as soon as possible after the loss or theft to block the card after it has been lost. Be sure to write down this number in a safe place so that you have it at hand in the event of theft or loss.

The central blocking emergency number can be reached free of charge within Germany by dialing 116116. From abroad, the corresponding number is +49 30 4050 4050.

Other blocking numbers

Advanzia Bank: Tel. 0800 88 011 20 (domestic) / Tel. +49 (0) 345 2197 3030 (international/mobile)

Barclaycard: Tel. +49 (0) 40 8 90 99 877

Comdirect: 069 – 97 97 20 00 (blocking number for American Express Gold Card, Visa and MasterCard via blocking emergency call)

ConsorsBank: Tel. +49 (0) 69 66 57 13 33 (blocking number for Visa credit card)

Hanseatic Bank: Tel. +49 (0) 40 600 096 422

International Card Services B.V.: Tel. +49 (0) 211 69 15 26 99

Mercedes-Benz Bank: Tel. +49 (0) 69 6657 1333

Postbank: Tel. 0228 5500 5500 (Germany) / Tel. +49 (0) 69 6657 1333 (abroad)

Santander Bank: Tel. +49 (0) 2161 27 29 889

TeamBank AG: Tel. +49 (0) 721 12 09 66 001 (easyCredit Card blocking number)

TARGOBANK AG: Tel. +49 (0) 211 900 20 444

PPRO Financial Ltd: Tel. 00800 48437776

Valovis: Tel. +49 (0) 69 26 48 97 55 5

Wüstenrot Bank: Tel. +49 (0) 7141 16 75 66 00

The DKB credit card can be blocked via Internet banking. To do so, log in to your account and scroll down to “Block card” in the “Security” tab.

Paying with your cell phone as an alternative?

Apple Pay and other mobile payment systems require you to store your credit card information on your phone. With Apple Pay, you must have an iPhone 6 or younger to do this. Apple Pay is stored in the wallet on the smartphone and is only activated for payment.

Advantages

Account information is no longer shared with the seller.

You don’t have to carry money or a credit card.

Disadvantages

The smartphone becomes indispensable.

If the smartphone is lost, all stored information can be decrypted by a skilled hacker. A real risk.

Traveler’s checks as an alternative to credit cards?

Traveler’s checks were a must-have when traveling around the U.S. a few decades ago. If cash ran low or your credit card didn’t work, you could exchange such a traveler’s check for cash at the hotel or bank. Today, traveler’s checks have more or less lost their significance. They are definitely not suitable as an alternative to a credit card.

Tokens and Сoins.

The cryptocurrency industry uses quite a few new terms that can get confusing. For example, it seems like tokens, coins, and altcoins are the same thing. But in fact, that’s not the case. What is the difference between token and сoin, what are сoins and what are altcoins – this is the review from ProstoCoin.

What is a Coin?

A coin is an asset of a blockchain platform. Bitcoin, lightcoin, ether are all coins that exist on a separate blockchain. For example, bitcoins are based on the Bitcoin blockchain, ethers are based on Ethereum.

Coins can be transferred from one user to another. However, there is no movement of actual physical coins, from hand to hand. Coins are a code of information stored in a vast database, the blockchain.

Types of Coins

There are thousands of different coins in the cryptocurrency industry. All of them can be divided into 2 types: digital coins and altcoins. Digital coins have a separate blockchain. The most famous examples are:

Bitcoins (Bitcoin blockchain);
Ethers (Ethereum blockchain);
Monero (Monero blockchain).
Altcoins are created and generated from the Bitcoin blockchain. They constitute a large class of coins that have branched off from the original Bitcoin code. The best known altcoins are as follows:

DOGE
Namecoin
LTC

Coins are most often used as a means of payment. They can be used to:

transfer funds – you can send funds to any country;
To pay for goods and services – Coins have purchasing power;
Make investments – especially for the cryptocurrencies, which are constantly growing in value.
Coins as a means of payment

BTC is used solely as a means of payment. It has no other purpose. But there are coins that have more functionality, for example:

Ethers allow you to support transactions on the Ethereum blockchain. They are also the basis of the smart contracts system. These are applications that run on blockchain technology. They serve as a digital contract that is augmented by a specific set of rules. Both participants in a smart contract can make specific commitments, which will be enforced by the blockchain. Ethereum-based tokens are also created, but you still need ETH to send them.
NEO can be stored in a wallet for dividends to accrue. Such dividends are known as “gas.” Sending a token in NEO will require you to pay gas as a transaction fee, just as Ether is used to pay fees on the Ethereum network. NEO also allows you to develop new tokens on its blockchain.
Dash gives community members the ability to make decisions meaningful to the system. For example, if the idea of updating the system is put forward, people who own enough Dash tokens can vote for or against the changes.

What is a token?

Tokens are often equated with cryptocurrency coins, but this is incorrect.Tokens are based on existing blockchains. In fact, thanks to the development and simplification of smart contracts, the most popular blockchain platform for tokens is Ethereum. Tokens based on this blockchain have the ERC-20 standard. That said, there are other platforms for token creation – NEO, Waves, Lisk, Stratis. They are of other types, for example, NEO tokens are known as NEP-5.

Any user with sufficient knowledge and skills can develop a new token on one of the listed blockchains. To develop it, you will have to spend some of your tokens. For example, if the token will be of the ERC-20 type, the developer will need to spend ETH to induce ether miners to confirm the transaction (token development). You should also consider that commissions need to be paid for all token operations in the system, not just development. This means that any application that is based on Ethereum must use ethers. ETH allows the application’s tokens to be transferred from one person to another, to make transfers between the application and the user. Here one can think of transactions with coins, where a commission is paid to those who confirm the transactions.

Because the creator of a decentralized application and token does not need to develop a new blockchain, the developer saves himself money and time.

We can highlight the benefits of using tokens as follows:

Forming a decentralized database, information from which cannot be changed, deleted;
optimization of trade processes;
improvement of the security level;
a simplified confirmation system for all operations;
provision of easy interaction between users and creators of the decentralized application;
possibility to optimize the work of the service, to expand its functionality.
Types of tokens
tokens

Tokens are divided into 4 types:

Investor tokens. They can be compared to an investor contract in the sense that such tokens are used as shares, a source of income for the firm. They allow the owner to receive dividends. They can also be compared to capital, securities, and derivatives. Investor tokens are mainly used in initial public offerings (ICOs). This is an increasingly popular way to raise funding for new startups. An example of a tokenized asset is TSLA.CX, which reflects the value of Tesla stock on the Nasdaq exchange.
Serviced. These are unregulated tokens that allow access to the functionality of various platforms, certain goods and services. According to FINMA, these tokens provide digital access to an application or service through a blockchain infrastructure and have no investment value. They can be compared to tokens purchased for slot machines or the subway. An example of a service token is CVC (more about it in the next block).
Commodity tokens. Such tokens are secured by ordinary valuable assets, various commodities (national currency, gold bars, oil products). Stablecoins belong to this category. Their main feature is stability. The best example of a stabelcoin is USDT, which is always worth 1 dollar.
Payment tokens. These tokens can be used to pay for products and services, financial transfers. Payment tokens also allow implementing the provisions of the FINMA Act, which talks about anti-money laundering. This category covers all of the above types except for investor tokens.
Applications
Most tokens are used in decentralized applications (dApps). When users develop new tokens, they can determine how many they want to create, where they will be sent in the future. Tokens are often used to activate the functionality of relevant applications. For example, Musicoin allows access to the functionality of the service of the same name. Token holders can watch clips and listen to music. The cryptocurrency exchange Binance also has its own token. If a user uses it to make a transaction, the commission is reduced by half.

Certain tokens are designed to represent a real object. For example, you want to sell a property through a smart contract. You can’t physically place the house in a smart contract. Instead, you can apply a token that will represent your property in the contract. WePower (WPR) is a great example of a token that represents a real object (electricity). WePower is a service for buying and selling electricity via blockchain via smart contracts. The WPR token serves to represent a specific amount of electricity.

Another example of a token is CVC. It is used in the decentralized application Civic. The service is designed to track encrypted identifiers of the Ethereum blockchain platform. Using the application, one can verify identity cheaply, reliably and efficiently. Let’s take a closer look at how it works.

For example, you plan to go on a vacation abroad. You will need to identify yourself at various places along the route. The first place is the airline. If it cooperates with Civic, you will receive a QR code requesting your personal data.

By using the service, you send information about yourself directly to the airline via your smartphone. The data is stored on the phone and is fully encrypted. This protects them from theft. A fingerprint, like an iris scan, can confirm that it’s you who owns the data you’ve sent.

You can then use the same phone to identify yourself in different places along the way (airports, hotels). Each organization where you verify your identity can perform an information verification via blockchain.

The service token itself is used to perform transactions related to verification. It can be used to pay for checks performed by banking and government organizations.

As you can see, the CVC token is used to pay for services. Bitcoins, Ethers, NEOs cannot be used for this. However, each transaction will require some ETH to pay for the work of the miners because the token is based on the Ethereum blockchain.

What is the difference between a token and a Coin
The main difference between Coins and Tokens is the way they are created. The former have their own independent blockchains, while the latter are based on existing platforms. You can draw an analogy with a house. A blockchain is the foundation. In this case, the coin is the house itself, while the token is the superstructure of the already built building.

Below you can see a table that clearly describes the differences between tokens and Coins.

Comparison parameter

Coin & Token Comparison

What is it?

Coin – A virtual coin that can be used in the same way as fiat money.
Token – A virtual digital asset.

What is it used for?

Coin – It is used as virtual money, by means of which it is possible to buy goods and services, to carry out transfers.

Token – It can be used for payment, but the main purpose is to provide certain rights, access to services.

Does it have its own blockchain?

Coin – It has its own blockchain.

Token – No own blockchain – tokens work on the basis of already existing platforms.

What can you compare it to?

Coin – With fiat currency. It is the same money that is used to buy and sell various goods and services.

Token – With subway tokens. Tokens provide access to a specific service, can be purchased for money, and can be exchanged like goods. The use of tokens involves narrowly focused actions, which vary depending on the purpose and functionality.

How are they created?

Coin – They are generated by miners using high-powered equipment. Proof of Work and Proof of Stake protocols are most commonly used. Hybrid, original protocols are also often used.

Token – They are issued by a developer. The issuer is either a centralized entity or a decentralized platform. More often than not, the creators conduct an ICO to raise money to develop the development.

How is the issuance done?

Coin – Only decentralized.
Token – Centralized and decentralized.

How is verification done?

Coin – Only decentralized.
Token – Centralized and decentralized.

Virtual currencies are a complex area that is difficult for a newcomer to understand. However, if you understand the exact meaning of the terms, you can make your way in the cryptocurrency industry much easier. We hope you now understand what is meant by the terms “Coin” and “token”.

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Journal Communications (JRN) is comprised of seven essentially separate businesses: The Milwaukee Sentinel, Community Newspapers, Television Stations, Radio Stations, Telecommunications, Printing Services, and Direct Marketing. The company’s five reportable segments

Information on anything and everything is available at our fingertips. In this age of information technology, we investors are blessed to access and gain knowledge about various mutual fund schemes, their returns, etc. And all this information can be accessed for free.

It is no different for those providing financial services, too. There would be a host of emails, messages, and websites hogging to provide information.

Many mutual fund distributors will be approaching you to solicit mutual fund investments into new and the existing mutual fund. Especially now, since the economy is returning from its recession and the markets are turning favorable for investments.

While most of the information sent to us is already there on the world wide web. We can easily check the information about a fund from the AMCs (Asset Management Company’s) website. Still, for some investors, it may be a valuable service.

These mailers and messages keep updating us on the new launches, returns of various schemes, their NAV (Net Asset Value), and many other advantages and disadvantages related to them. But is that all we need to know about investing?

Don’t you think it would be sensible to choose the Best Mutual Fund Distributor who can help manage your investments? What if all this information is only adding to your confusion?

What with the names changes of many mutual fund schemes and portfolio realignments, most investors get confused about what they should do with their mutual fund holdings.

It may make sense to work with a mutual fund distributor who can advise and guide you on your investment decisions.

Only returns are not enough basis to select the right mutual fund distributor. There are many other things you need to look for.

1. Qualification of the Mutual Fund Distributor

The Association of Mutual Funds in India (AMFI) makes it necessary that the individuals engaged in service of mutual fund advisory to have a certification issued by the National Institute of Securities Management (NISM).

But merely relying on the certification isn’t enough as you would need to search a bit more into the philosophy (attitude and rationalization) and research process which the mutual fund distributor and his team adopt while advising clients. Moreover, you need to make sure that the distributor is not an individual who peddles investments as side-business. Remember, acting on the advice offered by a mutual fund distributor who doesn’t hold the requisite knowledge, could spell disaster for your money and investments.

2. Expertise of the Mutual Fund Distributor

Check for the expertise of the mutual fund distributor and his team. Check how well qualified they are in terms of education and what kind of knowledge and experience they possess.

Also, look into whether the distributor has good knowledge of the whole variety of asset classes. Such as equity, debt, fixed income, gold, etc.

They should be able to understand and decipher how these asset classes would be affected by various domestic, international events, decisions or changes in trends related to oil prices interest rates, etc.

Understanding the mutual funds, identifying their suitability for you and your investment portfolio, balancing the asset allocation, and knowing how changes in assets will affect you require a high degree of expertise.

Therefore, you must check how skilled the distributor is and what kind of experience he or she possesses. The mutual fund should be able to identify products that will meet your life requirements as and when they are needed.

3. Accessibility

The mutual fund distributor you choose must be easily contactable. Whether by email, phone, or by meeting in person within a reasonable duration. It is important that the distributor, whom you have entrusted your money with, is accessible as and when you need him. The distributor or team should be able to clarify your doubts within a reasonable period.

Is this distributor able to execute the transactions for you well in time? Timing is of crucial importance in the world of investing in Best Mutual Funds and Stocks. The distributor should be able to execute your transactions within a short time. As quickly as possible.

All these things matter when your hard-earned money is involved.

4. Provide Complete Financial Solutions

We Indians do not like discussing our finances or financial status with all and sundry. Because we have been taught not to reveal our finances and investments with too many people. We have been taught to keep such things and details, confidential and under wraps.

So it would be preferable to find a distributor who is a one-stop solution for all our financial needs. An advisor who can understand and handle our investments better and with confidentiality. An unbiased one. One who would be able to offer us mutual fund products from all fund houses. Not just one or two fund houses.

5. Is the Distributor Asking Questions?

This is the one attribute that will tell you whether a mutual fund distributor is interested in only selling or is he/she really interested in understanding your requirements and needs. And then take the investment forward, accordingly.

Is he/she asking you questions to know better your financial needs, situations and goals? Or are you only being given details about the products to convince you to buy a product and not the solution which you actually are looking out for?

Without posing questions to you, how would anyone know for sure which particular plan is the most suitable for you? Whether you can take the risk of investing in Small-caps or should your investments be limited to debt Mutual Funds? Whether you have one or two Life and Health Insurances or not? These two are quintessential ones to have before we start with mutual fund investments. To secure our loved ones.

Not only helping the investors, but all this information also gathered from them and from other investors all over the country and submitted to the fund houses. With this data collected, the fund houses, as well as the government, are able to better understand the investor’s moods and inclinations. It also helps them bring up new policies and policy changes. Devise new strategies. Develop and come up with new and attractive plans.

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What exactly defines the “best mutual funds” anyway? Funds are by far the most widely used investment vehicle in the world. There are now more mutual funds than there are stocks in the US market. With over 26 thousand funds that Morningstar keeps track of, how can someone know where to find the best ones?

You’ve come to the right place to find out!

You’ll have to read all the way to the end of this page to see my recommended list of “Best Mutual Funds for 2009”. But before we dive into that, let’s back up and do a little mutual fund 101.

What is a mutual fund? A mutual fund is the most popular form of a pooled investment known today. They are designed for people who want to have their money professionally managed at a fairly reasonable cost. In addition to professional management, they give an investor convenience, diversification, record keeping, tax reporting, and safekeeping of securities.

How do mutual funds make money? Mutual funds make money in several ways. The main way is from internal fees that are called expense ratios. Expense ratio sounds a lot better than FEES, right? But it’s the same thing. It’s a percentage of the funds assets that are taken out every day, and it’s how the mutual fund company stays in business. You never see these fees come out, but they definitely affect your annual returns. You want to try to make sure your expense ratios are around 1% or less per year. Some specialty funds are going to be higher, but for the most part you should try to buy funds that are under 1%. Funds are required by law to produce a document called a prospectus, which no one ever reads, that tells you important information about the fund. Fortunately, Morningstar reports most of this same information in a much easier to understand way. The best mutual funds will keep these internal costs to a minimum.

What about commissions? This is an important one. Many mutual funds sold today by bank brokers and full-cost brokers like Merrill Lynch and Edward Jones have commissions, or loads. Loaded funds commissions can vary, but most are between 1% and 5.75%. That means for every $1000 you invest, $45 to $57.50 could be coming out for a commission to the broker, and the rest gets invested into your account. That’s not such a bad thing if the broker getting paid is actually helping you manage your account of mutual funds. Loaded funds can have either front-end or back-end commissions. Front-end means you pay it when you go into the fund with new money, these are called A share funds. Back-end means you pay it when you eventually sell the shares, these are called B share funds. With a B share, the back-end commission gradually declines the longer you hold it. It’s usually completely gone after 7 years. The problem is, B share funds have much higher internal expense ratios, sometimes 2.5% per year. This is how they make up for the commission that they paid the broker when you bought it. If you’re going to buy a loaded fund, you should NOT buy a B share. The other option is a C share. C share funds have no commission when you buy it, and a 1% back-end commission if you sell within the first year. The best mutual funds will have little or no commission on them.

What are 12b-1 Fees? These are another kind of internal fee that you’ll never see come out, but you need to be aware of. Most loaded funds have 12b-1 fees, and a few no-load funds do too. These are basically an annual trailing commission that goes to the broker who sold you the fund. It’s supposed to be his or her incentive to continue to take care of your account. It’s generally .25% per year, so it’s not going to break you. But when you add that on to an up front commission of 5.75%, and an expense ratio of 1.50% or 2.5%, and it starts to become very difficult to keep up with the market. If you’re looking for the best mutual funds, try to avoid 12b-1 fees.

What are No-Load funds? No load funds are funds that have no commission for the investor to pay at all. So every $1 that you invest goes right into the fund. Some famous no-load mutual fund companies are Fidelity Investments, Vanguard, and the Dimensional Funds. The only way a no-load mutual fund makes money is from the internal expense ratios. But that doesn’t mean that their expense ratios are higher. In fact, quite the opposite can be true. No-load funds are in our opinion are some of the best mutual funds available today.

What is an ACTIVELY managed fund This is a fund where the fund manager is actively buying and selling securities inside the fund in attempt to outperform the market. Many people think that actively managed funds are the best mutual funds. Keep in mind that each time a trade is placed, the fund has to pay a commission. These commissions are in addition to the funds expense ratio and are only reported in the annual report. Morningstar says that these trading commissions can run as high as 1% – 2% of the funds assets per year if the manager is a very active trader. You can get a feel for how much trading is going on by looking at the funds turnover rate, which is also reported by Morningstar. If a fund has a turnover ratio of 50%, that means the manager is selling and then buying again 50% of the funds assets each year. Many stock funds commonly have turnover ratios of over 100% per year.

Also, when a stock inside a fund is sold by the manager, any capital gains that are realized from that sale will be passed on to you as the shareholder. So even though you didn’t do anything, you could be paying taxes on your investment at the end of the year. Funds will estimate the amount of capital gains that they plan to pay out at the end of each year. It’s important to look at those estimates (usually published in November) and see if you should sell your shares before they pay it to you. This way you can avoid taking that gain and getting taxed on it. Yet, some of the best mutual funds are still actively managed.

So what’s a PASSIVELY managed fund? A Passively managed fund, usually called an index fund, is a portfolio of stocks or bonds that replicate a major market index. The S&P 500 or the Lehman Brothers Aggregate Bond Index are two major indexes that most people have heard of. There are a lot of people who now agree that the best mutual funds are passively managed. Passively managed funds are very low cost funds to own because there are not a lot of analysts doing research on what stocks to buy and sell. These kinds of funds generally don’t do much trading of the stock or bonds they own, so this keeps the trading commissions and taxes low. Expense ratios of passively managed funds are usually in the 0.08% – 0.5% range, much lower than actively managed funds. These are an excellent choice for an investor who is satisfied to match the performance of the index.

So which mutual funds ARE the best mutual funds? OK, so you’re just about ready to see my list. The best mutual funds to own tend to be index type funds. The truth is, most actively managed mutual funds UNDER-perform the major market indexes over time. There are a lot of reasons for this, and we’ve already mentioned most of them. Commissions, expense ratios, and taxes all add to the cost of owned actively managed funds. All these costs make it much harder for the manager to keep up with, not to mention out-perform the market index. Here are a few quotes from some famous investors about investing in index funds…

“…the best way to own common stocks is through index funds… – Warren Buffett, Berkshire Hathaway Inc. 1996 Shareholder Letter

“A very low-cost index is going to beat a majority of the amateur-managed money or professionally-managed money,” – Warren Buffett 2007

“Additionally, those index funds that are very low-cost (such as Vanguard’s) are investor-friendly by definition and are the best selection for most of those who wish to own equities.” – see page 10 of Berkshire Hathaway Inc. 2003 Annual Report

“Over the 35 years, American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns: All they had to do was piggyback Corporate America in a diversified, low-expense way. An index fund that they never touched would have done the job. Instead many investors have had experiences ranging from mediocre to disastrous.” – page 5, 2004 Berkshire Hathaway Annual Report

“Most individual investors would be better off in an index mutual fund.” – Peter Lynch

Finally, I’m done with all of that! Now here’s my list of recommended funds for your own portfolio for 2009.

The Best Mutual Funds For 2009

The following are all no-load funds. (Of course!)

Dimensional Small Cap Value (DFSVX) This is a small cap value fund that I believe is poised to perform extremely well as the market and economy begin to recover from this recession. Small cap stocks tend to be the first to recover after a recenssion ends, and this fund should be a top performer. Dimensional funds are index funds, but they are enhanced index funds. Dimensional Fund Advisors takes a market index and then screens out the stocks they feel are less likely to perform as well. They use 26 different screening methods to narrow down the list of stocks they want to buy. Then they use some timing and trading strategies to determine when to buy the stock.

Dimensional Emerging Markets Value (DFEVX) This is an index fund that invests in emerging foreign countries. Emerging markets, or under-developed countries, also tend to lead in performance coming out of a recession. This fund invests in countries like Brazil, Chile, China, South Africa, Czech Republic, Hungary, Mexico, Poland, Israel, Malaysia, South Korea, Indonesia, Philippines, Thailand & Turkey. It does not invest currently in Argentina.

Dimensional Tax Managed US Marketwide (DTMMX) This is another index fund that invests in large, mid and small cap companies here in the United States. Morningstar has is rated as a mid cap, but it really invests in all of them. Due to it’s heavy mid and small cap holdings, I believe it is also poised to do well coming out of this recession.

Real properties remain great investments in Australia, especially in the current buyers market. As an investment strategy, real property presents various advantages over other types of investments such as stocks,

Financing investment property is a good way to gain income. When you are in real estate business, you will have to purchase a property, have it restored and sell it at a higher price or you can also have it rented or leased to get a steady source of revenue.

However, some people who doesn’t have enough means make the mistake of using their own money to purchase or repair the property.You will lose a lot of money and it will not guarantee that you will grow your return of investment instantly. It may take a while and worst case scenario, you may go bankrupt. And this is when you ask what could be the other options to get funds for your investments.

There are a few alternatives in financing investment property which you would be wise to learn about so that at least you have some more ideas. You will see the benefits of this if you will learn more about its advantages and disadvantages.

Personal Funds

Some people make a mistake of using personal finances thinking that it is the only choice available for them. So you will have to rely on your own money without any outside support for financing. Good thing about this is that you will not have to worry about paying anyone for the debt, lending company or partners and the revenue will be all yours. While this will help a person avoid having to do a lot of paperwork and following some strict requirements from financing companies, this can also lead to bankruptcy if the person is not careful.

Bank Financing

This is the most common way of financing investment property. You will have to borrow from a bank and secure a line of credit. Then if you will have the property leased or rented, you will be able to get a monthly income to help you pay off your debt or interest. This is the most conventional means known in getting fund for the investment. Bank loaning is an ideal choice for investors but before they can lend you, they will have to appraise the property first to know if the fund you’re requesting is reasonable. It will not be as easy as everyone thinks so it is best to understand if this option works for you before you make any final decision.

Partnership Financing

It is also a good alternative if you have one one more investors to support you in financing investment property.This means that you do not have to use all your personal finances for financing a property, and you do not have to deal with a lot of paperwork. So partnership is good if you are wanting to have a commercial property and can also work if you wish to invest in residential property. This is great choice if you have a good relationship with your partners and maintain that partnership if you don’t want to have any complication in the future.

Personal resources is not the only option available in financing investment property. You need to research and find out which options would benefit you more. If you want the bank to finance your investment, you also need to secure a line a credit and have to go through a lot of. Or you may get some business partners to help and support you with your funds but you will have to report all you do especially when it comes to the money they invested in you.

There are options in financing investment property and these are just a few that you can look into if you want to get funds for your venture. So you should learn and study the best option for your planned investment before you make further actions.