A quick guide for moving into mutual funds

By Michele Lerner

Like many people, the recession encouraged me to take a harder line with my budget. I'm definitely saving more and being more careful with spending.  But I'm also looking past just saving the money I already have -- I'm looking into earning it.

This morning, I checked on the interest rate on my emergency savings account, and it turned out to be less than 0.5 percent, much lower than I realized! As a result, my next financial move will be to shift some of those savings into a fund where the interest is higher. I decided to do some research, and thought it might be helpful to those foraying into this higher return territory.

From savings accounts to mutual funds

While your basic emergency savings should stay intact in a fund where the money can be accessed quickly when necessary, as soon as that savings account has reached your target comfort level it is time to move into slightly riskier territory to increase the return on your money.

Investors with a deep understanding of the stock market might feel ready to invest in individual stocks, but individuals who are new to the investment world tend to opt for a mutual fund. A mutual fund pools money from investors and builds a portfolio of investments within the fund, with the investors sharing in the gains or losses of the fund.

The main reason new investors opt for mutual funds, besides their professional management,

By Richard Barrington

Have you ever run a long-distance race?

I find it useful to think of saving money like distance running. If you obsess over the total distance, then each step seems hopelessly insignificant in covering the necessary ground. If instead you just start making those steps, and concentrate on finding a comfortable and consistent pace, you'll find that before you know it, the distance will take care of itself.

In other words, focus on the next step, because that is what you can most directly control.

In terms of saving money, a great way to make that next step is with a contribution to an IRA -- either a traditional or a Roth IRA. To help you make that step, there are a few things you should know about IRAs, including important information on IRA contribution limitations for this year.

1. Traditional and Roth IRA contribution limitations

Both traditional and Roth IRAs have certain tax advantages, which will be discussed below in "Deciding on a traditional vs. a Roth IRA." However, for anyone considering starting an IRA this year or making continued contributions into an IRA account, it's critical to know that there are limits on how much you can contribute to IRAs each year.

To start with the simple part, the basic contribution limits for both traditional and Roth IRAs are the same, and are unchanged for 2011. The only difference is that taxpayers who are aged 50 and over are allowed to make higher,

By Peter Andrew

Last year, my sister and brother-in-law wanted to remodel their kitchen. They both have good, secure jobs and great credit scores, and could easily have raised the money they needed, even in this economic climate. However, at the same time my mom had quite a hefty balance in a high yield savings account. With bank rates running low, it didn't take them long to work out that my mother could earn more interest, and my sister pay less, if they cut out the bank, and worked out loan terms between themselves.

And that, in essence, is what peer-to-peer lending (a.k.a. person-to-person or P2P lending ) is all about. By eliminating the costly overheads and shareholder profits of banks (not to mention those bonuses), a loan between individuals can make both the borrower and lender better off. None of this is new. Families and friends have been helping each other out for millennia.

P2P lending web sites

What is new is the worldwide web. This allows strangers to lend and borrow through a middleman website that charges a small fraction of the mark-up that banks take for, in effect, brokering a loan. The first of these sites in America, Prosper, began in 2006, and by October 2010 had attracted more than a million members and had funded $205 million worth of loans.

The other big player in this country is

By Matt Riddle

A year ago, my wife and I switched banks. She was pregnant with our first kid and, like many Americans, we were saving money however we could.

We had our accounts in two different banks -- both traditional national chains with thousands of branches in the country and sports stadiums named after them -- that offered savings accounts that were accumulating about 0.25 percent interest on a small sum. While we were mostly happy with our banks, our needs had changed, and we wanted better interest rates on our accounts. After fees, we realized that we weren't saving but losing money.

Employees at both banks essentially admitted they were giving us an inferior product. We sorted through what we thought were the best online banks as well as a few local ones and picked one that offered not only a high interest savings account but interest checking as well. After that, we couldn't switch banks fast enough. I wanted our money to go toward saving for our future, not domes for basketball games.

How to find the best savings account rates and what to look for

There is a growing trend among banks to offer better savings rates in non-traditional savings accounts. So if you're thinking about making a switch to capitalize on higher interest rates, keep these five things in mind while hunting for better savings.

1. Interest rate

Is

By Peter Andrew

You say tomatoes...

Do you think the Federal Reserve should be more like the Bank of England? No, I'm not suggesting it should employ people with funny accents or lose most of its international influence. But perhaps its people could learn something from their opposite numbers in London about plain speaking. The Daily Telegraph, a UK-based newspaper, reported at the end of September 2010 some remarks by the deputy governor of the Bank of England. He told British savers to, "stop moaning and start spending."

Well, that's blunt, and you can't imagine a senior Fed official coming out with anything like it. However, if you look at what the Fed does, rather than what it says, it's hard to escape the conclusion that it's trying to send a similar message to Americans. Perhaps it should just come clean like the Brits.

Saving accounts that lose you money

Partly thanks to the Fed, interest rates right now are generally at or near historic lows. That's great if you need a mortgage, but bad news if you're saving up for the down payment you'll need to get that home loan - or for anything else for that matter. Indeed, if you factor in fees and inflation, you can actually come out at a loss by keeping your money in some savings accounts.

But don't despair. It may be a long time before we again see the sorts of high rates for savers that

By MoneyBlueBook

This is a guest post from Marc Pearlman.

When people ask me if they could be successful at day trading, my first response is, "Do you know what day trading is?"

Most people don't. You might think day trading is about finding the best online brokerage, grabbing a stack of financial reports, arming yourself with financial blogs and news and then diving in.

What many would-be day traders don't realize is that success doesn't come from the uncanny ability to analyze balance sheets and fundamentals like Warren Buffett. And even if you have the ability to interpret charts and price action--the primary skill for day trading--this is secondary to having the strict discipline of adhering to specific rules and guidelines.

Without these rules in place, day trading is like a child playing with a chainsaw.

I'm not judging the merits of day trading. I know both very successful day traders and those who blew themselves up financially with day trading. (For what it's worth, I know many more of the latter variety.) But if you're going to succeed at this kind of investing, you'd better understand what it takes.

What it takes to succeed

Here are observations from my experience as both a professional trader and money manager about what it takes to succeed at day trading:

• Hard work. Brains don't hurt, but day trading is a skill, and that skill needs to be developed by treating this as a business. A lot of people day trade as a side avocation or hobby, maybe because it seems