TECHNO MATERIAL

No problem, as long as you don’t die.
If you do die—no, when you do die—your loved ones will soon find that by not taking action, you have left their inheritance up to the state.
Let’s say you own your house, which was part of your divorce settlement, in your own name. Since divorcing, you’ve remarried and are hopelessly in love with your new hubby. Still, because of the terrible divorce you went through, you feel a little safer keeping the house in just your name. Your two children from your first marriage have never liked the idea that you remarried, and even though they’re grown, they’re extremely possessive of the house they grew up in. If anything were to happen to you, you would want your new husband to be able to stay in the house for as long as he likes, then title would transfer to your kids. But you haven’t got around to creating a will or a trust.

Once a fund starts to do well, the word gets out and it seems as if everyone wants to invest in it. A fund that continues to take on new investors’ money and keeps getting larger and larger is known as an open-end mutual fund. This means there’s no set limit as to how much money they’ll permit to be invested in the fund. At their discretion, the manager and others in authority may sometimes close the fund to new investors once they’ve taken in more money than they feel is manageable, but this is
decision they can make anytime, as they go along.
How Is an Open-End Fund Priced?
At the end of each day, the manager totals up the entire value of the portfolio that constitutes this mutual fund. He divides that total by how many shares are owned by the investors. This figure, whatever it comes out to, is called the net asset value, or NAV It is what each of your shares is worth. If you are a new investor and want to invest $1,000 into this mutual fund, and the NAV that day was $10 a share, you would own one hundred shares of the mutual fund. If the fund’s value goes up by $.25 a share, you will make $25. The more shares you have, the more you make, and the more you lose if the fund goes down.

There is another type of mutual fund, known as a closed-end fund. This is where from the very beginning the number of shares that can be sold to the public is decided ahead of time; once the shares are sold, the fund is closed to new business. It won’t issue new shares, the way the open-end funds will. New people can buy into a closed-end fund only if someone who owns it wants to sell it. Essentially it’s priced and traded just like a stock—so the value of its shares may not correspond exactly to the value of its holdings.
For our purposes here, though, we’re dealing with open-end funds. These are the ones you usually hear people talking about, and these are the ones commonly offered in 401(k) and 403(b) retirement plans.