Investor Ed gives unbiased answsers to comnon questions on investing and personal finance every week.http://www.sec.gov/investor.shtmlen-usTue, 10 Jul 2007 11:00:00 ESTQ: Why do many individuals use passively managed mutual funds, known as index funds, to save for retirement and other financial goals? A: Index funds try to equal, not beat, the returns of a major index, such as the S&P 500. Unlike actively managed mutual funds, which pick and choose investments based upon the research of the mutual fund managers, an index fund typically tracks the holdings of a chosen index through computer programmed buying and selling. Not surprisingly, the fees for index mutual funds generally are much lower than the fees for actively managed mutual funds. When comparing similar mutual funds, lower fees can translate into better performance, according to researchers. In any given year, most actively managed funds do not "beat the market." In fact, studies show that very few actively managed funds, including those with impressive short term performance records, provide stronger-than-benchmark returns over long periods of time. Q: How do I get permission to use Ask Investor Ed in a community newsletter? A: You don't need permission to use Ask Investor Ed and other educational materials on the Investor Information section of the SEC's website. You may use, reproduce, and distribute these education materials free of copyright restrictions.http://www.sec.gov/rss/ask_investor_ed/highcostmf.htmTue, 10 Jul 2007 11:00:00 ESTQ: I'm looking to invest in a mutual fund. I've found one with low annual operating expenses that I think meets my investing goals. Anything else I should look out for? A: Don't forget to consider the fund's turnover rate, particularly if you are holding your investment in a taxable account. A fund's portfolio turnover rate measures how often it buys and sells securities. A fund that frequently buys and sells securities may generate both higher trading costs (which will eat into your returns) and capital gain taxes, potentially leaving you with a higher tax bill. The difference between a fund's before- and after-tax returns can be quite striking. Don't believe Investor Ed? Take a look at the prospectus of a fund with a high turnover rate.http://www.sec.gov/rss/ask_investor_ed/turnover_rate.htmTue, 26 Jun 2007 09:15:00 ESTQ: I receive calls almost every day about investment opportunities. Is there anyway I can stop these people from calling me? A: These people are, of course, cold callers. If you want the calls to stop, there are two things you should do. First, add your phone number to the National Do Not Call Registry. You can add both home and cell phone numbers. How? Either go to donotcall.gov or call the following toll free number: 1-888-382-1222. Keep in mind that you'll have to re-register your phone number every five years to stay on the list. Then, tell any cold callers to put your name and telephone number on their "do not call" list. Will this stop every telemarketing call? No. You still may receive calls from political organizations, charities, telephone surveyors, and companies with whom you have an established business relationship. And a few other exceptions apply. For example, family members, even long-winded ones, may still call you. Q: Does the SEC have jurisdiction over privately-held companies? A: A company does not need to file reports with the SEC unless 1) the company makes a public offering of its stock or other securities or 2) has 500 or more shareholders and $10 million in assets. However, private companies that are not required to file reports with the SEC may still be subject to its jurisdiction under certain anti-fraud provisions of the securities laws. I'm Investor Ed and that's what I know.http://www.sec.gov/rss/ask_investor_ed/cold_callers.htmTue, 29 May 2007 10:20:00 ESTQ: A friend recommended a broker to me. Is there an easy way for me to check out her background before I contact her? A: Yes, very easy. Go to nasdbrokercheck.com. Click "start search" and type in the name of the broker you want to search. Bingo. You'll see a summary of qualifications, employment history, and conduct - all in a matter of seconds. You can also ask your state securities regulator to provide you with this information. Both pull information from the same database - the CRD or Central Registration Depositary. The only difference? Investor Ed knows that state securities regulators may provide more information from the CRD than NASD, especially when it comes to investor complaints. Q: What is the rule of 72? A: The Rule of 72 - really just a "rule of thumb" - is a great way to estimate how an investment will grow over time. If you know an investment's expected rate of return, the Rule of 72 can tell you approximately how long it will take for the investment to double in value. Simply divide the number 72 by the investment's expected rate of return (ignoring the percent sign). Assuming an expected rate of return of 9 percent, an investment will double in value about every 8 years (72 divided by 9 equals 8). I'm Investor Ed and that's all I know.http://www.sec.gov/rss/ask_investor_ed/broker_check.htmWed, 25 Apr 2007 11:20:00 EST