Spruce up for Spring

My guest today is Nikki Klugh, ASID, CIEC.  I love her wonderful tips for Sprucing up your home for Spring.

The arrival of Spring brings with it an abundance of joy and hope. We find pleasure in the newness of life that is produced in nature around us. Spring becomes a source of inspiration as we look around our homes for ways we can bring this excitement into our everyday surroundings. Thankfully, the longer days and warmer weather also gives us a boost of energy and we’re excited to take on new projects. Are you feeling the urge to bring a fresh look into your home? Areyou wondering where to begin? Here are some ways that you can successfully spruce up for Spring.  

 

Spring for a new color palette using accessories.  Changing the accessories in your home is the easiest way to add new life to your decor. You can change the entire color palette of a room simply by switching out the accessories. Using thehues in the large furniture pieces that you already own as a starting point, playaround with a new color scheme. It will be a synch if most of the large furniture pieces are in neutral tones.  

 

A short cut to selecting a new color palette is to find an inspiration piece that is composed of various colors--one of them should be the color of your existing furniture. The artist or designer of the item has already put together hues that are pleasing to one another. Once a new palette is selected, switch out many of the soft layers like, area rugs, window panels, accent pillows, vases, candles and other accessories. An easy design principle to master is repetition. At least one item, shape or color should be used three or more times in order to create rhythm, establish a pattern and make the design cohesive.

 

Spruce up a room with new paint.  Nothing changes the mood of a room more dramatically than a new wall color.Look around and select the one accent color that you simply love. Using thiscolor, choose three paint variations that are very low in saturation--ones that areon the top of the paint strip. Purchase the three samples and paint 2’ x 2’ test squares on the walls to observe the play of light on them.  Once you decide which color looks best on sunny mornings, at dusk and during lamp-lit evenings, you're ready to go! Most rooms can be painted in a single day; move all of the furniture to the center of the room and cover with a drop cloth. Solidify this new look by adding more of the original saturatedaccent color in the form of additional art or accessories.

 

“Freestyle” by rearranging furniture.  Create a new look and flow by trying a new furniture arrangement. This is the most cost effective way to make a significant change in a room. Be sure to save your back and sketch out the plan first on graph paper. Taking into account your family's traffic flow, create a new focal point. A collection of like items can be displayed on shallow shelves as an art installation. Similar color art pieces can be arranged to make one large collage. Gather items from other rooms in the house to support your new design direction. Add a punch to top off your new room with something totally unexpected. It could be one bold art statement that you thought would never "match", one large object that is opposite on the color wheel of your primary color palette or splurge a bit and really top your room off with a new sparkling light fixture.

 

by Nikki Klugh, ASID, CIEC

Happy Sprucing!

 

Nikki Klugh has more than 14 years ofexperience in interior design. She is the owner and principal designer of NIKKI KLUGH DESIGN GROUP. Find more information at www.nikkiklughdesign.com.

3 Things one should know about investing in Mutual Funds

Today J. Carlos Gomez, President Prime Capital Equities LLC in San Diego, CA is a guest on my blog.  He's providing us with 3 things we should know about Mutual Funds.   

1.  How do they work?

A mutual fund  is a basket of stocks grouped together into an investment vehicle.  Mutual Funds can also be made up of bonds or a combination of both  bonds and stocks.

www.investopedia.com/terms/m/mutualfund.asp  

A Bond Mutual Fund is the same as a Stock Mutual Fund, except that the fund is made up of just bonds.  A Bond & Stock Mutual Fund is comprised of both.

Mutual Funds can be bought at most brokerages houses, such as Charles Schwab, Fidelity or Ameritrade.

A Stock or Stock Certificate represents ownership in a corporation. Stocks or Stock prices are usually much more volatile than bonds.

A Bond is a debt instrument or IOU.  They are issued by banks, government agencies or companies

with an interest rate and a timeline when repayment will be made.

2.  How much do they cost?

When considering a Mutual Fund, one must look at how much they cost.   All Mutual Funds have a needed cost.  It is called the Annual Expense Ratio.

It is the fee needed to pay the operating expenses to run a Mutual Fund.  It is unavoidable.

On average the expense ratio varies from .15% to 2% on a fund.  For example, a Mutual Fund charging .15% on $100,000  = $150  a year.  A Mutual Fund charging

2% on $100,000 will cost you $2,000 a year. 

Other cost to be aware of are called Loaded fees.  They are generally called Class A for Front Loaded or Class  B for Back-end loaded charges on a Mutual Fund.   They can range from

2.5% to 5%.  A Class A Mutual Fund will  charge you immediately on your investment.  For example,  a Front Load of 3% on a $100,000 investment will cost

you $3,000 plus the ongoing Annual Expense Ratio.  The Front Load is only paid one time at the initial investment.

Class B Mutual Funds apply their charges when you sell the Mutual Fund, but you still pay the Annual Expense Ratio.  It usually has a decreasing sliding scale over a number of years. For example,  if you sell a Class B Mutual Fund with

a starting fee of 5% after a number of years, it may only charge you 2% to exit the Mutual Fund.   So the longer one holds a Class B Mutual Fund the less likely they will pay a fee if they

sell after the deferred charges period.

Sales charges or Class A and Class B  fees can be avoided on Mutual Funds.  They are called No Load Mutual Funds and they do not have Loaded fees when one buys or sells them.

An investors still pays the Annual Expense Ratio regardless of whether a Mutual Fund is Loaded or not.

3. What is the difference between an Active and Index strategy?

An Active Mutual Fund is trying beat a particular index.  There are approximately 12,000 stocks traded daily in the U.S from 60 different countries.

The market or analyst break up the market into different categorizes.  Categorizes or indexes are created into  International, Emerging , Small and Large companies.

Other indexes could be made from  value and growth companies.  One of the most famous indexes is the Standard& Poor’s 500.  It is a large capitalization or big company benchmark.

You find Coca Cola, Exxon and Colgate in this index.

So an Active Mutual Fund will attempt to beat the S&P 500.   They do this by applying different strategies that range from buying and selling stocks within the index that they believe will outperform all the other stocks.

Other strategies could include timing the market and over or under weighting certain sectors of the index.  The strategies vary from  one Active Mutual Fund to another.  There is no standard strategy

to beat a certain index.  In general most Active Mutual Funds have an Annual Expense of 1% or more. 

An Index Mutual Fund is a plain vanilla strategy that follows a certain category.  Other popular indexes are the Russell 2000 and Russell 3000.  They are considered plain vanilla because they do not

trade much and the strategy is to copy the flow of an index.  The average Annual Expense Ratio on an Index Mutual Fund is .20%.

One analogy to show the difference between the two Mutual Fund strategies is a road trip from San Diego to Los Angeles.  Automobile A is the Active Mutual Fund and automobile B is the Index Mutual Fund.

Automobile B strategy is the go with the flow of traffic from San Diego to Los Angeles.  Automobile A will attempt to beat automobile B by switching from lane to lane to gain an edge and even speed

when necessary.  At the end of the road trip Automobile A may have beaten automobile B, but when the cost are accounted for, it tells a different story.  To begin, Automobile A

cost more to operate.  Automobile A created other cost when it was switching from lane to lane because of the wear and tear on the vehicle.   Usually Active Funds trade more and the commission fees, realized gain can drag down the performance. 

They may have also have received a speeding ticket by betting big on a stock that underperformed that affected the actual returns.

In general, it is very difficult to beat an Index strategies because of the higher fees an Active Mutual Fund charges.  If for example an investor chose an under performing Active Mutual Fund that lagged the S&P 500 by 1.5% annually, the cost

could be substantial over time.

$100,000 x 1.5% = $1,500 a year.   Over a period of ten years the underperformance could cost $15,000.

In Summary,  an investor should consider his risk tolerance and financial goals when choosing a Mutual Fund.  Morningstar is a website that helps investors evaluate different Mutual Funds.

If an investor looking for more guidance, a fee only Advisor could help make recommendations and if needed manage monies.

I hope you found the information that J. Carlos Gomez has provided helpful.  If you should have any questions please contact him at  Carlos@primecapitalequities.com

As always thank you for reading.