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Mutual Fund News

You can count on Internet calculators

Canny investor that you are, there's no way you'd have bought Nortel Networks shares at $120. No, you shrewdly bided your time until they plunged to $12.

Then, you struck.

Now that your shares have fallen by roughly 94 per cent, you face an important question as you fine-tune your portfolio for optimum performance when the market stabilizes. Do you keep those Nortel remnants you own, or find a more promising place for your money?

One way to answer this question is to use one of the on-line investing calculators available on the Internet to help you with involved financial computations. These tools are free for the most part, yet they're often surprisingly sophisticated.

On the Web site FinanCenter at http://www.financenter.com, you'll find a great collection of stock analyzers that includes one titled: "Should I sell my stock now and invest the money elsewhere?"

Just type in the buying price and quantity of your shares, the commissions you paid and your guess of where the share price will be at some future point. Then, supply the particulars for a stock you're looking at as an alternative.

Let's say you're a hopeful sort who believes Nortel will rise to $2 in 12 months, but you're wondering if it would be smarter to sell and buy something steady, maybe Royal Bank. Using current numbers for both stocks, the FinanCenter analyzer showed that Royal Bank shares would have to deliver a 278.5-per-cent total return after brokerage fees to equal the projected gain of Nortel shares.

Numbers such as these won't make the decision on what to do about Nortel stock any easier, but they will at least provide solid information for making your call.

Other FinanCenter stock analyzers look at things such as trading costs and dividend yields. One calculator that looks especially relevant now explores the potential gains from dividend stocks compared with growth stocks.

You may be surprised to see how a stock with a fat dividend yield and a slowly rising dividend payout can outperform a growth stock, even while the share price of the dividend stock doesn't rise nearly as much on an annual basis.

FinanCenter is a supplier of on-line calculators to financial Web sites such as the one offered by Kiplinger's magazine at http://www.kiplinger.com. In the "Tools" area of this site, you'll find a motherlode of investing calculators for stocks, mutual funds and bonds.

Among the highlights are calculators that help you to compare the costs involved with front-load and back-load mutual funds, and with load and no-load funds. There's also a tool to help you assess the impact on your fund returns of purchase and continuing management fees.

Two other fee calculators for mutual funds can be found in the "Investor Resources" area of the Ontario Securities Commission Web site at http://www.osc.gov.on.ca, and in the "Investor Information Area" of the U.S. Securities and Exchange Commission site at http://www.sec.gov.

You'll find another valuable collection of calculators at the Independent Financial Web site at http://www.independentfinancial.on.ca. One with unfortunate applicability to today's stock markets is the percentage change calculator. It will quickly tell you how much you've lost (or gained) in a stock -- just type in the price when you bought and now.

On-line calculators are especially useful for messy, time-consuming calculations such as the average purchase price on a stock that you've bought gradually and in varying amounts.

A site called RefTools at http://www.reftools.com has a calculator that will supply your average purchase price on up to four buy transactions on the same stock. To find this calculator, look under the "Business and Finance" heading, then click on "Investing."

An on-line tool with all-round usefulness is the future-worth calculator in the "My Money" section of the WebFin site at http://www.webfin.com. To find out what your investments will be worth at a point in the future, just submit your expected rate of return, the amount of your investment and your time horizon. You also can factor in the impact of regular contributions over time.

If you've got a lot of guaranteed investment certificates scattered around various financial institutions, then you may want to try the deposit insurance calculator offered by Canada Deposit Insurance Corp. at http://www.cdic.ca. This is a particularly worthwhile exercise if you deal with smaller banks or trust companies.

Just list all your holdings at each institution and then let the calculator tell you how much of your deposits are covered (the usual limit is $60,000 per deposit).

Among pay Web sites, GlobeinvestorGold at http://www.gold.globeinvestor.com offers a complete collection of tools in its "Personal Finance" section. Just click where it says "Tools" and you'll find 30 investing and personal finance calculators. A highlight: the stock options calculator, which will show you the value of your options for the next one to 25 years.

On-line calculators won't accomplish anything you couldn't do for yourself if you had the time and patience. They're just a lot faster, and they don't make dumb mistakes.
rcarrick@globeandmail.ca

© 2007 The Globe and Mail. All rights reserved.

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