Time for Hourly Income Fund?

There’s no denying the popularity of mutual funds among individual investors. An estimated 96 million individual investors own funds, and hold 87 percent of total mutual fund assets, which now top $12 trillion. Altogether, 55 million households - or about half of all U.S. households - own funds, with historical fund performance driving most purchase decisions.

The need for liquidity and better than average returns, however – especially in the midst of widespread fiscal uncertainty – keeps millions of Americans out of the mutual fund market and searching for suitable investment opportunities. The current credit crunch and investment firm fallout should prompt a new look at non-traditional investment vehicles. Suppose, for example, investors could put their dollars into funds based on baskets of emerging opportunities such as domain names, social marketing innovations and advances in DNA testing technology? Suppose fund performance focused not on annual returns, but daily returns that could be tracked in real-time and withdrawn at any time – even daily or weekly to pay living expenses?

While not all investments have the potential to produce instant income, many do and investors shouldn’t have to wait 6 months or a year for returns, particularly in an uncertain market environment. A $100,000 investment for example, might produce a $6,000 return annually, or over $110 per week. The ability to immediately access these dividends would reduce actual and perceived investor risk, and attract more investments through increased liquidity. Additionally, dividend reinvestment would compound returns as we all know. Think about an investor who puts in $1 million and waiting for 6 months to 1 year to receive a dividend check? How many minor ‘heart attacks’ he or she will have until the dividend check is received, by looking at all the volatility that goes in the markets in general? If I were to invest $1 Million into a fund, I would rather receive $170 daily returns than wait for 1 year and get an hefty check for $60K..Guess ‘why’? I need money every day and also I would be minimizing my risk everyday with this fund model! I am pretty sure at least 25-30% of mutual fund investors will be like me who want to ‘feel’ the profits every day vs once in 6 months or 1 year! Does that make sense?

Since businesses make money every day, why can’t they pay you every day so that you can withdraw or reinvest earnings? Would anyone be happy to receive one hefty pay check for their annual salary at the end of the year rather than getting paid every week even if they were to offer ‘10% more’ for paying in one check at the end of the year? As simple as that! Because, normal people need money everyday! Millions of people are always on the look out for an ‘extra’ source of income and end up starting side businesses. They would be happy to put in their money in an hourly income fund. It doesn’t matter, even if it works out to 5 or 6% per annum as long as they can access the profits every day!

We used to check stock quotes in the newspaper, trading required a call to a broker and loans came exclusively from banks rather than through peer-to-peer lending networks such as Prosper.com. Evolution is a natural and healthy part of financial markets. People need money on a daily basis and investments that meet that need will succeed in the years to come. Even if a small fraction of the mutual fund investors and ‘extra’ income seekers were to sign up for such an ‘Hourly Income Fund’ model, it could be a great success to the fund owners and investors!”

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