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Which is the best investment option, ETF or Indexes?

Prior to deciding on this answer it would be advisable to get the basics clear. Index is defined as a list of companies that are chosen from the stock markets. The rise and fall in the value of ratio of a consolidated collection of stocks in an index, for a specific time period is manifested through the return offered by the index. ETFs work on market capitalization and bonds. Since the index in itself is non-tradable, the investors are required to purchase all the stocks mentioned therein.

Although the ETFs can fluctuate, the investment can remain secure. You stand to receive the net asset value of your mutual fund investment. After the day’s transactions are over, this value is calculated. This is obtained by dividing the profits or losses by the total number of shares that constitute the fund. The movement of the ETF price is akin to the share prices. The closing price of the day is the ETF for that particular day. There are no further calculations required. The mutual funds are managed by professionals. For a mutual fund there might be a minimum subscription amount, while the ETF do not impose any such restrictions. But, the shares of the mutual funds are not burdened by brokerage charges; as such, the investor can transform his returns as handsome savings.

The choice basically depends on the expectation and objective of the investment portfolio.

Haim Saban: One of the richest American Media Proprietors

Haim Saban was born on the 15th of October, 1944 in Alexandria, Egypt. His present net worth is an estimated 2.8 billion US dollars and has attained the hundred and second position amongst the richest Americans. He is an acclaimed television and media proprietor. He had to undertake a pretty long immigration journey. After the 1956 Suez War, Haim accompanied his family to Israel from his motherland Egypt along with numerous other belonging to the Egyptian Jewish community. The family went bankrupt in 1975 and shifted base to Paris, France. In 1983, he finally moved to Los Angeles and is a resident of the Beverly Hills, California.

His career began as a concert organizer and music promoter while he was in Israel. When he was in France, he got involved in the introduction of the Japanese anime and the sentai TV series. He was responsible for t he production of the scores and the opening themes for the UFO Robot Grendizer and Candy Candy. He continued the same work when he arrived in America and began his odyssey towards emerging as a millionaire by becoming a television producer through laying the foundation of the Saban Entertainment in the year 1988. Then, with the purchase of the Kirch Media Group in 2003, for a whopping $5.7 billion, Haim was finally able to prove his point as a successful immigrant.

Save with Standard & Poor’s 500 Index

The equity performance in America is usually determined with the Standard & Poor’s 500 Index. Constituting of over 70% of the publicly traded companies in the U.S., the S&P Index is hugely popular given its close proximity with the some of the well-known mutual funds that are currently in operation. They are the Vanguard 500 Index Fund, and Spiders (AMEX: SPY), the first exchange traded fund (ETF). The investors can save effectively through it given the fact that the S&P comprises of 500 companies belonging to a diverse range of industries. It is often misapprehended that these 500 companies are rated due to their revenues or market capitalization. But it is basically, the best of the common stocks of the U.S. The factors the work in the selection are sector representation, liquidity and market size.

The investment of the investor stands secured when it is done following the notifications of the S&P 500 as he gets an opportunity to enjoy the benefits of earnings from diverse fund allocation. Nearly every relevant section of the American economy is covered and hence, all the market growth and movements that take place in these sectors earns you rich dividends. Savings is also substantial following the low expense ratios. But at times when the price movement of a limited number of stocks is taken into account, there can be an incomplete picture of the actual price movements.

The television industry mogul

John Kluge has evolved as one of the most popular television industry moguls in the recent years of America. He was born in Chemnitz, Germany on the 21st of September, 1914 and immigrated along with his family to the United States as a little child. He earned his bachelor’s degree in Economics from the Columbia University in 1937. He had also been a student of the Wayne State University prior to joining the Columbia University.

During the middle of the last century, Kluge purchased stocks of the Metropolitan Broadcasting Corporation. This was his first venture in to the media industry as well as his first step towards becoming a millionaire. This Corporation was basically preceded by the DuMont Television Network and the Corporation comprised of two stations. The WABD located in the New York City and the WTTG located in Washington, D.C. today, both these DuMont outlets operates as independent stations. He emerged as the largest stockholder which was worth $6,000,000. He rechristened the company’s name to Metromedia and later in 1986; he sold off the television stations to the 20th Century Fox. The company’s worth is currently an estimated $4 billion.

The Forbes Magazine declared John Kluge as one of the richest men in America. Kluge is also an avid philanthropist. He took an active initiation in the creation of the John W. Kluge Center at the Library of Congress and donated a whopping $60 million.

A Small Cap Index Fund can be a Big Investment Option

Investors who have the skin to bear the heat of price fluctuations and market volatility can consider the Small Cap Index Funds as an amazing investment tool. These investors can attain savings as they go for indexing in stocks through an indexing approach. The investment can be diversified and it can experience substantial growth if you make it a part of the asset allocation program. This can also be a wonderful retirement investment option. The investor who desires to open an account in this type of fund simply requires an initial investment of $250. Here, $50 is regarded as an automatic investment.

Investment in Small Cap Index Fund is not a small term investment option. The investment offers you capital appreciation and the values may also experience substantial variations, depending on the market movements. The assets of this fund are collected as a separate series of the Master Fund, which is termed as the Russell 2000 Index Master Portfolio. 90% of the assets get invested in stocks in the form of Russell 2000 Index. The investor can earn good returns when the stocks of the small companies are purchased, as they can reap the maximum benefits of market volatility. The factors that need to be checked in this regard are like, the market risk and the management risks. It always pays off to diversify in a volatile market.

Igor Olenicoff – Russian real estate Tycoon

Igor Olenicoff immigrated to the United States of America when he was barely eighteen years old. He was accompanied by his family and they had just $800 in hand as they crossed over from Russia following the Russian Revolution of 1917. These immigrants were initially considered as “country-less and effectively illegals”. This was the fate of numerous others who were compelled to immigrate due to the situation of the land. It was basically the caste system that was responsible for this hostile attitude.

In America, Igor attended the USC and began to work as an executive in the Mowtown Records at the initial years of his career. Thus, began his journey towards becoming a millionaire. This was actually initiated when he decided to check out his luck at the real estate business. It was in the year 1973, that Igor laid the foundation stone of Olen Properties. It shaped up to this empire that has spread its branches across the entire continent as well as the world. The current amount of commercial space owned by Olen Properties is over 6.4 million square feet and it has around 11,800 residential units strewn across Los Angeles, Florida and Las Vegas. Igor observes that the key to his spectacular business growth is due to the timely and adequate credit availability that allows the immigrants to live their dreams.

Saving through Vanguard Index Funds

Proper allocation and investment of savings is an important part of an effective retirement plan. Today, there are a number of retirement plan sponsors who are interested in making the index funds the focal point of the investment portfolio. Reports referring to surveys indicate that 17% of 150 employers desired to substitute index funds for a part or whole of their actively managed investment options. This constitutes to around 8% increase. According to Mike Lucci of Vanguard Institutional Sales, the enhanced interest in Index Funds is a great opportunity for investors designing a retirement plan, as it can help them to secure their capital and save in turbulent market conditions. The plans are characterized by supplemental passive investment options and active funds are replaced with a unique line-up of highly diversified low cost index funds.

Participant communication, a simplified plan design coupled with multiple levels of investment choices are marked as endearing attributes for retirees. Savings can be attained through the low-cost indexing, broad diversification and the cash drag is kept low.

Just a few points of caution:

The investor is required to take note of the inflation risks, credits and the prevalent interest rates while investing in bonds. Diversification may not shield you in a declining market. As a plan sponsor, Vanguard believes that they can effectively determine what the best interest for their participants’ prudence is.

Good times ahead for the millionaire immigrants in the US?

Australia, Canada and the United Kingdom had already done it. Now, America has decided to follow suit and take effective measures to attract the immigrant millionaires from across the world. This initiative has been brought about as a constructive effort that will be beneficial to both sides. The immigrants will be allowed to their long standing wish fulfilled – that is, to become an American citizen and the State will use this opportunity to effectively stimulate the drooping economy. This can be perfectly brought about through investment and the simultaneous creation of jobs.

The details of the concerned initiatives can be obtained from the US Department of Homeland Security. According to the US Immigration Act of 1990, enables the allocation of 10,000 employment-based immigrant visas to the investors who qualify the requirements and their families too. If you take a look at the statistics between 1992 and 2004, you would find that the EB-5 visas were issued on an average of just five hundred each year. There are a number of factors that are responsible for this under-utilization. The fluctuating economic environment, program instability and the other countries offering more attractive immigrant investor programs are just a few of them. So, the government is considering “special handling package options for a higher fee’ in order to attract the immigrant millionaires apart from promoting stakeholders and boosting investor confidence.