Tag Archives: mutual funds
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.
Even if your bank crashes down, the FDIC Insurance can effectively protect your savings. Investors consider banks as a safe haven for their hard-earned savings and capitals. The banks on the other hand loans out the money and invests it in a variety of projects. If any of these activities goes haywire, the money deposited by you may well face the danger. Under such circumstances, the FDIC Insurance offers security and helps the bank to shield your cash from any probable damage.
The FDIC covers deposits that fall under the category of Checking accounts, Savings accounts CDs and Money market accounts. Here, one needs to note that the money market funds are not covered by the FDIC. This insurance cover is not extended to the safety deposit box contents, the investments like the mutual funds or stocks and the insurance products of the likes of annuities. Further, the products mentioned above do not fall under the category of deposits. This is in spite of the fact that, these products might have been bought from the bank. The credit unions also do not fall under the purview of the FDIC Insurance.
The basic insurance limitations are:
- Every depositor can have up to $100,000, covered.
- For a retirement account, the depositor can have $250,000.
These limits can vary again with the different banking institutions. The depositor can well increase his coverage by going for multiple bank accounts.
During the 1960s, Dr. Elwin Bautista emigrated from the Philippines to America accompanied by his wife Julia and settled down at Midwest. They basically belonged to the group of international medical graduates, who were being recruited by the medical centers in America. Dr. Bautista decided to pledge his service to the hospital, where he received his training. Elwin made good use of this opportunity to practice advanced medicine and eventually and honed his skills in surgical specialty. He went on to develop life-saving techniques that were acknowledged by the surgeons across the world. With the gradual rise in fortunes, the Bautista couple emerged as the rising millionaires.
They had always believed that regardless of being an immigrant or a millionaire, the core value that ought to be regarded dear, is education. There can be no substitute to successful education as this alone makes a complete individual, who is equipped to take all decisions with the best of intentions. This idea gets reflected in the professional status of their five children who went on attain advanced degrees in law, occupational therapy, psychology and divinity.
The journey to become a millionaire occurred when Dr, Bautista’s surgical practice caught on and he became a business partner in a successful clinic. On the other hand, Julia concentrated on enhancing their assets through conservative investments like the retirement plans sponsored by her husband’s clinic and mutual funds.
Index investing can be an amazing savings option. As an investor, you first get to have a clear idea about what are Indexes. Well, The Dow, S&P 500, Nasdaq 100 or the Wilshire 5000, all of them are indexes. Indexes are basically groups of stocks that are carefully selected in order to effectively represent certain sections or portions of the stock market. Majority of the index investments are based on S&P 500 or the Wilshire 5000. As you invest in them, you become a part-owner of these companies
As you delve deep into this investment pool, you would notice that the broad market index does match very closely to the return of the overall stock market. Majority of the mutual funds do not really manage to achieve this. The statistical data of the last ten years would reveal that less than 20% of the large-cap mutual funds have managed to outperform the S&P 500. This makes index investing a great option.
Then, the cost-efficient factor makes it a great way to save your investment too. Investment through the index funds are carried out only in those companies that are enlisted in the index. You don’t require an analyst to get this data! So, this way, you are saved on the operating fees that are usually charged by the funds from the shareholders. This indeed offers you high savings option.