Tag Archives: stocks

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.

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.

How the FDIC protects your savings?

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:

  1. Every depositor can have up to $100,000, covered.
  2. 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.