Exchange-traded funds - ETFs for short - are billed as among the most investor-friendly products ever created, thanks to low fees, intraday pricing, and unprecedented flexibility versus the mutual funds they've ostensibly "replaced."
- Four Black Monday Takeaways Wall Street Hopes ETF Investors Never Understand
- The Difference Between ETFs and Mutual Funds
- The Best Mutual Fund in Tech Owns Zero Shares of Apple or Google
- Investing in Mutual Funds: The Best Pick to Protect from Interest Rate Volatility
- How to Use Money Market Funds to Shield Your 401(k) from a Crash
- What Bankrupt Athletes Wish They Knew About Financial Windfalls
- The Five Questions You Need to Ask Your Financial Advisor Right Now
- Are Junk Bonds About to Become a Victim of Their Own Popularity?
- Don't Get Bullied out of Bonds
- Defensive Investing: The Eight Ways to Tell If You Should Hold – or Fold – Your Mutual Fund
- Defensive Investing: Eight Ways to Tell if Your Mutual Fund Still Fits You
- Bulls Vs. Bears: Who's Winning Wall Street's Biggest Battle?
Exchange-traded funds (ETFs) and mutual funds are alike in that both offer diversification and professional management. Otherwise, the two investment vehicles differ greatly.
Key differences include how these funds are bought and sold, as well as pricing, transaction costs, and much more.
The best mutual fund in tech has managed annual returns of nearly 11% without owning a single share of a big tech darlings.
And yet the performance of the Fidelity Select IT Services Fund (MUTF: FBSOX) makes it the best mutual fund in the tech sector for the past 15 years.
Since March 10, 2000 - the peak of the tech bubble - the fund has posted an average annual return of 10.9%. According to Lipper, that's more than double the second-best mutual fund in the tech sector.
Right now investors should be investing in mutual funds that provide stability - not ones that chase yield.
A case can be made for the Fed doves who want to see rates stay low for a while, or the Fed hawks who want rate hikes now.
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American workers with 401(k) plans are right to dread a stock market crash that would wipe out a big chunk of their hard-earned balances.
But instead of living in fear, it's possible to do something about it - thanks to the option of money market funds, which almost every 401(k) plan offers.
And the best part is, reallocating 401(k) investments to a money market fund couldn't be any easier.
Few among us haven't dreamed of sudden riches - the financial windfall of a big legal settlement, an unexpected inheritance, a winning lottery ticket, or, for the young and athletically gifted, a lucrative contract with a major professional sports franchise.
But it turns out that few are prepared for a financial windfall when it comes their way.
Nowhere is this more obvious than with big sports stars.
Despite the proliferation of multimillion-dollar contracts, an astonishing number of professional athletes are forced to declare bankruptcy within a few years of hanging up their jerseys.
In the National Football League, for example, where the average salary is $1.9 million, 78% of former players are in bankruptcy within five years of retirement. That figure is 60% for former National Basketball Association players, who earn an average of $5.5 million a year as players.
How can people so generously compensated go broke so quickly?
Part of it has to do with youth, but many of the mistakes athletes make with the financial windfall of a professional sports salary also are made by regular people who suddenly come into large sums of money.
There's a lot we all can learn from their mistakes. When it comes to financial windfalls, it's best to know what to expect ahead of time so you can put the money to work for you instead of squandering it.
"Every single day, people come into large sums of money, whether it's a thousand dollars or a million, and without proper planning, funds quickly disappear," writes Jim Wang in U.S. News and World Report. "Just look at the horrible stories you often hear of lottery winners, and you'll have enough evidence that everyone needs a little preparation, even if you don't expect to get a windfall."
That's everybody who isn't a gazillionaire. You may know a few people who fit this bill.
Being a 99-percenter just means that you want to do better.
In that regard, you're no different than the 1%. They just have more money and by extension more freedom than you.
That doesn't mean they are any smarter.
I know plenty of uber-rich people who are financially inept. You probably do, too.
What sets people apart sometimes, though, is as simple as the questions they ask. True 1-percenters have this down pat-even if they don't have a gazillion dollars.
Here are five things you need to ask your financial advisor today if you want to join them.
If you do, you'll profit more consistently, reduce your risk and invest with greater peace of mind.
And I have no doubt that you will join the real 1%.
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Junk bonds, that is.
More formally known as high-yield bonds - junk bonds have been on a tear lately.
With the Federal Reserve vowing to keep interest rates at or near zero through 2014, investors seeking higher-yield investments are eyeing junk bond exchange-traded funds (ETFs).
Investors dumped $31 billion into high-yield bond funds during the first quarter of 2012 according to research firm EPFR Global. That's almost four times the global demand for junk-bond funds in 2011.
Junk bonds are offering generous dividends at a time when most other bond investments aren't even matching the rate of inflation.
"Clients are essentially trying to replace the income they used to get from their government bonds," Hans Olsen, head of investment strategy in the Americas for Barclays Wealth, told Bloomberg News.
Indeed, one of the largest junk bond exchange traded funds, the iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG) is currently yielding more than 7%, while yields on the 10-year Treasury note hover just above 2%.
But while robust demand and issuance for junk bonds is a sign of a healthy market, there are reasons for concern.
Now some analysts are afraid that once the selling of bonds begins it will be indiscriminate, and there will be a bloodbath. But that fear totally ignores the new investment reality in which we're living.
The fact is, stocks won't be crawling out of the gutter anytime soon, and until they do, investors will continue to look elsewhere for a store of value. They have already decided they can find it in two places: U.S. bonds and gold.
But what if your buy-and-hold strategy has been implemented using mutual funds? As part of a solid "defensive-investing" review, should you consider bailing out of your current mutual-fund holdings at this point and start looking for better funds to ride into any future recovery?
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But what if your buy-and-hold strategy has been implemented using mutual funds? As part of a solid "defensive-investing" review, should you consider bailing out of your current mutual-fund holdings at this point and looking for better funds to ride into any future recovery?
You'll only know if you take the time to make the review. And you should take that time.
But despite what the bears would have you believe, several strong companies have shrugged such data aside and broken through to new highs. In fact, long-term, we continue to see evidence that a robust business-led recovery is underway.