Tag Archives: mutual

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Building Income

Exchange traded funds vs mutual funds What they have in common: They can be in cash accounts or retirement accounts. They hold a variety of stocks/bonds/commodities etc. Where they differ: ETFs: Generally follow the trend of earnings of an index such as S and P 500. Can be actively managed or passively.  Have lower costs.  Have lower taxation only when sold. Transactions are between stockholders and buyers not managers of the fund. Traded on the exchange.  Options can be done.  More liquid investment. Can be traded quickly.  Have leveraged etfs that perform better than the index fund by using margins.  Can specify investment industries.  Have not been around as long as mutual funds.  Mutual funds: Generally managed.  Higher cost. Not always follow indexes.  You buy in and it is not as liquid.  Takes longer to get cash out. Gets taxed by capital gains. Not traded on exchange.  No options. No…

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Building Income

Why the generic bank account is a bad investment Banks will only give you a low interest rate and at times may even charge fees. It is much more beneficial to invest extra money outside of your emergency fund into some type of higher yielding account. Banks may yield 5% if you are lucky and even some stocks will only get you 1%-8%. What I don’t understand is why people are fine with this low growth when you could be making 10% or more. Even the SP500 itself yields about 10%. Cash example: You have 10k in either the bank or in a mutual fund making 5% in the bank and 10% in the mutual fund. Bank per year=$500. Mutual fund per year=$1000. The only advantage to having money in the bank is that you have a guarantee of 250k from the government if the bank is robbed.  Liquidity should…

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