ETF. ETN. ETP. So many initialisms. Here we'll explore what these things are and what differences exist among them. ETF vs. ETN vs. ETP - What Do the Letters Mean? First, here's what these initialisms stand for: ETF - Exchange Traded FundETN - Exchange Traded NoteETP - Exchange Traded Product Secondly, I created this crude Venn diagram to illustrate the … [Read more...] about ETF vs. ETN vs. ETP – Differences, Similarities, Risks, Etc.
Investing 101
23 Emotional and Cognitive Biases in Investing To Avoid
Humans are inherently susceptible to irrational preferences called biases. Since investors are human, there are a number of emotional and cognitive biases in investing decisions to be aware of and try to avoid. Introduction - What Are Investing Biases? Investing biases are these irrational preferences that affect investing decisions and subsequent outcomes. They … [Read more...] about 23 Emotional and Cognitive Biases in Investing To Avoid
Market Timing – Time in the Market vs. Timing the Market
Market timing refers to trying to predict future market movement to buy or sell at the best price. Here we'll look at why it doesn't work, and why you should stay the course and go ahead and invest as soon as possible. Introduction - What Is Market Timing? Market timing describes the speculative strategy of trying to time one's trades based on predictions about … [Read more...] about Market Timing – Time in the Market vs. Timing the Market
The 7 Best Inflation Hedge Assets and ETFs for 2021
Inflation fears are always lingering. Here we'll look at what inflation is, why it occurs, how it's measured, and the best assets to hedge against it with their corresponding ETFs for . Introduction - What Is Inflation? Simply put, inflation refers to an aggregate increase in prices, commonly measured by the Consumer Price Index (CPI). Put another way, purchasing … [Read more...] about The 7 Best Inflation Hedge Assets and ETFs for 2021
The 4% Rule for Retirement Withdrawal Rate – A Revisitation
With high stock valuations and low bond yields, is the 4% rule for retirement withdrawal rate still valid for the 21st-century investor? Let's dive in. What Is the 4% Rule? The 4% rule refers to what is widely accepted as a safe withdrawal rate (SWR) for retirees from their investment account. Using this figure and assumptions about future expenses and investment … [Read more...] about The 4% Rule for Retirement Withdrawal Rate – A Revisitation
How To Calculate Investment Returns (ROI and CAGR)
Here's how to calculate investment returns (known as return on investment, or ROI for short) to see your portfolio's performance. Introduction - Return on Investment Return on Investment (ROI) measures the gain or loss of an investment, as a percentage, relative to its cost. ROI is used in business to evaluate revenue performance, such as the return from marketing … [Read more...] about How To Calculate Investment Returns (ROI and CAGR)
No, Covered Call Options Are Not a Free Lunch
Covered calls are pitched as a "free lunch" and a way to "collect rent" on your stocks. Let's explore why that's not the case. What Are Covered Call Options? Options contracts are derivatives that allow traders to speculate on the value of the underlying security. Call options allow the holder to buy an asset at a set price within a given time period. Put options … [Read more...] about No, Covered Call Options Are Not a Free Lunch
Portfolio Diversification – How To Diversify Your Portfolio
Portfolio diversification is considered to be the only free lunch in investing. In this post, I'll show you why and how to diversify your portfolio. What Is Portfolio Diversification? Portfolio diversification simply means combining different assets in one's investment portfolio, effectively spreading out your risk. As the related platitude says, "Don't put all … [Read more...] about Portfolio Diversification – How To Diversify Your Portfolio
Dollar Cost Averaging vs. Lump Sum Investing (DCA vs. LSI)
Dollar cost averaging and "lump sum investing" are two different timing strategies for getting cash into the market. Let's compare them. What Is Dollar Cost Averaging (DCA)? Dollar cost averaging (DCA for short), also sometimes called a constant dollar plan, is a systematic investment timing strategy in which the investor divides up a total amount equally across … [Read more...] about Dollar Cost Averaging vs. Lump Sum Investing (DCA vs. LSI)
VEA vs. VWO vs. VXUS – Which ETF for International Stocks?
Three of the most popular international ETFs are Vanguard's VWO, VEA, and VXUS. Is there one that reigns supreme to hold alongside U.S. stocks? Diversifying with International Stocks Index investors in the U.S. usually know it's a good idea to diversify in equities outside the United States. At global market weights, U.S. stocks only comprise about half of the … [Read more...] about VEA vs. VWO vs. VXUS – Which ETF for International Stocks?
Should You Invest in Commodities? Probably Not.
Commodities have been used in the past for their purported diversification benefit from their inherent low correlation to the total stock market, but do they really deliver? Commodities are materials like gold, oil, copper, livestock, agriculture, etc. Their value depends on their usage in production, and is directly related to supply and demand. Any position in … [Read more...] about Should You Invest in Commodities? Probably Not.
Should You Avoid State-Owned Enterprises in Your Portfolio?
State-owned enterprises typically have inherently lower operating efficiency due to compromised business interests. It may be prudent to avoid them in your international portfolio. Here we'll see what the data has to say. What Are State-Owned Enterprises? State-owned enterprises, or SOEs, refer to companies with at least partial government ownership. The … [Read more...] about Should You Avoid State-Owned Enterprises in Your Portfolio?
Sequence of Return Risk in Retirement Explained
Sequence of return risk may very well ruin your financial retirement plans, and all from sheer bad luck. Here we’ll look at the nature and implications of sequence of return risk in retirement, and some proposed solutions to at least mitigate its potential negative impact. What Is Sequence of Return Risk? Sequence of return refers to the variability of … [Read more...] about Sequence of Return Risk in Retirement Explained
Factor Investing and Factor ETFs – The Ultimate Guide
Factor investing refers to specifically targeting independent risk factors in securities markets that explain the differences in returns between diversified portfolios. Here we'll look at what factor investing is, various factor models from the research, and how to do it using factor ETFs. What Is Factor Investing? Factor investing simply refers to consciously … [Read more...] about Factor Investing and Factor ETFs – The Ultimate Guide
ESG Investing – Going Socially Responsible in Your Portfolio
Interest in ESG investment products has skyrocketed in recent years, particularly among young investors. Let's explore what ESG investing is, why you might be interested in it, and how to implement it in your portfolio. What Is ESG Investing? ESG investing - also referred to as socially responsible investing, sustainable investing, and impact investing - means … [Read more...] about ESG Investing – Going Socially Responsible in Your Portfolio
Day Trading vs. Investing in Stocks – Which Is Better?
Day trading and investing involve very different audiences, time horizons, trade frequencies, risk profiles, mindsets, tactics, and methodologies. Here we'll explore the differences and similarities between day trading and investing. What Is Day Trading? Day trading, as the name suggests, refers to attempting to capitalize on intraday changes in the share price of … [Read more...] about Day Trading vs. Investing in Stocks – Which Is Better?
Why Automated Investing Is More Powerful Than You Think
With the new year usually comes new or renewed interest in investing and personal finance. Let's explore why you should be looking into automating your investing. The Benefits of Automated Investing Any successful investor knows to invest early and often. That means regular deposits into an investment account. Thankfully, this usually happens automatically with a … [Read more...] about Why Automated Investing Is More Powerful Than You Think
401k Max Contribution Calculator for Front Loading Each Year
I've always tried to "front load" my 401k contributions to reach the annual limit. Front loading refers to contributing more earlier in the year to get money in the market sooner and then dropping the contribution election down for the rest of the year. For my personal situation, for example, I front load heavily in the first 3 months of the year. Why Front Load Your … [Read more...] about 401k Max Contribution Calculator for Front Loading Each Year
Why and How To Invest in Gold for Beginners
Gold can be used as a store of value and a significant alternative asset in a diversified investment portfolio. Here we'll explore how to invest in gold quickly and easily online. Why Invest in Gold? Gold has long been a common currency of the world. The shiny metal is now traded on exchanges via futures and ETFs. Gold is considered a commodity. Commodities as a … [Read more...] about Why and How To Invest in Gold for Beginners
Beginners Start Here – 10 Steps To Start Building Wealth
I would have loved some sort of a roadmap laid out for me when I started over a decade ago. The goal of this page is to do just that, so that you can start building wealth today. View this page as a reference sheet; a pathway along which you'll progress; a general framework, from which the details branch off. I would suggest taking a brief look at all the steps first, and … [Read more...] about Beginners Start Here – 10 Steps To Start Building Wealth
