June 17th, 2010 — Investing
- “Now I don’t know who to trust and I don’t know what I can believe. They say they want to help me but with the stuff they keep on sayin’. I think those guys just wanna keep on playin’ [“Roulette”] (Springsteen)
“Risk” is a word you hear a lot if you invest. Ever stop and wonder why that is?
Risk is key to broker success. Large investment brokers have found ways to transfer risk onto the shoulders of their clients without their client’s knowledge. Some do it for commissions. Some do it so they can profit off their client’s ignorance.
Smaller investment brokers use risk as a way to milk clients for money too.
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June 1st, 2010 — Investing
(part 3 of 3)
Risks of Investing
If you’ve ever bought a mutual fund and read its prospectus, you’ve probably seen the section where the prospectus highlights all the kinds of risks attached to that kind of fund. Unfortunately “disclosures” of risks from the financial community are much like disclosures of side effects of prescription drugs in TV commercials for those drugs. There are so many you just tune all of them out.
Is risk a four letter word? No! It’s not a bad thing if you want to live life to the fullest. But only a fool jumps off a cliff without knowing if there are rocks under the surface of the water below.
This blog series aims to reveal the chief risks of ETF’s.
Risks of derivatives in general and ETFs in particular
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May 25th, 2010 — Investing
(part 2 of 3)
You’ve seen what ETFs are in part one of this series. Now we’ll look at the pros and cons of buying these “poor man’s derivatives.”
The advantages of exchange traded funds
ETFs beat mutual funds when it comes to costs. Even with paying both commissions on buying and selling and fees, ETF costs will usually be lower than a mutual fund.
Besides lower prices, the presumed advantages of ETFs are that they are more diversified than mutual funds. After all, a whole country or even an entire region of the world is much broader than a stock or a mutual fund.
ETFs have an advantage over stocks of being much simpler to invest in. Investment in stocks requires knowledge of companies, industries, and if you’re a technical trader, of all kinds of technical indicators of the health of a company and the industry it belongs in. ETFs only require a basic knowledge of the stock index index that ETF is based on.
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