Hot answers tagged

64

Short answer: The YouTube channel has over 500k subscribers but most videos have well under 50k views, complete with click-baity thumbnails. Those numbers mean nobody actually cares. Internet personalities like these make their money by selling newsletters and "classes," which supplement the ad revenue from their YouTube channel. If she were ...


45

Hindsight is 20:20. companies like Google, Facebook, Netflix, Amazon, Apple have all increased anywhere from 3x-6x in value in the past 5 years. ...while at the same time, companies like General Electric, Walgreens or Kraft lost a considerable amount of their stock value. How could you have known 5 years ago which companies would be "good" and ...


42

It really depends on what you mean by "hard to outperform the S&P 500". Consider a roulette wheel. In a certain sense, it's easy to make money at a roulette wheel. The strategy is very simple: if the wheel is about to come up red, then bet on red, and if it's about to come up black, then bet on black. You'll double your money! However, this ...


36

Any scheme of borrowing money to "invest" is in fact a gamble and should be avoided. Stick to your own money for investments. Nobody can predict the market and neither can you. 4% interest rates for a government bond sounds like a banana republic given the amount of money central banks are pumping into the market to buy government bonds. Even worse,...


32

Leverage can be good to increase gains, but it amplifies movements of a stock. Also downward movements. Paired with the increased gains is also an increased risk, and that changes the investment vehicle. The goal of an index fund is to passively follow an index as closely as possible. Leverage could reduce tracking error on upward movement, but would ...


30

No. Owning a stock is not trading a stock. See https://en.wikipedia.org/wiki/Insider_trading. If you are in a position of the company where you know (positive or negative) information about the company which would materially impact the stock price, you only commit insider trading when you use that knowledge before it becomes public knowledge.


28

You can use firecalc (https://www.firecalc.com/) to show the historical probabilities that your stock investments will never run out of money when you take out money each year. For 15.000, a stock portfolio of 460.000 would be historically 99% safe for a 50 year timespan. In a best case scenario with that sum, your portfolio would have grown to 9,2 million. ...


28

First of all, insider trading is only illegal when you have material, non-public information that affects your trading decision. So if you do not have any pertinent information that could be considered the reason for your trade (i.e. you're making one-off trades and not part of a systematic trading program) then you'd be fine. As to whether it's a violation ...


24

Personal rule for borrowing money in order to 'invest' in any kind of generally available thing: Assume your investment will lose all of its value and you lose your job and need to live off your savings for 6 months to a year while still repaying the debt. (If you think losing its value is unrealistic, then assume the brokerage goes bankrupt and it takes 5 ...


21

Generally, it is recommended to use 4% initial withdrawal. That gives you a 99% chance to make it through 30 years, using up the capital in the process. So unless you plan to die in 30 years, that's too thin. The 4% rule gives you however a nearly as good chance to still have the capital or even more, so if you're fine with maybe 98.5%, it could work - ...


21

Yes, you pay capital gains tax on ETF holdings just like mutual find holdings, but you are not "double taxed". Say you buy a fund at the beginning of the year and sell it at the end of the year. Say also that the NAV (the value of all of its holdings, less expenses) of the fund goes up by $5 per unit over the year, and realizes and distributes $1 ...


20

X, A, B and C all trade independently and are subject to their own buy and sell pressures that affects their prices. But the price of the ETF tends to be consistent with the price of the underlying shares, for a couple of reasons. The fundamental value of X is just the aggregated value of the underlying shares. After all it's just (indirect) ownership of ...


17

The stocks you mentioned are pretty good. So is a Nasdaq index fund, which has had double the returns of the S&P 500 over the past 5 years. The Nasdaq has a solid record of beating the S&P 500. If you'd invested in a Nasdaq index fund in 1997, by 2000 you'd have triple the gains of the S&P 500. (^IXIC: Nadsaq; ^GSPC: S&P 500) So it's ...


17

Few people can outperform the market over the long term. Most of them cannot do it consistently. Therefore there is little reason to buy some premium plan For the average Joe (without excessive risk) money is not gained by excess activity. This will just eat away your money by commissions and bid/ask spreads. On your questions: negative comments can be ...


16

One aspect of the misunderstanding that no one has really mentioned yet: It seems like any reasonable person 5 years ago should have been able to realize that Google, Apple, et. al. would do well and buy accordingly. But that's not at all true, and there are at least 2 reasons: 1. In order for a stock to do really well, it's NOT enough that the company does ...


15

Because funds of different share classes are there to cater different account sizes. The actual equivalent of VTI is Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) if account size is > US$10,000. Now you may ask why VTI is 0.03% while VTSAX 0.04%. That is because Vanguard of VTSAX provides service, while the service of VTI is provided by ...


15

Mathematically is just does not matter as compounding is a percentage increase. x*1.05 is the same as (y+z)*1.05 with x = y+z In real life there might be some caveats to this however are there any fixed (amount) costs associated? These will eat more on a smaller account than on a larger one taxation splitting everything appropriately in case of a divorce


12

MSCI is an "index provider". MSCI makes money from licensing its indexes. ETFs pay MSCI licensing fees based on the assets under management (AUM) and trading volumes of the fund. It seems to me that I can just look up the list of stocks on the Internet. Yes, but is the information enough for you to build an ETF that replicates the index? Is it ...


10

The prices of each individual stock are 100$ (A), 10$ (B) and 1$ (C). The index weights at this moment are 60% (A), 30% (B), 10% (C). In other words, for every 6 shares of A (initially worth $600), the fund will hold 30 shares of B (worth $300), and 100 shares of C (worth $100). In other words, the initial ratio of shares A:B:C is 6:30:100. In the following ...


9

Curious to know why is that? Generally each region in the world has it's own regulations and specific financial products. The VTSAX is an American product. You also can't buy it in Australia or even in Canada. So to a large extent it really boils down to regulations. German (or generally EU) brokers are only allowed to offer UCITS regulated funds to their ...


9

Look at the identifiers under the name: One starts with "SWX" and one starts with "LSE". A quick search will tell you that SWX is the Swiss Stock Exchange and LSE is the London Stock Exchange. The ETF also has different tickers (the second group) but the same ISIN and currency. The prices for ETFs traded on different exchanges should be ...


8

Buy Netflix, you say? Solid business, guaranteed to beat the market? Perhaps you didn't read today's news? Netflix shocks Wall Street with earnings miss, weak 3rd quarter guidance Netflix Q2 earnings miss expectations as competition increases from Apple, Amazon, and TikTok Shares Of Netflix Smacked After Earnings Miss & Lowering Guidance Past results ...


8

Think about it this way, the bank would rather trust you to pay back the loan with interest instead of denying you the loan and engaging in the scheme themselves. They probably use larger envelopes for their math...


8

Adding onto base64's excellent answer, an ETF also avoids some of the liquidity costs incurred by open end funds. Since only authorized participants may trade shares directly with a fund, and only in large blocks, the fund manager does not need to worry about buying/selling shares to service individual account holders needs. Imagine if you needed to cash out ...


8

This suggestion will probably engender some hisses and downvotes but a variable annuity would do the trick. I don't know what current guaranteed deferred rates are (I've had one as high as 10% simple) but about $100k in one with a 6% deferred growth benefit would grow to $250k in 25 years (age 60), at which time you could withdraw 6% or $15k a year until the ...


7

This is a little bit like saying "why do people bet on the favorites in sporting events" and then citing the results of some sporting events where a bigger return could have been made if you knew the result in advance. I mean the short answer is, people don't have time machines. Making money on the stock market is an exercise in predicting the ...


7

You can't "exchange" one asset for another similar asset, if the asset you hold is a stock. If you instead wanted to do this for investment real property (not a residence) or a business, you'd possibly be able to pull off a 1031 exchange (a "like-kind" exchange). Even this is very complicated (I don't have experience with it).


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