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37 votes
Accepted

Why are ETFs so bad at tracking Japanese indices?

Yes, the ETF return you quoted is in euros, whereas the Nikkei 225 index is denominated in yen. The yen has depreciated substantially against the euro over the last 5 years. Thus, the ETF gives a ...
nanoman's user avatar
  • 30.2k
18 votes

Is investing in S&P 500 a wise choice if you plan to purchase a house in 10-15 years?

I am not checking your math. I as assuming that you feel confident that if you start with 50K, add 5K a month, that in 10-15 years you can have $1,000,000 after taxes. All this is to be able to put $1,...
mhoran_psprep's user avatar
13 votes
Accepted

Is it better, financially, to invest in a property or in ETFs?

So in the end, A property is a good risk free investment and seems like real estate investment cannot go wrong No it's not "risk free" - you're just not evaluating the risks properly. What ...
D Stanley's user avatar
  • 137k
8 votes
Accepted

Is investing in S&P 500 a wise choice if you plan to purchase a house in 10-15 years?

Maybe Buy Sooner Starting with 50k, and adding 5k a month, you get to 200k in 30 months (2.5 years). Using this calculator, I assumed 7% interest rate, 1M home value, and 200k down. The $5,300 monthly ...
codeMonkey's user avatar
  • 1,639
8 votes

Is investing in S&P 500 a wise choice if you plan to purchase a house in 10-15 years?

You are essentially short a house (that is, your financial picture is negatively correlated with housing prices). Therefore, your portfolio should aim for a greater positive correlation with housing ...
Acccumulation's user avatar
7 votes
Accepted

Can ETFs be broken down into the stocks composing them without paying capital gains tax?

No. You can't exchange mutual funds or ETFs directly for the underlying holdings without selling the fund first and then buying the stocks directly.
JohnFx's user avatar
  • 53.1k
6 votes

Stock prices rise due to index (SP500) inclusion means I should not buy index funds?

Doesn't that mean when you purchase index funds, you are significantly overpaying for some stocks? I think "significantly" is a bit of an overstatement (it's not like stocks double when ...
D Stanley's user avatar
  • 137k
5 votes

Contributing over the 401(k) limit vs investing in an index fund?

You cannot "over-contribute" into a 401k. As mentioned in the comments, the plan allowing you doing so will lead to the whole plan losing it's retirement qualification status. That would ...
littleadv's user avatar
  • 177k
5 votes

Can one get a liquidity premium as a retail investor?

Suppose the locked-in contract will return an extra e after 5 years, and that the buy/sell spread (difference between buy and sell prices) for both the normal index fund and the locked-in contract is ...
GS - Apologise to Monica's user avatar
4 votes

Can one get a liquidity premium as a retail investor?

I'm not sure if you can do that. It is more common to be able to do that for fixed income because there are retail instruments with different types of grace periods.
ACGarcia00's user avatar
4 votes
Accepted

index rebalancing question

The index level is unaffected by index rebalancings. It is true that prices and outstanding shares change during rebalancing, but the divisor will change to account for this. (Divisor) after ...
AKdemy's user avatar
  • 2,957
4 votes

Question to do with ETF price changes during the day

In my learnings I was told the nav price of an etf is calculated at the end of the trading day. So the next day trading resumes at that price but then fluctuates due to supply and demand for the etf ...
D Stanley's user avatar
  • 137k
2 votes

Cheap indices in Europe

You can’t buy an index. An index only gives you a value, which is a weighted average of the stocks it is composed of (each index having their own criteria for deciding which stocks it contains and the ...
jcaron's user avatar
  • 3,952
2 votes

What kind of investment strategies are typically employed when investing at the industry level?

On a high level you can apply several binary approaches to sectors, such as defensive vs. cyclical, value vs. growth, over-bought vs. oversold. These could be macro driven. E.g. energy, consumer ...
xiaomy's user avatar
  • 1,838
2 votes

What kind of investment strategies are typically employed when investing at the industry level?

Sector rotation. Google it. It works. For instance energy has done well this past year because we are "heading into a downturn" or at least that is what the market thinks including me. Also ...
Ryan Kephart's user avatar
2 votes
Accepted

How does the definition of expense ratio and gross return fit into the net return on investment equation?

A fund has a gross return of 10% and an expense ratio of 1.5%. Therefore the net return of the fund becomes 10% - 1.5% = 8.5%. Isn't that exactly the answer. The fund based just on the investments ...
mhoran_psprep's user avatar
2 votes

Understanding the weight of stocks in S&P 500 indexes

What's the problem of being equal here? Suppose you created your own index of 5 equally-weighted stocks (A, B, C, D, and E) and wanted to create a fund that tracks that index. Suppose also for ...
D Stanley's user avatar
  • 137k
2 votes

Understanding the weight of stocks in S&P 500 indexes

https://www.investopedia.com/articles/investing/090414/sp-500-index-you-need-know.asp says: The S&P 500 is calculated by adding each company's float-adjusted market capitalization. This seems to ...
nobody's user avatar
  • 1,874
2 votes

Can one get a liquidity premium as a retail investor?

Use 5-year LEAPs to create a synthetic long. Because a synthetic long equivalent to $10,000 in stock requires less than $10k in upfront investment, park the difference in a 5-year bank CD or other ...
Orange Coast- reinstate Monica's user avatar
2 votes

Is investing in S&P 500 a wise choice if you plan to purchase a house in 10-15 years?

Better to buy a house Investor purchases (businesses buying residential houses) have been rising steadily. More demand will push up prices. S&P500 rises 10% per year average, but that's 10% of ...
Mirror318's user avatar
  • 719
2 votes

Why are ETFs so bad at tracking Japanese indices?

There are sites that track tracking errors e.g. here https://www.trackingdifferences.com/ETF/ISIN/LU0839027447 If you trust this site, you can see that there is no significant tracking error
ChristophE's user avatar
2 votes

Which of my tax-advantaged accounts should I hold my bond market index funds in?

Generally bonds would probably not appreciate as much as stocks in the long term, so Roth is probably not the best actually. You'd want to put something with the most gain potential into the least ...
littleadv's user avatar
  • 177k
1 vote

Options to invest after maxing IRA

My company offers a Simple IRA where they match 3% to what I put. I can only put in a max of $16,000 per year. I'm guessing they match you contributions up to a maximum 3% of your salary, which is ...
D Stanley's user avatar
  • 137k
1 vote

Is it better, financially, to invest in a property or in ETFs?

Deciding on it depends on three factors for you: your financial goals, risk tolerance, and investment horizon. When deciding whether to invest in commercial property or ETFs, consider your risk ...
SponsorCloud's user avatar
1 vote

Which of my tax-advantaged accounts should I hold my bond market index funds in?

The difference between choosing to fund a Traditional IRA (or SIMPLE IRA, which is just a Traditional IRA that is offered by your employer in lieu of a 401(k)) is whether your marginal tax rate now is ...
D Stanley's user avatar
  • 137k
1 vote

index rebalancing question

See past answers. The S&P is explicitly intended to track the behavior of the top 500 companies at any given time. Which companies do or don't make the cut can be affected by a smaller company ...
keshlam's user avatar
  • 48.4k
1 vote

Is investing in S&P 500 a wise choice if you plan to purchase a house in 10-15 years?

Endowment manager here. Your timeline is a little short for my comfort. If you want a timeframe of "effective certainty" like we require in endowment planning, you need to be out 30 years ...
Harper - Reinstate Monica's user avatar
1 vote

Is investing in S&P 500 a wise choice if you plan to purchase a house in 10-15 years?

How steady is this income? Do you have an emergency fund currently? It should be 3 months of expenses minimum, up to 6 depending on volatility of your income or number of people who depend on your ...
Jacob Nordstrom's user avatar
1 vote

Stock prices rise due to index (SP500) inclusion means I should not buy index funds?

Shouldn't you purchase some stocks that's just outside the SP500 so that when they're added you can make a gain? Of course you have no idea when that stock will be added. But if you want to try and ...
mhoran_psprep's user avatar
1 vote

How does mutual funds confiscate the stock dividends?

"Confiscate" is a loaded word. Mutual funds have various management costs, but they want to make these seem as low as possible. So they hide fees in other ways, such as keeping (some or ...
Simon B's user avatar
  • 10.4k

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