Investing in ETFs For Dummies. Russell Wild

Читать онлайн книгу.

Investing in ETFs For Dummies - Russell Wild


Скачать книгу
Russell Wild

      Investing in ETFs For Dummies

      Investing in ETFs For Dummies®

      Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.com

      Copyright © 2016 by John Wiley & Sons, Inc., Hoboken, New Jersey

      Published simultaneously in Canada

      No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.

      Trademarks: Wiley, For Dummies, the Dummies Man logo, Dummies.com, Making Everything Easier, and related trade dress are trademarks or registered trademarks of John Wiley & Sons, Inc., and may not be used without written permission. All other trademarks are the property of their respective owners. John Wiley & Sons, Inc., is not associated with any product or vendor mentioned in this book.

      LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE PUBLISHER AND THE AUTHOR MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUT LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES OR PROMOTIONAL MATERIALS. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR EVERY SITUATION. THIS WORK IS SOLD WITH THE UNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL SERVICES. IF PROFESSIONAL ASSISTANCE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL PERSON SHOULD BE SOUGHT. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM. THE FACT THAT AN ORGANIZATION OR WEBSITE IS REFERRED TO IN THIS WORK AS A CITATION AND/OR A POTENTIAL SOURCE OF FURTHER INFORMATION DOES NOT MEAN THAT THE AUTHOR OR THE PUBLISHER ENDORSES THE INFORMATION THE ORGANIZATION OR WEBSITE MAY PROVIDE OR RECOMMENDATIONS IT MAY MAKE. FURTHER, READERS SHOULD BE AWARE THAT INTERNET WEBSITES LISTED IN THIS WORK MAY HAVE CHANGED OR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRITTEN AND WHEN IT IS READ.

      For general information on our other products and services, please contact our Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or fax 317-572-4002. For technical support, please visit www.wiley.com/techsupport.

      Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

      Library of Congress Control Number: 2015951533

      ISBN 978-1-119-12192-3 (pbk); ISBN 978-1-119-12193-0 (ebk); ISBN 978-1-119-12194-7 (ebk)

      Introduction

      Every month, it seems, Wall Street comes up with some newfangled investment idea. The array of financial products (replete with 164-page prospectuses) is now so dizzying that the old lumpy mattress is starting to look like a more comfortable place to stash the cash. But there is one relatively new product out there definitely worth looking at. It’s something of a cross between an index mutual fund and a stock, and it’s called an exchange-traded fund, or ETF.

      Just as computers and fax machines were used by big institutions before they caught on with individual consumers, so it was with ETFs. They were first embraced by institutional traders – investment banks, hedge funds, and insurance firms – because, among other things, they allow for the quick juggling of massive holdings. Big traders like that sort of thing. Personally, playing hot potato with my money is not my idea of fun. But all the same, over the past several years, I’ve invested most of my own savings in ETFs, and I’ve suggested to many of my clients that they do the same.

      I’m not alone in my appreciation of ETFs. They have grown exponentially in the past few years, and they will surely continue to grow and gain influence. While I can’t claim that my purchases and my recommendations of ETFs account for much of the growing $2 trillion+ ETF market, I’m happy to be a (very) small part of it. After you’ve read this book, you may decide to become part of it as well, if you haven’t already.

      About This Book

      As with any other investment, you’re looking for a certain payoff in reading this book. In an abstract sense, the payoff will come in your achieving a thorough understanding and appreciation of a powerful financial tool called an exchange-traded fund. The more concrete payoff will come when you apply this understanding to improve your investment results.

      What makes me think ETFs can help you make money?

      ✔ ETFs are intelligent. Most financial experts agree that playing with individual stocks can be hazardous to one’s wealth. Anything from an accounting scandal to the CEO’s sudden angina attack can send a single stock spiraling downward. That’s why it makes sense for the average investor to own lots of stocks – or bonds – through ETFs or mutual funds.

      ✔ ETFs are cheap. At least 250 ETFs charge annual management expenses of 0.20 percent or lower, and 60 of them charge 0.10 percent a year or less. The average actively managed mutual fund, in contrast, charges 1.25 percent a year. Index mutual funds generally cost a tad more than their ETF cousins. Such cost differences, while appearing small on paper, can make a huge impact on your returns over time.

      ✔ ETFs are tax-smart. Because of the clever way ETFs are structured, the taxes you pay on any growth are minimal.

      ✔ ETFs are open books. Quite unlike mutual funds, an nearly all ETFs’ holdings are readily visible. If this afternoon, for example, I were to buy 100 shares of the ETF called the SPDR (pronounced “spider”) S&P 500, I would know that exactly 4.02 percent of my money was invested in Apple, Inc, 2.07 percent in the Microsoft Corporation, and 1.94 percent in Exxon Mobil Corp. You don’t get that kind of detail when you buy most mutual funds. Mutual fund managers, like stage magicians, are often reluctant to reveal their secrets. In the investment game, the more you know, the lower the odds you will get sawed in half.

      If the book you’re now reading were like some (but certainly not all) mutual funds, it would be largely unintelligible and expensive. (It might be doubly expensive if you tried to resell the book within 90 days!) Luckily, this book is more like an ETF. Here’s how:

      ✔ Investing in ETFs For Dummies is intelligent. I don’t try to convince you that ETFs are your best investment choice, and I certainly don’t tell you that ETFs will make you rich. Instead, I lay out facts and figures and summarize some hard academic findings, and I let you draw your own conclusions.

      ✔ Investing in ETFs For Dummies is cheap. Hey, top-notch investment advice for just the price of this one small book (plus or minus any discounts, shipping, and tax). Where else are you going to get that kind of deal? And should you come to the conclusion after reading this book that ETFs belong in your portfolio, you’ll likely get your money (plus any shipping costs and tax) back – in the form of lower fees and tax efficiency – in no time at all.

      ✔ Investing in ETFs For Dummies is tax-smart. Yes, the money you spent for this book, as all other outlays you make for investment advice, may be deducted from your federal income taxes (provided you itemize your deductions). Go for it!

      ✔ Investing in ETFs For Dummies is an open book. We’ve already established


Скачать книгу