What a week! To recap on the series, I wanted to provide you with a quick 2 minute guide on what these investments are!
And there you have it! Hope you check out the posts in full.
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Ah, the last of this week's five part series: Mutual Funds.
There is no question that you haven't heard of Mutual Funds. Many advisors, banks, financial institutions, and more have access to some of the world's best mutual funds. But I bet you they all will tell you to buy buy buy! But not why why why.
Yes, here at Aryandale Financial, we do offer Mutual Funds as well. However, I have no interest in telling you to buy buy buy. My interest is to teach teach teach, and in turn, when you are ready, you will take charge of your financial future and have an idea of WHAT you want to buy buy buy.
Our advisors provide ADVICE and ACCESS to the best products. We help you build a financial foundation with knowledge and guidance: you call the shots, and we help you make it happen.
With that being said, whether it's individual stocks, bonds, REITs, low cost ETFs or low cost mutual funds, you now have the basic understanding of what each product can do and a bit of how they work. This was the point of the 5 part series: to educate, on a basic level, what is available to you out there for investments.
With that said, let's wrap up this series with Mutual Funds!
What are Mutual Funds?
ETF: Exchange Traded Fund.
Now that you know what the acronym stands for, let's talk about what they do!
What are ETFs?
ETFs are investment funds traded on stock exchanges which allow investors, like you and I, to purchase a basket of stocks, commodities, currencies or bonds at a unit price set on the net asset value of the fund.
What do ETFs invest in?
ETFs are structured in various ways. There are index ETFs that track market indices, ETFs that hold stock in certain industries, ETFs that hold gold or other commodities, and more. Basically, ETFs can invest in any arrangement of stock, bonds, currencies or commodities.
Why should I bother with ETFs?
You've heard of stocks and bonds, I'm sure of it. But for the majority of my clientele, they haven't heard of this other investment vehicle: REITs.
What are REITs?
REITs stand for Real Estate Investment Trusts.
They are a great way for young investors like you and I to get involved in real estate when we don't have enough money to invest in a condo or house at this age.
Why should I buy a REIT?
Have you noticed how a majority of people's wealth is a result of their dealings within real estate? I've noticed a lot of my mentors and people I look up to have built their wealth and life thanks to real estate, saving and investing, and building quality businesses.
REITs are a great way to get exposure to real estate with its income and growth.
How do I make money from REITs?
They provide a monthly return in the form of rent. Over time, they provide capital growth with land values growing.
Remember: there is only so much land on Earth. As long as there are people and population growth, the basic need for shelter will continue to propel the demand for real estate.
What are the advantages of REITs than to purchase physical real estate?
Bonds! What are they you ask?
Well, by definition, a bond is:
So when you look at it like this, when talking about investments, a bond is a debt instrument that allows one party to borrow money from another. This is a legally binding agreement that allow borrowers to raise money for their businesses. Bonds can be from the government, municipalities and even corporations.
So why would I buy a bond?
With bonds, you are promised to be paid back for the money you lend out, plus interest.
Think about your investment like this: I give you $10,000 of my money. You promise me a 5% interest rate paid yearly for 5 years. You will pay me this $500 interest per year for 5 years, and when it is done, you must pay me back the original $10,000 you borrowed from me.
I just turned my $10,000 into $12,500 after 5 years. Not bad!
Buying bonds are a great way to secure your hard earned money while earning a great return in the form of interest income.
What are the risks of buying a bond?