The World’s Top 10 Investment Banks 2021

top 10 investments banks

If you think of banks, you tend to think of financial institutions where you get to store your money which you eventually withdraw at a given time. But, there is another type of bank that not only stores your money but also grows it. These are the so-called investment banks.

Compared to commercial banks, investment banks could provide small and growing businesses as well as individuals with high net worth to invest and help raise money to a company while also taking a stake in the company. Though complex, dealing with investment banks can be financially rewarding.

To know more about investment banking, read about the top 10 investment banks in the world. We chose them based on various criteria, including revenue number, global reach, employee headcount, income, etc. Note that not all investment banks are made equal. If you wish to deal with one in the future, you should research more on which of these institutions fit your profile as an investor.

Goldman Sachs Investment Bank

  • Best All in All: Goldman Sachs

One of the Top 10 is Goldman Sachs which is an investment bank based in New York City. It is an American international company that also offers financial services to its clients. Aside from investment management, Goldman Sachs offers services in asset management, securities, securities underwriting, and prime brokerage.

With about 150 years of experience as a financial institution, Goldman Sachs is one if not the largest investment bank in the world. In 2019, the company earned a revenue of US$36.546 billion while its total assets were recorded at US$992 billion. In terms of awards, Goldman Sachs was ranked by Fortune as the 62nd largest US corporation with total revenue.

JP Morgan Chase Investment Bank

  • Best from a Big Institution: JP Morgan Chase

JP Morgan Chase is an American investment bank based in New York. It is considered a global leader in the investment banking industry as it has one of the largest client bases in the entire world. Today, the company has around 200,000 clients ranging from governments, corporations, educational institutions, banks, and individual investors. They have a global reach expanding to around 100 countries.

In 2019, the company reached a revenue of around US$115.6 billion. Meanwhile, they had a net income of around US$36.43 billion. With around 200 years of history, JP Morgan has received awards from groups advocating for women, people with disability, veterans, and many more. Without a doubt, the company is one of the largest investment banks in the world.

Barclays Investment Bank

  • Best in Europe: Barclays

Barclays is a British multinational investment bank with more than 325 years of history in banking. It operates in more than 40 countries and has around 80,000 employees tasked to provide service to the clients. While Barclays does not have a global reach as wide as the first two investment banks, it is considered as the best in Europe. Its headquarter is in London, England.

In 2019, the company had a revenue of around US$28 billion. Because of its excellent service in its electronic trading platform, the company won the Electronic Platform of the Year award from the GlobalCapilta Americas Derivatives Awards 2019. Today, the company continues to grow its reach not only in Europe but also in Northern America and Asia.

Bank of America Investment

  • Best for Innovation: Bank of America Corporation

The Bank of America Corporation is best known for bringing innovation to the field of investment banking. It is an American multinational investment bank based in North Carolina but has central hubs and offices in New York City, London, Hongkong, Dallas, and Toronto. This bank has brought innovation by merging and partnering with other top financial institutions, including Countrywide Financial and Merrill Lynch, to name a few.

The company earned revenue in 2019 amounting to US$91.24 billion. The company was awarded as Top Global Bank on Fortune’s “Change the World” list in 2020. Its quality service in other parts of the globe has also received recognitions. In particular, it was awarded by Euromoney the Best Transaction Services Bank in Latin and North America this year.

Morgan Stanley Investment

  • Best for Markets: Morgan Stanley

Also included in the top 10 of the global investment bank is Morgan Stanley. It is known for its effective and successful contribution to the growth and development of the capital markets as well as its effective and efficient wealth management. It is an American multinational investment bank that also offers financial services. Its headquarter is located in Manhattan, New York City. Currently, Morgan Stanley is found in more than 42 countries in the globe employing more than 600,000 individuals from various nationalities. It offers services, including investment management to different types of clientele, including governments, business institutions, and individuals.

Morgan Stanley gained revenue of US$41.4 billion for 2019. In the same year, it was awarded the title of World’s best bank for markets by Euromoney. According to the award-giving body, Morgan Stanley has shown resilience in spite of problems in the market. It was able to provide growth in the investment of its clients or customers.

Deutsche Bank Investment

  • Best for the Asia Pacific: Deutsche Bank

Another prime investment bank is Deutsche Bank which is a German multinational investment bank based in Frankfurt, Germany. It has offices found all over the globe including in Europe, the Americas, and in Asia. In 2019, Deutsche Bank has earned US$26.3 billion. Its great work in the Asian market has won the company Top 1 in Best Investment Bank for Financial in the Asia Pacific from the business intelligence firm Coalition.

With around 150 years of history, Deutsche Bank has proven its strength in traditional fields of investment banking including financing, advisory services, fixed income, and currencies. Aside from doing well in Asia, Deutsche Bank is one of the top 4 investment banks in Europe. This indicates its capability to satisfy its clients from all parts of the world.

Citi Group Banking

  • Best for Inclusive Investment Banking: Citigroup

Probably known for being the largest credit card issuer in the world, Citigroup is also one of the most reliable financial institutions in the field of investment banking. It is an American multinational investment bank based in New York City. In 2019, it had revenue of US$73.29 billion with as many as 204,000 employees as of June 2020. It provides strategic and financing products and advisory services to corporations, governments, and private businesses to more the 160 countries.

Citigroup is best known for being a haven for customers from all walks of life. It is friendly to even to young, women, racial minorities, and many more. It has been recognized as one of the Most Community-Minded Companies in America since 2012. With such an accomplishment, no wonder new clients continue to choose this company for their investment banking needs.

Credit Suisse Banking

  • Best for Modern Investment Banking: Credit Suisse

Credit Suisse is a global investment bank founded and based in Switzerland. It is particularly popular for its strict bank-client confidentiality and banking secrecy. For clients who do value their privacy, choosing Credit Suisse is the best choice. It has proven excellent services in wealth management and capital markets especially in South East Asian countries as proven by the recent accolades it has received.

The company earned US$24.63 in 2019. Meanwhile, in 2020, Credit Suisse received the award of being the Investment Bank of the Year from The Banker besting all investment banks in the world in 19 different product areas. The Banker said that the decision was because “Credit Suisse ticks all the boxes of what a modern investment bank should be focused on.” This investment bank was able to make sustainable banking for its clients.

UBS Group AG Investment Bank

  • Best for Secured Investment banking: UBS Group AG

Like most Swiss global investment banking companies, UBS Group AG puts secrecy and confidentiality its priority. It had a revenue of US$30.21 billion. The company is best known to provide access to capital markets for corporate and institutional clients. Aside from providing investment banking and investment management services, it also provides global wealth management.

HSBC Holdings plc Banking

  • Best for Sustainable Finance: HSBC Holdings plc

HSBC Holdings plc is a British multinational company offering services on investment banking, wealth management, and many more. It is considered as the 6th largest bank in the world as of 2020. In 2020, it had a revenue of US$56.1 billion. Also in the same year, this investment banking company was awarded by the Euromoney Awards for Excellence for sustainable finance as well as the Banker Investment Banking Awards with Investment Bank of the Year for Sustainability.


It is true that looking for a trusted investment banking company can be daunting and exhausting. We have to make sure that we choose the best investment bank that provides services deserving of our hard-earned money.

To begin your search, you can start with these top ten investment banking corporations. They have provided outstanding services to thousands of customers in the past decades.

Be sure to research more about deciding which of these investment banking companies is right for you. Note that customers have different demands. Make sure that your bank of choice can accommodate your needs and wants.

Overview of the Schwab Healthcare ETF

Charles Schwab Healthcare ETF

The secret to top-level investing is easy: find a commodity or service whose value does not degrade.

The Schwab Healthcare ETF is one of the best exchange-traded funds (ETF) you can add to your portfolio. According to recent data, the long-time established healthcare fund remains in excellent standing despite the US economy’s ups and downs.

If it’s your first time to add a healthcare ETF to your investment portfolio, here are a few things you need to know about healthcare ETFs first. Furthermore, we’ll give you insight and comparisons of the Schwab Healthcare ETF against other top fourth-quarter healthcare ETFs in 2020.

What is Healthcare ETF?

An exchange-traded fund (ETF) collects stocks from numerous businesses in a single or mixed industry. A healthcare ETF, such as Schwab Health Care, is a diversified collection of stocks that focus on everything happening in the healthcare industry.

Healthcare ETFs expose investors to growth in medical equipment procurement, medical technology improvements, private hospital activities, and funding, to name a few.

Joining a healthcare ETF brings many advantages, such as a stabilizer for your portfolio, especially if you’re an investor with a high appetite risk.

Despite bull and bear markets, healthcare industries and businesses have always thrived. For example, the Covid-19 outbreak in 2020 saw an enormous uptick in medical supply and equipment manufacturing, quality control, and research. Indeed, investors saw a great increase in healthcare ETF value during the time.

However, it has advantages and disadvantages, like any other investment vehicle.


  • Diversification

A single healthcare ETF, such as the Schwab Health Care Fund, holds dozens of healthcare stocks in the market. Additionally, the market is broad, similar to other industries, such as computer and technology, mining, construction, and infrastructure development. Therefore, you can expect all healthcare ETFs to remain balanced across numerous industries, giving you stable and virtually guaranteed returns upon investing.

  • Industry-Targeting

On the other hand, some ETFs focus only on specific industries. For example, biotechnology is a rapidly-evolving industry. Some healthcare ETFs focus on investing in numerous bio-technology-oriented companies to take advantage of their skyrocketing growth.

    • On the other hand, you can expect targeted healthcare ETFs to hold a higher risk and less diversification than its non-targeted variation. However, during the most bullish markets in the healthcare industry for these specific industries, you can see plenty of growth.


  • Possible Stagnancy

Diversified healthcare ETFs will always prevail and pay within optimal or pessimistic estimates. They’re predictable, making them the best but an enormous investment for low-risk appetite investors.

On the other hand, growth-oriented investors fast-tracking their portfolios will find healthcare ETFs an excellent safety net because of their stagnancy. Growth in the sector has strict limitations because of the slow technological and equipment progress, requiring in-depth study, peer evaluation, and maximum safety quality checks.

Regulations and limitations in other markets create stagnancy and minuscule growth, which still rings true with healthcare ETFs.

  • Requires an Enormous Amount of Technical Knowledge

The only way to invest exceptionally in any market is to invest in technical knowledge about it. Investors who find medical technologies, practices, implications of existing and new medical equipment, and healthcare market movements will find healthcare ETFs a challenging but rewarding market.

Therefore, the healthcare ETF industry reserves itself to investors willing to understand and take note of immense technical and scientific knowledge. Truthfully, much of medical technologies focus on healthcare improvement, meaning investors need to know its contributions to operating procedures, hospitals, and patients suffering specific health problems.

Everything You Need to Know About the Schwab Healthcare ETF (SWHFX)

One of the healthiest and average-performing funds in the market is the Schwab Healthcare ETF (SWHFX). In the last decade, its performance has been stellar and grew immensely in 2020 after the economic downturn that Covid-19 caused during the year.

Here are some specifics:

  • Performance over 1-Year: 9.57
  • Expense Ratio: 0.80%
  • Annual Dividend Yield: 1.02%
  • 3-Month Average Daily Volume: -3.31
  • Assets Under Management: UnitedHealth Group (UHG), Johnson and Johnson (JNJ), Merck & Co Inc. (MRK), Abbott Laboratories (ABT)
  • Inception Date: July 3, 2000
  • Issuer: Schwab Healthcare Fund

About The Schwab Healthcare ETF

Fund managers of the Schwab Healthcare ETF place the entire fund inside the healthcare industry, just as any healthcare ETF.

It changes its course by purchasing equity securities that healthcare sector companies issue. SWHFX doesn’t focus on a single industry, meaning it is a prime example of a well-diversified portfolio.

It will invest in pharmaceutical, biotechnology, medical technology development, medical science, and other industries its fund managers see fit to grow in the next few years.

The Schwab Healthcare ETF aims to produce long-term capital growth. For investors with high-risk appetites, it means limited portfolio growth. However, it remains a stable source of income despite any economic downturn. Truthfully, it’s the best choice for low-risk appetite investors because of its consistency and stability.

The fund has a solid policy: it will invest around 80% of its assets in various healthcare industries providing equity securities. Any investor comfortable putting almost all their eggs in the healthcare industry have nothing to lose with the SWHFX

Why Is It Worth Investing in the Schwab Healthcare ETF?

The Schwab Healthcare ETF (SWHFX) is one of the top 20 highest-performing and most stable healthcare ETFs in the United States’ health sector.

According to US News Money, it came as 18 out of 124 of the best health funds existing in the country. Leading healthcare fund industry researchers consider SWHFX to be an essential healthcare ETF for any portfolio requiring a dependable safety net during economic downturns.

  • Fees

SWHFX has nominal to below-average fees if you compare this figure among its peers. It has an expense ratio of 0.8%, which is significantly lower than the 1.22% industry average. Additionally, management costs take up only 0.5%, significantly lower than the current category average of 0.74%.

Additionally, SWHFX does not charge anything for initial and deferred maximum sales fees. Furthermore, it does not charge administrative, redemption, and minimum investment fees. It’s one of the best ways to enter the healthcare ETF market with minimal overhead costs.

  • Performance

In the past year, SWHFX returned 9.51% in 2019. In 2017, it returned 8.39% and 7.7% in the last five years. Overall, its one-decade performance has been exceptional by achieving 13.79% during the last decade. While it significantly lags behind Schwab US Large-Cap Growth IDX Fund (SWLGX), which achieves a remarkable 29.16% yearly, Schwab Healthcare Fund is much more stable due to its focus on stability and equity securities.

  • Risks

Morningstar and other significant ETF performance reporters note that SWHFX has average risk by comparing its performance against similar products.

Its uncertainty and volatility measurements are as follows:

    • Standard Deviation: 14.919
    • Mean: 0.763
    • Sharpe Ratio: 0.507

In this light, it’s a great investment for any portfolio requiring stability and safeties during a bear market. On the other hand, it can achieve top-notch results for low-risk investors willing to go steady but surely in their long-term investments.

Comparing Schwab Healthcare ETF Performance With The Best Q4 2020 ETFs

Healthcare ETFs saw a tremendous uptick because of the Covid-19 worldwide pandemic in 2020. One among them is the Schwab Healthcare Fund, which guarantees stability for many investors across the country. On the other hand, it isn’t the only healthcare ETF that saw huge growth in the previous years. Here are three more best-performing Q4 ETFs that might see immense growth in the coming year.

ARK Invest Genomic Revolution Multisector ETF (ARKG)

Like Schwab Healthcare ETF, ARKG focuses on long-term capital growth. However, it invests 80% of its assets in different sectors, such as information technology, materials, energy, and healthcare. All its investment-oriented sectors focus on its goal of supporting the genomic revolution companies, including Twist Bioscience Corporation (TWST), Pacific Biosciences of California Inc (PACB), Teladoc Health (TDOC), and others.

Performance in the Last Five Years

The ARKG has nominal performance in the last half-decade, earning 94.68% value throughout its inception on October 31, 2014. It has an average expense ratio of 0.75% and has a Year-to-Date Total Return of 190.61%

  • Pros

As a multi-sector fund, ARKG has better stability potential than SWHFX theoretically. Schwab Healthcare ETF has an investment focus on biotechnologies, medical technologies, and relevant research and data-gathering ventures. On the other hand, ARKG focuses on technologies and utilities and their significant healthcare allocations, giving investors exposure to industrial and technological growth outside the healthcare market.

  • Cons

Truthfully, an ETF with more diversity will have higher stability yet only earn reasonable growth. The ARKG is not an aggressive earning fund. Like SWHFX, it focuses on long-term capital growth. Short-term hedge-oriented investors will find ARKG a stabilizing asset handy during economic downturns similar to mutual funds.

KraneShares MSCI All China Heal ETF (KURE)

The MSCI China All Shares Health Care 10/40 Index contains hundreds of China’s renowned healthcare institutions concentrating on medical technologies, research, biotechnologies, private healthcare, and more. KraneShares MSCI All China Heal ETF (KURE) monitors this index’s price and yield performance. In this light, it invests 80% of its assets in Chinese-focused healthcare companies, allowing it to track Chinese healthcare companies’ growth and provide investor exposure.

Performance in the Last Five Years

KURE reached 36.42% growth in the last two years. Overall, it has significantly grown since its inception on January 31, 2018, if you compare its performance with ETFs born in the same year. Furthermore, KURE has a Yield-to-Date Total Return of 53.11%

  • Pros

KURE is the perfect alternative to SWHFX because it focuses on the healthcare industry in China. Investors who see great progress in Chinese medical technologies and healthcare and looking for industry exposure will find KURE the best place to start.

  • Cons

However, KURE is non-diversified, meaning it invests only in Chinese healthcare companies and focuses on the MSCI All China Health Care 10/40 Index’s performance. It’s a gateway into the Chinese medical and healthcare industries, but your journey starts and ends only in-country.

Invesco DWA Healthcare Momentum (PTH)

The Dorsey Wright Healthcare Technical Leaders Index (DWHC) contains the fastest-growing healthcare sector companies across the United States. It selects only 30 of the most stable and strong healthcare companies across the country. The Invesco DWA Healthcare Momentum (PTH) focuses on investing 90% in these 30 companies’ securities, allowing investors exposure to any and highly-likely phenomenal growth.

Performance in the Last Five Years

PTH has significantly grown to 159.09% in the last five years. Furthermore, its Yield-to-Date Daily Total Return boasts a 66.19%, making it an appealing ETF for any discerning investor.

  • Pros

The DWHC has an unparalleled capacity to deliver exceptional returns by identifying the best healthcare sector performers. PTH ensures that investors will always get exposure as DWHC continues to update its list.

  • Cons

On the other hand, 30 securities from top performers is a small market. Betting on more than two dozen top-performing healthcare companies with high growth potential sounds like an excellent portfolio until they all experience limited growth.

Healthcare ETFs Aren’t Invulnerable, But They’re Efficient

Many investors dive straight to food and medical services, especially during bull markets. While undeniably a rocky investment road, its risk and payoffs are adequately acceptable for low-risk appetite investors.

The healthcare sector in any country will never cease to grow because of our innate need for excellent healthcare services. Despite their imperfections, healthcare ETFs, such as the Schwab Healthcare ETF, will always remain excellent choices.

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Index Fund vs. ETF: What’s the Difference?

Business Woman with Scale Comparing Index Funds vs ETF difference

Knowing the differences between an index fund and an ETF is important as these could help you with your finances and your strategies as an investor, both in the short and long run. But what are these things exactly, and which among them should you choose?

A lot of financial managers and professionals would understand that it is natural to get confused on these things because of some characteristics (like, for example, both are managed passively, yet one is more actively engaged with than the other).

One major characteristic that differentiates ETFs and index funds is you can buy and sell trades any time of the day, while with index funds, you can only buy or sell with prices already set at the end of the trading day.

Both types, however, have clear differences, and it would help you make more informed decisions as you buy or sell your investments in the future.

Index Fund Vs. ETF: An Overview

When it comes to investing, it is important to understand what makes an index fund and an exchange traded fund (or ETF) crucially different from each other. For one, ETFs are usually known to be more convenient and even flexible than most mutual funds.

Similarly, ETFs are those that can be easily traded when compared to traditional mutual funds and index funds. You can even purchase and sell ETFs at any time and cost lower than other mutual funds where they are only priced after the day has ended.

Furthermore, index mutual funds are usually perceived in the market as somewhat pooled investment avenues that are managed by an investment advisor, or financial management professional. An ETF on the other hand, is seen as baskets of securities that are being actively managed and traded in the market, just like stocks.

Difference Between ETF and Index Fund

Index Fund Exchange Traded Fund
Trading- Sell and Buy Priced only after the day has ended Any time of the day
Pooled Investment Yes No
Activity in the market More passive More active
Expense Ratio Relatively lower Relatively higher
Market Liquidity Less liquid More liquid

What Is An ETF?

As pointed out earlier, ETFs are incredibly liquid on the market (which in essence, means that you can trade these easily). Because they are highly liquid, the prices for these funds go down or up throughout the duration of the day. If you invest in ETFs, you will usually need to set aside a commission fee to some brokers in the market each time you make a trade.

It is, however, very notable that ETFs are typically and normally passively managed in the market, as these attempt to come up to par with an index benchmark, rather than outperform it. Also, if you are a person who wants to be more actively engaged in the market, and would want to be more, sort of hands-on on your investments, then ETFs would be more suited for people like you.

What Are the Types of ETFs in the Market?

1) Stock ETFs

Stock ETFs, in hindsight, is something that gives investors the opportunity to engage with baskets of equities without having to buy individual stocks in a specific sector of the market. The following are a couple of characteristics for stock ETFs:

  • Charges for management fees are low;
  • Stock ETF is ideal for new investors that eye for low costs with actively managed returns.
  • Stock ETFs is a good choice if you would want to diversify your financial portfolio using lower costs.

2) Sector ETFs

A sector exchange traded fund or sector ETF, is, as compared to stock ETFs, an investment that you would build through specific industry sectors. Here are the things you should know about this traded fund:

  • You can use a sector ETF to invest in an entire and specific industry without having to put together the individual funds and stocks belonging to that sector;
  • Because of its high liquidity, there barely are any tracking errors from the underlying index.
  • Assets are also passively managed when in an underlying index.

3) Commodity ETFs

As the term implies, these are goods that are being used as inputs in the economy. Those basic goods are seen as a potential for investments that can help cushion economies from the traps of inflation. Engaging in this needs to have a portfolio manager as well. But, what makes this different from the other ETFs in the stock market?

  • Commodity ETFs are avenues for investors to have less expensive as well as accessible opportunities to various commodities in the market index.
  • Commodity ETFs, exist as wide arrays of goods in the market, from gold to oil and even to agricultural goods such as livestock;
  • This type of ETF can, when designed, impact your risk as an investor, including your returns on your investments and your tax portfolio as well.

4) Bond ETFs

Bond ETFs are investment types that are usually invested specifically in financial bonds. It may look the same as a bond mutual fund because both of them carry on a portfolio of bonds but just with varying trading strategies.

  • Just like a stock ETF, bond ETFs are traded and managed very much passively, especially on the stock market.
  • Because traditional bonds exist and are relatively inaccessible to investors that have less money, bond ETFs make it easier for investors to engage in the stock market because they trade in major indexes and major stocks, such as the New York Stock Exchange.

5) Currency ETFs

What makes currency index ETFs very much different from other exchange traded funds is that they are financial items that are designed to give exposure on investments to foreign currencies (also known as forex). As usual, these are also being managed passively in the stocks. Here are a few other features:

  • With currency exchange traded funds, you won’t have to be burdened in investing with individual trades because of being exposed to various foreign exchange funds.
  • An investor like you can use currency funds like this to study forexes in the market, or provide a buffer for yourself from currency risks, or simply to diversify your investments and funds portfolio.
  • A currency traded fund may include having cash deposits, forex contracts, and even short-term debt that is denominated in a particular currency.

6) International ETFs

The last but not the least category of an ETF is an international ETF. An international ETF revolves around specializing in foreign-based securities in the market.

  • You can track global markets, or monitor a benchmark index of a specific country using an international ETF.
  • When investing, you can not only diversify your financial portfolio with an international ETF, but you can also expand your political and geographic risks in the market that are associated with such portfolios.

Charts and graphs of Index Fund

What Is an Index Fund?

Index fund shares is a branch under the category of a mutual fund that is designed to observe, track and compete on aspects of the financial market index. This includes the S P 500 index. These types of funds are expected to keep the market exposed to broader opportunities and with a lower expense ratio.

If you would like to maintain competitive retirement accounts, then an index fund should be the ideal financial portfolio holding for you. 401k accounts and IRAs are usually affiliated heavily on index funds. In other words, you use such funds to rather imitate the composition and performance of an index in the financial market. These have lower fees and operating expenses when compared to actively managed funds (meaning these are managed passively as well)!

Index funds are relatively more long term in nature, meaning, your index returns and capital gains for the fund are meant to get back to you at a relatively longer period of time. As compared to ETFs which are relatively actively managed funds, index funds are for those people who are more conservative and those who would take rather lesser risks when it comes to their funds.

How Do ETFs and Index Funds Work?

Index funds are those types of funds that serve as a theoretical portion of the stock market. Index funds can represent huge or small companies or even those companies that you can segregate depending on which industry they are affiliated with, among others. Index funds are passive investments and include stocks in the process.

Now, because index funds, per se, are not investable in nature, index fund investors can still somehow put an investment through a mutual fund (as this is constructed to “imitate” or to “mimic” the aforementioned index).

With mutual funds, you wouldn’t have to spend much on administrative fees or on fund managers, or merely on shareholder transaction costs. So if you would want to become an investor with a lower expense ratio and become tax efficient, then a mutual fund would work perfectly for you.

ETFs, on the other hand, are considered as investing securities that come in forms of asset baskets. They can be sold or bought any time and any day, as long as an exchange can be made. This is very much different from a mutual fund, because you can only trade at particular hours of the day.

An investment advice professionals would give you on this is that if you want to engage in investing passively, ETFs are a way to go, as they are more knit together to equities and are more liquid when compared to mutual funds.

Choosing Between Index Mutual Funds and Index ETFs

As mentioned numerous times in this article, you can exchange ETFs at any time of the day because they are relatively more liquid than index funds. So, if you would want to actively engage in the market more often, then you should choose using ETFs than mutual funds.

It will be easier for you to choose between an ETF or an index mutual fund as investments after knowing that when you invest in an ETF, you will need to spend it on a brokerage account, a personal finance manager, or a commission share price every time you make a trade. This is very different with mutual funds, as lower operating costs are expected.

Another factor to help you choose between index funds and ETFs is that both are usually being managed passively. The reason behind this is that both try to come up with some match on an index benchmark, rather than to try to outperform it. But if you would want to have relatively actively managed funds, then you can choose investing on some types of ETFs.

Given that you now have more knowledge on the types, differences, and similarities between index funds and ETFs, which do you think suits your financial plans better?

Bottom Line

As a conclusion, the very basic and crucial things for you to remember is that, for one, index funds as mutual funds are more fit to those who would like their investments to be less complicated and wait for returns in the long term (such as merely investing on your long term retirement plan). Now if you would want to keep your investments simple and if you would want to minimize your expense ratios, then you will surely benefit with index funds over time.

On the other hand, funds ETFs are more suited for those who would want to keep their investing more hands-on. If you have more diverse investment strategies and would be willing enough to take higher risks, then exchange traded funds will work just right on you. Because of higher risks, you may buy and sell more actively and get capital gains in the short run.

Now, while you can get easily confused with these two major types of investments, all you have to do is remember which fund can easily be traded and which doesn’t, which is better for the long run and the short, among others. If you are looking for more knowledge and pro-tips about Stocks and Funds, just subscribe to our Investoralist’s Newsletter and be ready to equip yourself with the financial knowledge you deserve!

10 Best ETFs to Buy and Hold for Long-Term Investors

Man on Smartphone Searching For the Best ETFs to Buy and Hold

Renowned investors, such as Warren Buffet and George Soros, have always said that making your money work for you is the best way to work.

Truthfully, investing relies on your every decision, making it essential that you’re knowledgeable and well-informed of all entry and exit strategies with every share, stock, and investment vehicle you find potential.

One of the biggest challenges to making proper investments is constructing a well-rounded portfolio. However, “well-rounded” is a subjective term that differs with every investor.

On the other hand, both high and low-risk appetite investors agree: portfolio balancing depends on economic situations. Therefore, knowing different investment vehicles, such as exchange-traded funds (ETF), is always imperative.

Top 10 high-quality ETFs

During bear recessions similar to 2020, high-quality ETFs will have lower-priced entry barriers. This opportunity can give starting and experienced investors a chance to become part of the following funds’ growths:

1. S&P500 – Vanguard S&P 500 ETF (VOO)

  • Expense ratio: 0.03%, or $3 annually for every $10,000 invested
  • One-year return: 18%
  • Dividend yield: 1.8%

Any investor who has yet to purchase any ETF stocks that tracks an index fund will want to consider the Vanguard S&P 500 ETF (VOO). One of the best index funds available in the market, it reflects the U.S. economy’s current state, including the technology and biotechnology-oriented Nasdaq composite. The U.S. economy is a significant market that investors remain bullish despite any downturns, and VOO is the key to this top-level market exposure.

2. Gold – SPDR Gold Shares (GLD)

  • Expense ratio: 0.40% or $4 annually for every $10,000 invested
  • One-year return: 20.23%
  • Dividend yield: 0.0%

Gold might not directly correlate with the economy, but it still has a high worth across numerous markets. The SPDR Gold Shares (GLD) reflects the actual performance of gold prices in the market. It derives its value by subtracting gold’s current price against the trust’s operational costs. The GLD ETF has a very low expense ratio with extremely high one-year returns, making it an ideal choice for numerous investors.

3. Tech – Invesco QQQ Trust (QQQ)

  • Expense ratio: 0.20% or $2 annually for every $10,000 invested
  • One-year return: 47.02%
  • Dividend yield: 1.03%

Technology-oriented Invesco QQQ Trust (QQQ) monitors the Nasdaq-100 index’s price and complete performance based on the ETF’s decisions and performance. Nasdaq’s index is the direct reflection of the U.S.’ technology and biotechnology industries, both of which have continuously improved throughout the years. With a low expense ratio and exceptional one-year returns to date, this ETF is a long-term fund any investor wants to have.

4. Real Estate – Vanguard Real Estate ETF (VNQ)

  • Expense ratio: 0.12% or approximately $1 for every $10,000 invested
  • One-year return: -6.55%
  • Dividend yield: 3.45%

The real estate market isn’t in the best shape in 2020 because of the COVID-19 pandemic. However, real estate is always a rebounding asset, which the Vanguard Real Estate ETF (VNQ) prioritizes. Closely tracking the MSCI US Investable Market Real Estate 25/50 Index, VNQ makes its decisions using the index’s reports on all public REITs, valuations, and other real-estate relevant actions and investments. A non-diversified, aggressive stock, VNQ can go up and down at any period, but just like real estate values, it will always recover and give its investors high value.

5. Preferred stock – Invesco Preferred ETF (PGX)

  • Expense ratio: 0.52% or approximately $5 annually for every $10,000 invested
  • One-year return: 7.3%
  • Dividend yield: 4.91%

Renowned investor Warren Buffet has always been one to take calculated risks, and he believes preferred stocks always paved the way beyond any investment break-even. Invesco’s Preferred ETF (PGX) is an assortment of preferred securities while closely tracking the ICE BofAML Core Plus Fixed Rate Preferred Securities Index. One of the best non-diversified ETFs to buy, PGX invests most of its assets (80%) in its fund managers’ preferred securities in U.S. dollar-denominations using the underlying index.

6. Developed Market Stocks – Vanguard Developed Markets ETF (VEA)

  • Expense ratio: 0.05% or $0.50 annually per $10,000 invested
  • One-year return: 2.18%
  • Dividend yield: 2.11%

The FTSE Developed All Cap ex U.S. Index monitors 3,873 common stocks from all market caps sizes in Canada, Europe, and the Pacific. The Vanguard Developed Markets ETF (VEA) monitors and makes its decisions using the index’s data. Fund managers will replicate the target index by investing all of its assets in stocks making up the index to closely match the index. Truthfully, this is one of the best ETFs to buy in 2021.

7. Stable dividend – Schwab U.S. Dividend Equity ETF (SCHD)

  • Expense ratio: 0.60% or $6 annually per $10,000 invested
  • One-year return: 14.20%
  • Dividend yield: 3.55%

The Dow Jones U.S. Dividend 100 Index reflects the U.S. economy’s performance by evaluating its top dividend companies, such as UPS, Pfizer, Coca-Cola, Pepsi, and others. The Schwab U.S. Dividend Equity ETF (SCHD) is something you should buy and hold because of its dedication to closely tracking the Dow Jones 100 index. While not a truly diversified portfolio, you can receive great extra dividend income, which is a significant sign of market strength.

8. Emerging market stocks – Vanguard FTSE Emerging Markets ETF (VWO)

  • Expense ratio: 0.10% or $1 annually per $10,000 invested
  • One-year return: 20.40% (in 2019)
  • Dividend yield: 3.82%

Emerging market countries have shown that many industries can compete in the global arena with their top-notch performance. The FTSE Emerging Markets All Cap China A Inclusion Index monitors emerging market business growth. The Vanguard FTSE Emerging Markets ETF does not closely track the index but takes some samples to hold a diversified collection of well-balanced securities.

9. Small caps – Vanguard Total Stock Market ETF (VTI)

  • Expense ratio: 0.03% or $3 annually per $10,000 invested
  • One-year return: 30.80% (in 2019)
  • Dividend yield: 0.11%

The CRSP U.S. Total Market Index monitors 100% of all investable U.S. stock market businesses of all caps, including micro or startup businesses with regular activity in the New York Stock Exchange and Nasdaq. The Vanguard Total Stock Market ETF (VTI) focuses on taking small-cap samples from the index to create a diversified portfolio. With an affordable expense ratio and exceptional one-year returns, it’s a must-buy and hold ETF for any investor for those unpredictable rainy days.

10. Bonds – iShares Core U.S. Aggregate Bond ETF (AGG)

  • Expense ratio: 0.04% or $0.40 annually per $10,000 invested
  • One-year return: 8.68% (in 2019)
  • Dividend yield: 2.20%

The investment seeks to track the investment results of the Bloomberg Barclays U.S. Aggregate Bond Index. The index measures the performance of the total U.S. investment-grade bond market.

The fund generally invests at least 90% of its net assets in component securities of its underlying index and in investments with economic characteristics that are substantially identical to the economic characteristics of the component securities of its underlying index.

The U.S. investment-grade bond market is volatile yet has demonstrated exceptional growth in the previous years. The Bloomberg Barclays U.S. Aggregate Bond Index monitors the investment-grade market’s performance.

About 90% of iShares Core U.S. Aggregate Bond ETF goes into copying the index’s bond component securities. Bonds are a great safeguard during economic downturns, making this ETF an important buy decision for numerous investors.

Portfolio-Building: The Significant Role of ETFs

Truthfully, numerous investors worldwide minimize their individual stock investments thanks to the dependable and reliable opportunities in exchange-traded funds.

As securities, your ETFs are essentially mutual funds – which comprises stocks, bonds, and other assets. However, unlike most mutual funds, high-quality ETFs focus on particular indexes. For example, the Schwab U.S. Equity Dividend ETF (SCHD) focuses on top-performing U.S. company dividends.

For most investors, they do not expect ETFs to have stellar growth in the next five years. However, they expect them to be the best safety nets against any possible economic downturns or bear markets. Depending on your chosen ETF’s quality, you’ll recoup and preserve the majority of your bull-market investments.

ETFs do not bet for or against the stock market. Most ETFs, such as the ones we’ve listed above, focus on stability and reasonable income. Even the most aggressive exchange-traded funds following and imitating the S&P 500 index, such as the Vanguard S&P 500 ETF (VOO), have relative investment safeguards allowing them to float evenly even during the most disastrous economic downturns.

Therefore, it’s wise to see ETFs as your safeguards allowing you to have higher risk appetites in prospective growth and secondary markets. A wise investor will take calculated risks to grow at any given point.

Choosing Between Long and Short-Term ETFs

The majority of ETFs we’ve chosen above are long-term because of their effective bear market shielding and a low-priced barrier to entry. On the other hand, short-term ETFs do exist.

These short-term funds focus on bonds with high-interest rates, allowing them to cash in once all debtors have repaid. Unfortunately, it carries a high risk of debtors defaulting and failing to pay for their debts.

Long-term ETFs focus mostly on having a well-rounded approach depending on their market of focus. On the other hand, short-term ETFs see enormous growth within a quarter, making them a viable option for high-risk appetite investors seeking exponential growth.

With careful research, it’s possible to find the best-quality short-term ETFs in the market that focus on debtors with low credit risk.

For example: The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) focuses on high-quality debtors with a proven track record of debt repayments. In doing so, it has achieved popularity, amassing a significant investor following.

Low-risk appetite investors will always find peace-of-mind and slow-but-sure growth with high-quality long-term ETFs, such as those that we’ve listed above. On the other hand, if you have enough long-term funds on your portfolio, taking some calculated risks with short-term ETFs, as you would with day trading, is always a good portfolio-expanding investment move.

Understanding Market Exposure

The stock market is more than an exchange center of publicly-available business shares from different local companies. Additionally, it allows investors to obtain share ownership of multinational companies, commodities, and any industry they wish to enter. Investors must have in-depth knowledge regarding market exposure to both well-balanced and risk-aggressive portfolios.

An investor’s market exposure can be correlated and non-correlated. The oil and agricultural industries are different but have a correlation because oil prices affect agricultural goods. Higher oil prices create logistical frictions and obstacles for agricultural industries.

On the other hand, the pharmaceutical industry has no direct correlation with general goods manufacturing industries. The price of medicine does not directly affect the rise or fall of general good values, clearing them of any connection.

An aggressive or well-balanced portfolio identifies these correlations and welcomes or rejects them depending on the investor’s short and long-term goals. Short-term investors may choose to invest most of their resources to correlated industries, enabling them to propel growth at a higher risk of loss. On the other hand, long-term investors wanting a diversified portfolio will want to own non-correlated ETFs

High-Quality ETFs Makes Balancing Your Portfolio Easy In 2021!

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Fidelity Robo Advisor: What You Need to Know

Businessperson And Robo investment shaking hands

If you aspire to be successful in investing, but clueless on when and where to start your path, the lack of knowledge may cause confusion and make investing seem complicated and intimidating. Fortunately, there are a bunch of options you can seek to make things easier. Where one does not need a background in finance and which does not require a large amount to put your investables in the stock market. A popular example would be robo-advisory services.

Automated or digital investing platform or more commonly known as a Robo Advisor, is an investment advisory service that can be acquired online. To put it simply, it’s an online portfolio management service, where your basket of goods are managed by artificial intelligence. Revolutionary, isn’t it?

One of the companies that offer this service to potential and experienced investors is Fidelity. Fidelity’s robo advisor is called Fidelity Go.

Robo advisor or Fidelity Go in particular, claims to benefit their clients through setting achievable goals while taking a more passive approach with lesser management fees, or none at all. Distinctly, for investments below $10,000.

What Is a Robo Advisor?

Robo Advisor is an automated investing program powered by machine learning technology. It calculates ideal financial decisions for their clients based on the information that it was provided. Basically, the digital counterpart of an investment advisor that would otherwise be a real person.

Generally, a Robo advisor’s purpose is to build and manage portfolios. Which can render you with little to no effort at all.

How Do Robo Advisors Work?

Not all Robo Advisors function in the exact same way, nor do they offer the same features. However, most of them are still identical in a way. Here’s a gist of how they basically work.

As previously mentioned, it is a system that utilizes machine learning technology or artificial intelligence. This means that they feed the system with data gathered by asking the investors specific and general questions about their personal preferences and their financial objectives. Questions usually include one’s risk tolerance (aggressive or conservative), total investment amount, preferred profit amount, preferred turnaround time for profit, and more.

From there, the algorithm processes the data and provides clients with market predictions and data based conclusions with reasonable accuracy. The result will likely consist of suggestions regarding portfolio allocation. The portfolio allocation will indicate the specific commodities you should invest in, like funds, stocks, bonds, or a combination of such.

Moreover, clients are also presented with investment strategies that boost their chances of achieving their desired goal, within their desired timeframe. The more information you feed the system, the more accurate and evident its conclusion.

Once an investor agrees and opens a Robo advisor account, the Robo advisor will then integrate actions that it deems necessary to properly build and maintain the portfolio. Of which, the clients will be notified and updated online on a regular basis.

What’s a Hybrid Robo Advisor?

A hybrid Robo advisor is an upgraded investing solution that involves both the technological and human aspects of an investment advisory program.

Fundamentally, it leverages the benefits of a Robo advisor with active investment strategies instead of a more passive approach. With no guaranteed performance and minimal options to educate Robo-advisors on the art of trading, or the contemporary market issues that affect investment options, the unguaranteed effectiveness of Robo-advisors are offset by human integration. Basically, the elements of a Robo-advisor with a breathing financial advisor steering the wheel.

Based on economic and market conditions, risks differ over certain periods of time. A hybrid Robo advisor system is designed to overcome these risks and execute investment strategies according to market fluctuations. In essence, it creates a more responsive portfolio that makes the most out of emerging trends in the whole investment landscape. Fidelity Go is a prime example of a hybrid Robo advisor.

Can Robo Advisors Help Manage Some of the Risks in Investing?

Essentially, yes. As previously mentioned, market fluctuations are inevitable. The great thing about the inclusion of machine learning technology in Robo-advisory is that it provides an efficient market hypothesis, generating a blend of appropriate investments that are calculated to manage and surpass risks.

How Can Robo Advisor Help You?

It is wiser to evaluate both sides of the coin in order to assure and accrue financial investment counseling of a higher caliber, we listed below the key pointers of things you need to know how Robo Advisor can help you.

Where Robo-Advisor Shines:

1. Easy Account Setup

Most Robo-advisory sites provide a brief tutorial on how to sign up, including a tutorial on how their robot advisor service works. In Fidelity Go specifically, you can check the video on their sign up page.

Upon signing up, you will be presented with a questionnaire that will assess the accurate investments for you, based on the data you input.

The questionnaire will include your financial objectives. How much is your start up capital, when and how much are you expecting for the return, how aggressive or conservative you are in terms of risk tolerance, and other information that directly affects your financial objectives.

Once you have answered, they will provide you with the most ideal game plan for your investables. This includes strategies, a calculation of the potential value of your investments over time, and an estimation of possible additional costs.

After that, setting up an account is just as easy as signing up on any website. You will be asked to input your name and other personal information. You will then be redirected to a funding page where you will connect your bank account so you can transfer the funds.

Moreover, this procedure proves to be time and cost efficient for the reason that in order to do this in a regular setting, you will have to set an appointment or endure a long phone call with your financial advisor regarding your information. This kind of accessibility is what sets this system apart from the traditional investing programs.

2. Goal Setting

Every investor’s goal is to gain more than what they have invested, whether it be in a limited or lengthy time frame. It is common knowledge in the market that obtaining a diverse portfolio is more likely to secure a more abundant and positive outcome for your financial assets. Robo advisor does exactly that.

With a Robo advisor, you are primarily granted with instant diversification. This is because Robo advisors tend to invest in Index Funds and exchange-traded funds (ETFs) to maintain a diverse portfolio. For example, it is likely that your Robo advisor will recommend investing in the S & P 500 index. S & P 500 includes the top 500 companies in the market.

The logic of this is that, as opposed to selecting just one, S&P 500 will provide you more security because you are always betting your money on the best performing companies. Additionally, since you are not necessarily investing in a fixed set of companies, just on the top 500 on the list, this allows your portfolio to gain more market exposure.

3. Customer Service

The main difference between a robo advisor and the traditional investment program is automation as opposed to personal attention. Generally speaking, this approach is more feasible to investors that favor an expedited process with minimal costs. Switching to digital offsets the various administrative and management fees.

In particular, Fidelity Go follows a tiered pricing system. They only collect 0.3% of your account balance. This means that for every $10,000 you invest, only $3 will be deducted on your balance. If you reach or exceed an investment initial capital of $50,000, the new percentage is priced at only 0.35%.

Additionally, they don’t require clients to pay advisory, trading, transaction, and rebalancing fees. Perfect for those who are interested in investing without much experience and capital.


Robo advisors like Fidelity Go are fairly easy to use. Fidelity itself actually provides it’s clients a mobile app they can use to further improve accessibility to their assets. Through their digital platforms, investors are regularly updated on a monthly or weekly basis. The report usually contains a summary of their weekly investment reports, investment strategy, and investment results. Through desktops or mobile apps, you can access these information in just a few clicks.

Another key feature is the ability to tap into your index funds and ETFs without exerting too much effort, you just have to input the funds on a monthly and weekly basis.

Globally, the robo-advisor industry is projected to double its AUM to $2 trillion in the next 3 years with an even better projected user growth of 21 million by 2022.

Where Robo-Advisor Fall Short:

1. Account Services

As initially stated, each robo advisor differs in the features they offer. Some of them are better than the other in different aspects.

A downside of Fidelity Go is that it lacks retirement arrangements under their goal attainments. This is an issue to investors who are seeking to invest for their retirement plans. Nevertheless, Betterment and Wealthfront are counterparts that offer this feature.

Another drawback of Fidelity Go is that they don’t allow transferring current assets to Fidelity and other firms. The only way to open a new account in Fidelity Go is with cash.

2. Portfolio Construction

Another negative aspect of Robo advisor is the limited customization of your portfolio. Previously, it was mentioned that Robo advisors primarily endorse index funds and ETFs. For this reason, if you are interested in acquiring stocks concerning precious metals or real estate, you are not necessarily allowed to do this, they simply don’t provide the option to.

Robo advisors are not necessarily great for everyone because it depends according to your specific needs. If you have a significant amount of wealth and a large number of assets, this may not be for you. This option may be more fitting for investors with minimal assets.

3. Portfolio Management

The main point of investing is to increase your initial financial assets so you can use it for future financial needs. With this in mind, you should ask yourself if you are really comfortable in granting Robo advisors access to your assets and take over your portfolio. After all, it’s your hard-earned money.

Robo advisors lack the ability to assemble a specifically tailored account. This is a key feature some investors seek and may not like the idea of its unavailability.

4. No Tax-Loss Harvesting

Tax-Loss Harvesting, also known as tax selling, is a method of reducing taxes while conserving the predicted risk and return profile of a certain portfolio. How it works is that it collects former undetected investment losses to offset taxes on other profits and income on your portfolio. Additionally, investors have the option to invest these tax savings back into their portfolios to yield significant growth.

However, this is quite challenging to achieve with Fidelity Go. They don’t normally set a band range to prompt a rebalancing. Because of the undetermined balancing, your Robo advisor account might face an unexpected tax deduction at an unanticipated time.

How Do I Know If a Robo Advisor or Hybrid Robo Advisor Is Right for Me?

There is no definite answer to this. In order to reap optimal results from Robo-advisors like Fidelity Go, it is important for investors to weigh the advantages and disadvantages, along with their specific preferences and financial objectives. This will help determine the most suitable integration of this technology in your investment ventures.

Bottom Line

Robo and Hybrid Advisors like Fidelity Go are still recognized as legitimate methods. However, one should keep in mind that the effectiveness of Robo-advisors is neither consistent nor guaranteed. Invest smart and research to avoid unfortunate outcomes.

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8 Best Long-term Investments

Coins stacking with growing plant use for long term investment

Automatically, we associated the term “investments” with planting a seed and watching it become an enormous tree in 10-15 years. You’re not wrong thinking about it this way — long-term investments do resemble trees. They branch out and evolve to tremendous value if their environment meets certain conditions.

If you’re planning to start on long-term investments, we’ve got you covered. Below, we’ll share with you great examples of long-term investments capable of growing to sustainable and beneficial heights.

But, first things first…

The Risk and Rewards of 8 Top Long-Term Investments

1. Stocks

Investors classify these into two: regular dividend stocks and high-yield/growth stocks. Stockbrokers present regular stocks as upcoming or established companies and their growth prospects in the next 3-5 years.

Truthfully, most stockbrokers and exchanges advertise certain growth stocks in a certain way because investors need to invest higher due to the exceptional value these have.

  • Risk Level

When you hear people say “investments,” you think of dividend stocks and shares. During high manufacturing and gross domestic product (GDP) seasons, locking on both regular and high-yield investments will give you huge returns.

However, when economic recessions hit, stocks lose the most value than diversified funds (mutual, ETF, and others), unless you find or invest in a “unicorn” company like Facebook, Amazon, and other equivalents.

  • Rewards

If you’re willing to stick it through thick and thin with your diversified portfolio of regular and growth stocks, you’re sure to get huge returns when higher FTSE Straits Times Index (Singapore’s S&P500) performance happens. Truthfully, it’s easy to own high-performing stock if you’re looking for long-term investments that yield great profits.

2. Long-Term Bonds

During a bearish market (meaning a poorly-performing commercial and industrial market), interbank borrowing rates, such as SIBOR, have increased interest rates due to increased risks. Long-term bonds have a powerful shield because it does not use bank rates as their value anchor.

Instead, it increases its price thanks to its limited supply. You can think of it as an alternative to gold. When stock prices decrease, bond prices stay the same, but the treasury’s bonds can deplete.

  • Risk Level

A direct inverse to stocks, bonds allow investors to float during the most terrible financial recessions. However, if the commercial and private sectors have flourishing profits and low-interest rates, bonds become virtually useless — until a recession happens again.

However, bonds are decades long-investments, the lowest being 30 years. Additionally, bonds change interest rates as fast as a single year. Therefore, your 30-year 3% yield treasury bond will sell low because it is a fixed-rate bond, even if the current year endorses a 5% yield on the bonds.

  • Rewards

Stability is one cornerstone low-risk investors love about bonds. Their predictability allows them to invest more money with safe and calculable yields. Furthermore, if you invested in bonds the previous year and saw a recession the following year, you can get high returns once bonds deplete, and investors are clamoring to purchase them at higher than ever prices.

3. Mutual Funds

When you combine a set of stocks and bonds to achieve a certain goal, they become a fund. Mutual funds are managed by professionals who create a company (complete with incorporation) to help first-time and long-time investors make long-term investments with different profit possibilities.

You’ll only allocate a certain amount of capital, then the professional brokers and managers will make the investments.

  • Risk Level

Mutual funds present their fund manager’s strategy and objectives. Working with actuaries, managers can present optimistic, average, and pessimistic returns their investment strategies can achieve.

    • Mutual funds describe themselves as the following:
    • Equity: Stock-oriented with high risk
    • Fixed-Income: low but guaranteed stable income, medium risk
    • Index: high-yield stock oriented. Expensive but medium risk
    • Balanced: Risk-reduction focused. Very low risk but low return
    • ETFs (More on this below)
  • Rewards

Like other investment products in this list, your rewards depend on the risks you’re willing to take. Most beginner mutual fund investors go for balanced funds but find its slow, and low profit returns troublesome. Some want equities for impressive returns, even if it’s just once or twice in a blue moon.

For long-term investments, balanced funds are your best bets. Choose stability and low risk over quick and high profits accompanied by high risks.

4. Exchange-Traded Funds (ETF)

ETFs have an extremely popular mutual fund, an investment trust structure, allowing them to trade on the stock and receive stock benefits. Therefore, it enjoys stock liquidity, making it another option for short-term investors.

Their lower fee makes them a much more appealing choice. Plus, ETF managers can hedge or leverage funds for maximum profits.

  • Risk Level

While most financial advisors rate ETFs as a low-risk investment, stock tax variety will apply to its liquidity. Truthfully, tax-efficiency is notable in ETFs if managers buy and sell them in-kind. Capital gains taxes occur when derivatives, commodities, and other factors get involved.

  • Rewards

Like stocks, ETFs increase their value if the market is bullish (or positive). When GDP plus commercial and industrial activities increase, so will ETF values regardless of style. However, if your ETF does not trade in bonds, you might be in trouble once recession hits.

Long Term Real Estate Investment

5. Real Estate

From the Middle Ages to modern times, real estate is a commodity that only grows in value. Truthfully, it’s one of the most expensive investments you can make with a 20% down payment as the minimum ownership fee of properties you intend to rent out to Singaporeans or foreigners.

The average cost of non-HDB properties in Singapore is beyond S $200,000 – S $ 400,000 at a minimum. However, because of the high demand for real estate in the country, it remains an excellent source of income despite its slow start.

  • Risk Level

One risk exists with real estate investments: bank debt and passive management. You can assume bank debt as money you’ll invest in the property coming from a reputable financial institution. Truthfully, this works similarly for owner-occupant properties.

Once you’re running multiple rental real estates, you’ll want to use a management company to oversee maintenance, accounting, and other necessary procedures to enhance your investments’ quality and dependability.

Both of these entail great risks because you can end up with deep bank debt if you fail to pay or secure a tenant (if your interest to invest in real estate is rental profit). Plus, your passive real estate management company can demand you to pay their accumulated fees if you default on property payments.

  • Rewards

Real estate’s value remains high, thanks to the consistent demand and limited supply. If you can ride out the initial massively-expensive storm, you can expect to find an enormous profit. This outcome is true, especially if you’ve completed property and debt payment and going beyond your break-even rates.

6. Tax Sheltered Retirement Plans

Honestly, you haven’t heard a single Singaporean soul tell you they’ve achieved financial independence by using tax-sheltered retirement plans. However, many financially-successful individuals use them to minimize their investment losses. Everybody pays taxes, but if you have tax shelters, you use legal means to minimize your contributions and get more profit from your assets.

Tax shelters use existing tax brackets for investment profits regardless of capital assets. Thankfully in Singapore, you won’t need to worry — the government does not charge for any capital gains taxes. Alternatively, you can lower your taxes by familiarizing yourself with the country’s bilateral tax treaties.

  • Risk Level

With no capital gains tax to worry about, Singaporeans can maximize the sale, purchase, property transfer, and other profits they receive by moving assets. Truthfully, tax shelters are zero-risk ventures, but then again, they’re not actual investment vehicles. On the other hand, they can be tedious with all the legwork and paperwork.

  • Rewards

Being familiar with Singapore’s tax system enables you to maximize profit within every legal limitation possible. Therefore, you won’t need to worry about long-term issues arising from investment profits you’ve failed to track. While the absence of any capital gains tax helps, you might step on a legal landmine if you’re not too familiar with Singapore tax laws.

7. Robo-Advisor Portfolios

Automation is one of the biggest benefits this age of progressive and advanced technology benefits any Singaporean, including investors. A Robo-advisor is like a fund manager in your pocket with the option to customize their management and purchasing style. For example, you can set your Robo-advisor to invest in stocks and minorly in bonds.

It uses machine learning, another advancement for both technologies. Once it learns you and other investors’ practices, it can give you asset recommendations using success percentages from other Robo-advisers as the basis.

Most Robo-advisors have some basic parameters to set during the start, allowing you to adjust them progressively to suit your automated investing style.

  • Risk Level

Truthfully, the 0.25% commission it receives is negligible. However, you face similar risks if you will invest in stocks or bonds independently. When using your Robo-advisors, research and decision-making bulks will always be yours; they can only provide suggestions.

As for your bot, its responsibility is to assess whether it meets your pre-set investment goals. It will then give you recommendations using its talents of fast-tracked data comparison analysis between investors who have the same investing behavior and assets as you.

  • Rewards

Like risks, the rewards you get from Robo-advisors are thanks to your assets’ performance. However, it’s easier to assess rewards thanks to a data-accurate Robo-advisor.

It can provide you details on trends and actions by other investors. Having an effective briefing regarding the general investor flow helps you anticipate whether certain asset prices can increase or decrease.

8. Annuities

These are insurance products that invest for you. These products have their respective objectives, such as providing you with income at 65 until your death.

To make their products accessible, insurance companies make annuities affordable for entry-level products at least. However, substantial-paying life-plans ask you for a higher initial down payment before subsequent installations until you finish paying.

Some financial advisers consider annuities a controversial product because it benefits the insurance company and its representatives more than the beneficiary.

For example, if you paid to get an income after you retire by 65, you maximize your annuities if you lived up to 100 years. Achieving this meant the insurance company paid the additional percentage they advertised.

Otherwise, you will have fared better saving your huge initial annuity down payment and subsequent installation payments to pay yourself after retirement.

  • Risk Level

Annuities are useful if you are in good shape. Unfortunately, no human can ever predict their final resting years’ duration. However, having peace of mind that a financial institution is liable to keep you financially afloat during retirement can benefit the majority of Singaporeans.

  • Rewards

As we’ve mentioned above, if you live for 65-100 years, you have maximized your investments to the fullest. On the other hand, passing away earlier than 75 will reward the insurance company the retirement fund remainder. Some annuities award your remaining fund amount to family members or registered beneficiaries, but these are rare.

Factors to Consider

  • Higher Risk Levels Equal Higher Returns (And Vice-Versa)

Don’t be swayed or fooled by seminars and advertisements brokers publicize about investing being worry-free and easy. Making investments is easy, thanks to technology and financial technology advancements. However, turning a profit through long-term investments will always be challenging. To make your long-term investments bear fruit, you’ll need to research and have a complete understanding of SWOT.

Every business relies on its strengths, weaknesses, opportunities, and threats (SWOT) analysis. Thankfully, many business and market analysts have their respective SWOT analytics data on different websites and magazines. All you’ll need to do is a simple search engine query.

  • Time Horizon Anchored To Your Goals

Truthfully, long-term investments have smaller risks than their short-term counterparts because assets can recover their value over time. For example, during a recession, short-term investors suffer more losses if they invested in stocks. However, best long-term investments with in-depth planning can ride out the ups and downs of its stocks through a recession and gain double or triple the initial investment value.

However, a long-term investment fund is never risk-free. You might be at the end of your holding position, and without warning, interest rates have plunged so low, spelling bad news for your bond-oriented investment approach. After decades, you’ve received only a small investment growth instead.

Start Your Investment Journey With The Right Information!

One of the best ways to build wealth over time is to invest long-term. If you’re looking to get started with long-term investing, it’s critical to always invest with the right information on hand. With the right thoughts on the best long-term investment products, your user experience during investing becomes smoother and profitable. Subscribe to Investoralist for more investment tips and ideas!

Guide to the Best Charles Schwab ETF List of 2021

Guide To Charles Schwab ETF

Charles Schwab is a U.S. based financial services company that offers various investment management services meant to cater to all types of investors. Clients receive investment advice and strategies to help them achieve the highest return of investment possible. Schwab offers various products for their clients, such as stocks, exchange-traded funds (ETF), mutual funds, and money.

This article aims to provide readers with an idea of how to start investing in an ETF. Here, you will learn the introductory information necessary to start building your investment portfolio. Also, you will see a list of the best ETFs with low fees.

Charles Schwab: An Overview

Schwab index funds have been in the market for several decades now, but it was only in 2009 that the company has started to offer exchange-traded funds. More than a decade later, Schwab has gained a reputation for offering profitable ETFs with low expense ratios. In fact, it was Schwab who first introduced the no-commission offers for an ETF, which other investment companies copied.

ETF is an abbreviation for “exchange-traded fund,” which is a type of investment fund traded on stock exchanges. It is a collection of investable assets like bonds or stocks which is used to track an index or to invest in a certain industry or sector. For investors, an ETF is a quick way to diversify their portfolio even though they only bought one security.

It is easy to confuse an ETF and mutual funds. In many ways, these two are the same. But the major difference between the two is that an ETF is traded throughout the day. In contrast, mutual funds are traded only once a day, after the market has closed.

Today, Schwab was ranked #1 for offering low-cost and free ETF trading by the Investor’s Daily Business. Investors can choose from the 2,000 index mutual funds and ETF products they offer. Also, it has a lot of ETF products apt for investors who have limited funds.

Why Choose Charles Schwab Index Funds?

Through the years, Schwab has gained popularity for offering affordable index funds. It has been favored by many for offering the best ETFs and mutual funds. Below are some of the specific reasons why Schwab continued to attract thousands of investors in the past decade.

  • Low-cost index funds

Many investors would attest to the affordability of Charles Schwab index funds. Each has affordable if not the lowest expense ratio in the market. Also, Schwab has numerous commission-free ETFs. Given these factors, it is no doubt that the company has developed a reputation for being an affordable discount broker. It has maintained its brand of being one of the most reachable ETF issuers in the globe.

  • Easy and effective research

There is no denying that investing can be a tough job because of the many information you need to read and understand. It is overwhelming for beginners to encounter terms like Stock Market Index Fund, S&P 500 Index Fund, or Aggregate Bond ETF, and more.

But, those with Schwab brokerage accounts would find it easy to understand the details of the stocks and funds they are buying. Schwab has several resources, as well as help from third-party independent researchers, to guide investors to make the best investment decisions.

  • Large assets managed

Admittedly, Schwab only has a few ETFs. Despite this, it manages assets with $145 billion – fifth-largest U. S. ETF sponsor. This is an admirable feat considering that its competitors like Vanguard have way more ETF offerings. The large assets managed by Schwab tells us that its ETFs are highly in-demand.

Two Ways Schwab Categorizes Its Equity ETFs

Charles Schwab has two ways of categorizing its ETFs, namely, market-cap ETFs and Fundamental index ETFs. These are two methodologies used by Schwab when it comes to indexing its index funds. Note that both of these approaches can help you build and improve your investment portfolio.

1. Market-cap ETFs

These ETFs benchmark indexes to their portfolio based on the size of a company’s market capitalization or the total value of the shares of stock of the company. For example, Schwab has a so-called Schwab 1000 Index, which tracks the 1,000 largest companies traded on the stock market of the United States.

On the other hand, Schwab has the so-called Dow Jones U S Small-Cap Total Stock Market Index, which tracks the 1,750 smallest companies in the American stock market. You can see that both indexes sort the list of companies by market capitalization.

Under the market-cap ETFs of Schwab. They provide an easy way for their investors to invest in small-cap, mid-cap, and large-cap growth companies that are traded in the stock market. Note that U. S. small-cap companies are those with a market capitalization of less than $2 billion. Meanwhile, mid-cap has between $2 billion to $10 billion. And, U. S. large-cap companies are those with a market capitalization of more than $10 billion.

2. Fundamental index ETFs

While the market-cap ETFs are based on market capitalization, the Fundamental Index ETFs are based on three measurements of the company size. These are: first, adjusted sale; second, retained operating cash flow; and third, dividend and buybacks. Adjusted sales refer to the measurement of the company’s revenue. Meanwhile, retained operating cash flow refers to the total amount of cash the company keeps each year. And, dividend refers to the amount paid by the company to the shareholders.

Fundamental Index ETFs have higher expense ratios compared to market-cap ETFs. Also, they bear greater tax liabilities. Despite these disadvantages, Schwab’s Fundamental Index ETFs have shown better performance than its market-cap ETF counterparts. Hence, it is understandable why investors choose this.

How to Buy Schwab ETFs?

There are multiple ways to buy Schwab ETFs. You can directly buy the ETFs issued by Schwab. Also, you can buy from the Schwab ETF OneSource. Both of which have commission-free options.

If there are no commission-free products you can find, you can avail of Schwab’s brokerage commissions. Here, you will pay for an advisor who will help and guide you on where to invest your money. Opening a brokerage account does not necessarily mean spending a lot of money. If you play your cards right, your brokerage account can yield a high return on investment.

Buying Schwab ETFs are fairly simple and easy. Just follow the steps below and be a pro in no time!

  1. Open an account at charles schwab website

The first thing you have to do is to open an account and put in the fund you are willing to invest. Take note that there are a wide selection of Exchange-traded funds (ETFs) at some of the lowest costs, so decide on which ones are the best for your portfolio.

  1. Select number of shares you wish to purchase

On the website of Schwab, just use the ETF ticker and the number of shares you wish to purchase. If the ETF you chose is not commission-free, you also have to make sure that your account has enough cash to pay both for the price of the share and the added commission fee.

  1. Build your portfolio and start trading!

When you start building your portfolio by buying ETFs, you can use the Personalized Portfolio Builder tool offered by Charles Scwab to simplify the process. You can as well use the variety of tools, guidance, and support designed they extend to beginners or have live support from Schwab Investment Professionals available 24/7 on their website support.

Wooden Block With ETF

7 Best Schwab ETFs for Low Fees

Charles Schwab, as an investment company, has a lot of index fund offerings for investors. Below are seven of the Schwab ETFs with low fees. These are for investors who do not have a lot of funds for their investment accounts. Maybe, one of these funds is right for you.

Note that each of these Schwab ETF is low-cost and has a minimal expense ratio. If you want to have an aggressive type of investment, these ETFs might not be right for you. The challenge here then is to look for the best Schwab index funds that can give you the highest amount of return given the limited amount you have invested.

1. Schwab U. S. Small-Cap ETF (SCHA)

Expense ratio: 0.04%

Management Style: Passively-managed index fund

This fund tracks the total return of the Dow Jones U. S. Small-Cap Total Stock Market Index. It is a low-cost and tax-efficient fund. It provides investors with simple access to U. S. small-cap equities. Also, it is best for those looking for long-term growth for their portfolio.

SCHA is one of the most affordable small-cap funds you can find in the market. It holds about 1,750 stocks and has around 8.3 billion of assets under management. Notably, this ETF has outperformed other funds in the past recent years. For example, it has outperformed Russell 2000 index, S&P Small-cap 600 indexes, S&P 500 Index Fund, or even larger ones like Schwab 1000 Index Fund (SNXFX).

Also, SCHA has allocated 31% of its weight in industrial and healthcare stocks and 37% of its weight in the technology and financial services sectors. While it was only launched a decade ago, this Schwab ETF has shown consistent growth and good performance. In fact, it is managing more than $8 billion in assets today.

2. Schwab Fundamental International Large Company Index ETF (FNDF)

Expense ratio: 0.25%

Management Style: Passively-managed index fund

This is a low-cost Schwab ETF that tracks the Russell RAFI™ Developed ex U.S. Large Company Index. It can serve as a good complement to a market-cap index fund or an actively managed ETF. Buying a similar ETF, a Large Company Index, from other investment advisors, will cost you so much more, around 0.42% compared to only 0.25% charged by Schwab.

The measurements used to construct the benchmark index of the Schwab Fundamental International Large Company ETF are adjusted sales, operating cash flow, and dividends and buybacks. Also, most of the companies in this ETF are based in Europe, Japan, and the U.K. This means that FNDF is good for those looking for an alternative for EAFE funds or those looking for a Schwab International Large Company Index.

3. Schwab U. S. Broad Market ETF (SCHB)

Expense ratio: 0.03%

Management Style: Passively-managed index fund

This ETF tracks the total return of the Dow Jones U. S. Broad Stock Market Index. It is designed to measure U. S. small-cap, mid-cap, and large-cap equities. This fund provides simple access to the 2,500 largest publicly traded U.S. companies, which means that it has four times the number of components in the S&p 500 index. You can use this ETF as the main fund of your portfolio.

Schwab U. S. Broad Market ETF has one of the most affordable ETFs offered in the U.S. One problem, though, is that it is fairly safe and has a low gain. Investors looking for high profit or return should not choose this fund. It is best for those looking for a conservative type of investment.

4. Schwab U. S. Dividend Equity ETF (SCHD)

Expense ratio: 0.06%

Management Style: Passively-managed index fund

This ETF tracks the total return of the Dow Jones U. S. Dividend 100, which tracks the quality and sustainability of dividends. Since SCHD follows a focused approach, it is best to use it to complement a diversified portfolio. It has around $9.5 billion of assets in its management, which means that it is one of the largest dividend ETFs in the United States.

Also, it is one of the least expensive dividend ETFs in the market. Investment advisors and investors favor this fund because of the way it creates its index. It only includes stocks that had a consistent minimum dividend increase in the past 10 years.

5. Schwab U. S. Large-Cap Value ETF (SCHV)

Expense ratio: 0.04%

Management Style: Passively-managed index fund

This ETF tracks the return of the Dow Jones U. S. Large-Cap Value Total Stock Market Index. It gives investors access to large-cap equities in the United States that exhibit value style characteristics. It can serve as part of the core of your diversified portfolio.

Admittedly, Schwab U. S. Large-Cap Value ETF has not performed well in recent years, but it cannot be denied that it remains one of the least expensive index funds you can find today. As a result, this index fund is chosen by investors looking for a long-term investment. In total, this fund has 350 stocks, 22% of which are in the financial sectors, while 28% are in healthcare and technology.

6. Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE)

Expense ratio: 0.39%

Management Style: Passively-managed index fund

This index fund tracks the total return of the Russell RAFI™ Emerging Markets Large Company Index, which is a basket of the largest emerging markets companies based on fundamental measures. This Schwab emerging markets equity ETF is best paired with an index fund that has market-cap indexing, or that is actively managed.

Schwab Fundamental Emerging Markets Large Company Index ETF has remained productive in recent years, largely because of the emerging economies in Asia. Around 40% of the weight of this fund is on the stocks of Asian economies. It is a Schwab ETF that uses an alternative index methodology. It is similar to FNDF, but FNDE is for emerging markets.

7. Schwab U. S. Large-Cap Growth ETF (SCHG)

Expense ratio: 0.04%

Management Style: Passively-managed index fund

It is a Schwab ETF that tracks the total return of the Dow Jones U. S. Large-Cap Growth Total Stock Market Index. It provides simple access to large-cap U.S. equities, which must show growth style characteristics. This is an affordable fund that can provide tax-efficiency.

SCHG is similar to SCHV. The only difference is the focus of this Schwab total stock market ETF is on growth instead of value. Its approach to growth is traditional. For example, a large part of it, around 32%, is invested in technology stocks. This means that investors also have to manage their expectations on the return of their investment.

Bottom Line

The Schwab index funds mentioned above are for investors looking for affordable investment opportunities. Aside from being low-cost (each has a low expense ratio), they are also tax efficient. Despite these advantages, remember that they are low-risk, low-gain investments. Charles Schwab has other index funds for investors with a lot of funds that are expecting bigger gains or profit.

If you feel like the ETFs mentioned above are not right for you, Investoralist has other articles discussing other types of Charles Schwab index funds as well as index funds from other investment services. Browse this website to find other written materials and research tools to help and guide you in your investment. We do have detailed and in-depth discussions about Charles Schwab international and U. S. index funds, U. S. aggregate bond, Schwab U. S. broad market, and many more.

Aside from topics of Schwab index funds, mutual funds, and ETFs, Investoralist has other articles dedicated to explaining how to manage funds, diversify a retirement account, and find affordable expense ratios. Also, you can find our topics on real estate, money lending, credit score, and many more. All of these are easy-to-read and are friendly for beginners.

Finding the Best Charles Schwab Mutual Funds

Business Man Finding the Best Charles Schwab Mutual Funds

The Charles Schwab Foundation is a renowned financial services company based in the United States. Aside from being known as a reputable online discount brokerage firm, it is also popular for offering low-cost, high-return, and high-quality mutual funds. The terms and conditions set by the company are always attractive to long-term investors.

Through the years, Schwab has attracted beginner investors because the minimum account is $0, and there is no commission for the stocks, mutual funds, and exchange-traded funds (ETFs). You can also avail of the company’s no-load, no transaction fee funds with a minimum investment of $100.

Charles Schwab Mutual Funds

Mutual funds refer to investment vehicles (a bank or a company) that combines the money of different people (called investors) to use it in buying stocks, bonds, or other assets. Every single person who puts in money to a fund gets to have a slice (called shares) of the profit. Instead of putting your money in a single basket, bearing all the risks, a mutual fund allows you to diversify your portfolio and make good investment choices with the help of professionals and advisors.

People choose to buy a mutual fund from companies like Charles Schwab Co Inc because of their years of proven effective investment management that are worth more or less than their original benchmark index through the years.

It has all resources to ensure that the money of the investors is put into investments that will likely give high returns. To date, Schwab investors have two families of index funds two choose from namely Equity Index Funds and Fundamental Index Funds. Both of which have reasonable costs and provide a high, relatively high return to their clients.

What are the Best Schwab Mutual Funds?

If you feel like Schwab fits your criteria in choosing an investment advisor, below is a list of five of the top mutual funds they offer. If you think that investing may be worth pursuing, look at the products below to see if there is a fund that fits your budget and financial goals. This lineup is only about mutual funds. For more information about other index fund Schwab options, read other articles on this website.

1. Schwab S&P 500 Index Fund (SWPPX)

This is a low-cost index fund that needs no minimum investment. It invests in 500 leading companies based in the United States, which covers around 80% of the available US market capitalization. Investing here means investing in the most popular brands and companies in the US. It has an expense ratio of 0.02%. It is fairly unaffected by market volatility.

2.  Schwab Total Stock Market Index Fund (SWTSX)

This index fund tracks the total return of the entire United States stock market as measured by the Dow Jones U.S. Total Stock Market Index. It is meant to have a comprehensive coverage measure of small-, mid-, and large-cap equity securities in the US. It has a total net asset value of $12,665,772,353.71.

3.  Schwab U.S. Broad Market ETF (SCHB)

This is one of the most competitive ETFs managed by Schwab. It is a low-cost fund that provides access to the 2,500 largest publicly traded companies in the United States. Its fund performance is projected to be continuously high in the next 5 to 10 years. An investor should choose this as part of the core of a diversified portfolio.

4. Schwab Health Care Fund (SWHFX)

It is an actively managed fund that targets long-term capital growth. Its focus on the health sector or health care companies which includes medical research facilities, pharmaceutical companies, medical manufacturing businesses, and many more. In contrast to other funds mentioned above which focus on the domestic market, this fund relies on the international market. In terms of fees, it has a net expense ratio of 0.800%.

5. Schwab U.S. Large-Cap Growth ETF (SCHG)

This is a low-cost fund that provides access to large-cap companies in the United States that show growth style characteristics. Some of these companies include Facebook, Apple, Amazon, Microsoft, Visa, and many more. It has an expense ratio of 0.04%. You can purchase this fund as part of the core of your diversified portfolio.

Why is Charles Schwab the Best Trading Platform?

So, why have Schwab brokerage accounts attracted people through the years? The company has built systems that made the process of investing easy. Surely, people who invest would like investment returns. Schwab, through its various products and service offerings, assures that people who choose to entrust their money will likely make a profit.

Here are the key takeaways why Charles Schwab Corporation is the best when it comes to investing. Note that while this article focuses on mutual funds, the factors identified below also apply to those who want to avail of the company’s other products and services like ETFs and other types of funds.

No Load, No Transaction Fees (etfs)

If you buy a mutual fund from Schwab, you are not charged with a transaction as long as you have a minimum investment of $100. As an investor, this is what you have to look for because it means that you will no longer need to pay any sales charges on the trade. For those planning to take investing seriously, the transaction fee means that you can save a lot of money in the long run.

Mutual Fund Selection and Expenses

When it comes to mutual funds, in 2020 Charles Schwab Co. has more than 3,500 funds where you can avail of their no-transaction fees promo. Aside from mutual funds, the company has other funds offered like index funds and ETFs. When it comes to investment expenses, Schwab has a reputation for offering a low operating expense ratio on each of its funds.

To give you an idea, a passively managed Schwab fund usually has an expense ratio of 0.02% – 0.39% while an actively managed fund has an operating expense ratio of 0.22%-1.92%. While each fund has its own expense ratio, the low percentage mentioned above should give you an idea of how low-cost Schwab funds are. Also, take note that the company’s redemption fee of $49.85 will be charged on the redemption of funds.

Provider of Quality Trade Tools and Excellent Stock Research

Schwab provides guidance to its clients through the extensive market and stock research. Aside from employing experts, it has also sought the help of third-party research providers who give premium independent research. Investing in this company means that you can get helpful information from research companies like Morningstar, Credit Suisse, and other prominent and trusted research organizations. Getting information from independent, third-party research organizations can guarantee unbiased decision when it comes to investing. Moreover, investors can do their own research easily as Schwab has made it easy for their clients to screen, compare, and analyze the various funds offered by the company.

Transparency on Account and Investment Minimums

You can avail of Schwab’s no minimum account balances and zero monthly services. All you have to do is to open an account under Schwab One brokerage account. You do not have to maintain a balance in your account, and you are not charged with any recurring fees each month.

Best Trading Platforms for Beginners

Aside from improving its website, Schwab created a trading platform that is easy to use and is friendly even to those not tech-savvy. It is called StreetSmart Edge, which makes charting of funds easy. The platform has integrated tools where users can see potential opportunities. Also, it has risk management features that help users monitor and make necessary actions on open orders and positions.

Also, you can download the StreetSmart Edge as an app. As an investor, this would provide you with more control of your portfolio. You can check the value of stocks and shares as well as look at the market price at your own time. This comfort and accessibility make investing for a lot of people.

Where Charles Schwab Could Improve?

One disadvantage of using Schwab is that it has a low cash sweep rate. Meaning, the uninvested cash in your account will be automatically invested into a deposit account at Charles Schwab Trust Bank, which has an extremely low-interest rate. Just to give you an idea, the annual rate of this account in 2020 is 0.01% only. While the funds swept in this account is insured by the FDIC, the interest rate is too low.

Bottom Line

Surely, there is so much to choose from the long list of Schwab funds. Mutual fund solutions offered by Schwab is a good way to start. Aside from zero to minimal fees, the company has a reputable record of managing ETFs, shares, and index funds effectively. Also, through the years, it has built research and trading platforms that are easy to use even for a member who does not have experience in banking or investing.

Please remember to check out other index fund options offered by Schwab. Most of the funds mentioned above are not actively managed. Search on the company’s site, which can be accessed here to find out the most recent products they are offering. Remember that investing is time-dependent, which means that there is a particular fund right for certain economic and political conditions. Try to look for that product that will give you the biggest possible return.

Meanwhile, if you feel like the information discussed above is not enough, you can check more of our articles on how to invest, manage a fund, and find the best investment advisor in the market. Investoralist also gives its readers updates on trends not only in the field of investment but also in banking, finance, moneylending, and many more. Find the right way of saving and spending your money by reading our articles.

7 “Dave Ramsey Baby Steps” to Achieve Financial Freedom

Business Man Enjoying Financial Freedom

Want to achieve ultimate financial freedom? Finance guru Dave Ramsay has 7 simple steps that’ll help you get out of debt and get started on your journey to worry-free independence today.

Whether you’re one of Ramsey’s top listeners and number one fans, or you’ve never heard of the guy and are just looking to better balance your finances and build up some wealth, these tips will help you get started.

Who is Dave Ramsey?

Dave Ramsey is a widely respected financial expert and money management, guru. He’s a household name in the USA as far as business and investments are concerned. On his popular website, he describes himself as “America’s trusted voice on money and business” – and with an amazing “rags to riches” backstory behind his belt, we at Investoralist tend to agree.

By the time he was just 26, Ramsey had established a multi-million dollar real estate empire. In the late 1980s, however, he was forced to declare bankruptcy and had to rebuild his life from the ground up – something he achieved by creating Dave Ramsey s Baby Steps.

Dave Ramsey has dedicated his life to helping others achieve financial freedom. Over the years, he’s built businesses, shaped brands and established a huge fan following on US radio stations with millions of listeners.

He’s also authored several best-selling books, like Financial Peace, The Total Money Makeover and Dave Ramsey’s Complete Guide to Money – as well as set up the Financial Peace University (FPU), a widely-used initiative that helps people pay off debt.

How Can Ramsey’s 7 Baby Steps Help Americans?

Living in the amazing US of A doesn’t come cheap and few people are lucky enough to live a debt free life.

There’s no doubt we’ll all face a number of financial challenges during our lifetime. From expensive mortgage payments and raising money for a comfortable retirement, to saving for your children’s pricey college education and just keeping up with the bills, there’s a lot to stay on top of in everyday life.

That said, we think Dave Ramsey s 7 baby steps can work some real miracles, helping people to get out of debt, rise above financial limitations, consumer debt and wealth barriers and achieve more financial independence and control. Let’s take a look at how the 7 steps work.

The 7 Dave Ramsey Baby Steps Explained

So, what are the 7 steps? And what can Americans do to get started today? Let’s take a look in closer detail, one at a time (or baby step by baby step).

Baby Step 1 – Save $ 1 000 for Your Emergency Fund

Between credit card debt, mortgage payments, everyday living costs and other outgoings, the average American simply does not have enough spare money to shell out in the event of a financial emergency – and this can be a real problem.

What to do: For baby step 1, Dave Ramsey recommends setting aside a small amount of money each month to kickstart an “emergency fund” as early as possible in life.

Right now, it probably seems unrealistic to save up enough spare cash to cover 6 months of expenses at the drop of a hat, but by building up a $ 1 000 reserve sooner rather than later, most Americans can get started with bettering their personal finance today, improving their ability to control an unpredictable situation in the near future.

How to make it work: If $ 1 000 sounds like a lot of money, think small to make it work. Selling old belongings on sites like eBay or Amazon, eating out less and downloading specialized money saving apps to help you monitor your spending can help you build up that $ 1 000 reserves faster than you might think!

Make sure to opt for a savings account that pays the highest possible interest on your stored-away money, too – as this can greatly help to ensure that your emergency fund builds up super-fast, putting you in a much better situation as far as finance is concerned.

Baby Step 2 – Pay Off All Debt (Except the House) Using a Debt Snowball

Of all the steps in this list, baby step 2 is one of the most ambitious – but that doesn’t mean it’s not achievable. After all, we’re talking about tried and tested techniques created by the man behind the Financial Peace University here!

If you’re following the steps in order, you should already have a $1,000 emergency fund set up by now and be beginning to realize that taking back control of your finances is easy if you take baby steps.

What to do: For baby step 2, Dave Ramsey recommends using what he calls the “debt snowball method” to start paying off each and every debt to your name one by one, little by little. This involves imagining your debts as a snowball rolling down a hill, starting off small but gathering more snow (or debt) as it rolls.

How to make it work: Using this debt snowball idea and applying it to each debt you have on record, you can pay off smaller debts first, add the freed-up cash to the minimum payment of the next debt, and so on. Now, the snowball method certainly takes some practice, but once you’ve started using the debt snowball in day-to-day life, it’s easier (and faster) than you’d expect to start making a big difference to your finances. Will baby step 2 pay off? We certainly think so.

Baby Step 3 – Save 3 to 6 Months of Expenses in a Fully Funded Emergency Fund

Once you’ve waved goodbye to all that debt, it’s time to save, save, save. Your starter emergency fund you set up in baby step 1 should have already helped you save $ 1 000 (if not more, if you’ve been smart enough to use a savings account that gains plenty of interest).

From now on, you need to supercharge those savings to enable you to control 3 to 6 months of expenses in the event of an unforeseen personal finance emergency.

Now, as we’ve seen with COVID-19 and the recession of 2008, unprecedented world events that can take a serious toll on your finances are far from uncommon – and almost never predictable. This is why it’s absolutely essential to ensure you’ll fall on your feet in times of crisis, whether that crisis be a lost job or a national emergency.

What to do: In baby step 3, Dave Ramsey advises single-income families to aim for the “six months of expenses” mark – which can be reduced to “3 months of expenses” for dual-income households, if needs be. That said, it’s always best to aim higher.

How to make it work: One way to achieve this is to normalize an attitude of saving in your day-to-day life. Use money saving apps as much as possible, track your spending on Google Docs and try to better your targets month-on-month, eat at home as much as you can and be sure to raid those coupon books at every given opportunity. Oh, and be sure to use a high interest rate savings account again!

Baby Step 4 – Invest 15% of Your Household Income in Retirement

With the average American working until they’re 66 years and two months old, saving for retirement is often the last thing on most people’s minds – but Dave Ramsey thinks that this attitude needs to change.

What to do: Baby step 4 is all about abandoning that “tomorrow’s problem” mentality and putting at least 15% of your household income aside each month to help finance your later years in a comfortable way. After all, with 66 years of work behind your belt, you’re going to want to relax!

Once paying off debt has become a thing of the past, there are a number of ways you can supercharge your retirement savings.

How to make it work: Baby step 4 recommends closely scrutinizing your employer’s 401(k) and completely maxing-out the amount of contributions you can deposit into this fund. In most cases, you should be able to drop in up to $18,500 per year of your own money but using Roth IRAs could help to boost this by $5,500.

If you’re a bit more ambitious – which you should be – you can also follow the principles of best-selling other and finance guru Chris Hogan, who advises savers to set a Retire Inspired Quotient (R:IQ), which is a kind of savings and retirement age target that Americans can work towards using Chris Hogan’s intuitive retirement calculator.

Just like with other savings accounts, having targets, goals and ambitions and visualizing what you need to do and how much you must save to achieve them can work wonders, as can using Roth IRAs.

Baby Step 5 – Save for Your Children’s College Fund

That’s right – baby step 5 is also all about saving! But this time Dave wants you to save big to help fund a debt free college education for your children.

Now, obviously if you have no children and are simply aiming to accumulate wealth for yourself, or yourself and your partner, you can skip this one out. But with average undergraduate tuition fees in the US ranging anywhere from $17,797 to $26,261, putting some money aside for your children’s college education is absolutely vital if you don’t want to end up burdened with credit card debt and other debt when your kids hit their teenage years. Unless you’d rather see them saddled with student loan debt for years to come?

What to do: It goes without saying that we all want the best for our kids and one way to achieve baby step 5 is to open an Educational Savings Account (ESA) or a 529 college savings fund, depending on which feels like the best fit.

Contrary to popular belief, it’s entirely possible for your children to bag a college diploma or degree without breaking the bank.

How to make it work: Save as much as you can from as early as you can and consider in-state and community college options with lower average fees to save yet even more money in this area.

Dave advises savers to follow baby step 4, baby step 5 and baby step 6 simultaneously – but be sure to initiate each step in the proper order to achieve ultimate freedom and control.

Baby Step 6 – Pay off Your Home Early

Outside of credit cards, car loans and regular household bills, mortgage payments are pretty much the top debt most Americans are dealing with on a day-to-day basis.

Recent estimates suggest the average US citizen shells out around $1,400 per month on mortgage payments. But the thing about buying a home is, once you’ve made all of those payments, that real estate is 100% yours. Forever.

While it might seem like pie in the sky thinking today if you’ve only just stopped renting and found your feet on the property ladder, it’s nowhere near impossible to pay off your home – it just takes a bit of strategizing and dedication.

What to do: Use refinancing options in your favor, save wisely and there’s no reason why you can’t shave valuable years off of your mortgage-paying life.

Maybe you could switch from a 30-year to a 15-year mortgage and take a second job to make the repayments, or perhaps your home has increased in value, enabling you to refinance onto a much better deal.

How to make it work: Dave’s top tip for baby step 6 is to make one additional mortgage payment in each quarter. This enables you to pay off your home faster using the extra cash you’ve managed to save by studiously following all the other steps.

Over the course of an average mortgage, just one extra quarterly payment could get you 11 years closer to financial independence, saving you upwards of $60k in interest payments in total!

Baby Step 7 – Build Wealth and Give

Now, by this point you should be very familiar with the fact that Dave Ramsey is all about giving and sharing, so it should come as no surprise that baby step 7 wants you to give, give, give!

Once you’ve managed to fully succeed with baby step 1 to 7, debt is a thing of the past and you’ve no more house payments or credit card bills holding you back, Dave suggests you start thinking about generosity.

What to do: After having worked so hard that you’ve achieved ultimate financial control and independence, you can start sharing that extra cash with friends, family members, charities or even your local church – and start helping others to accomplish their dreams too.

How to make it work: Baby step 7 can be initiated using a combination of everything you’ve learned so far. Max out those Roth IRAs, that 401(k) and those retirement fund contributions to help your wealth grow in a snowball method style.

Then simply kick back and enjoy the beautiful feeling of easy generosity – i.e., “build wealth and give”, as Dave would say.

Achieve Full Financial Control and Freedom with the 7 Steps Today

So, we’ve shared the knowledge – now it’s time for you to put these steps into action.

We understand that it can be quite a journey to go from saving an initial emergency fund of $ 1 000 to ramping up your retirement fund savings for baby step 4.

It can take even longer to pay off your home for baby step 6 and eventually achieve ultimate financial control for baby step 7.

Nevertheless, we believe in you and we know you can master all steps – even that confusing debt snowball baby step!

With a bit of hard work and perseverance, Dave Ramsey himself has proven that virtually anyone can give themselves the total money makeover, pay off all debt and better balance their finances. The trick is not to expect miracles overnight. After all, they’re not called “big steps”, are they?

How Do I Start a Dave Ramsey Plan?

The key to success with Dave Ramsay s 7 baby steps is to follow each strategy slowly, in order and – most importantly – one at a time. We understand that despite their baby-ish name, these steps still appear intimidating at first glance, which is why you need to break your ambitions down into manageable, budgetable goals that work for you. As Dave would say, take one baby step at a time.

We’d recommend using money-saving apps or Google Docs to create a sensible budget, then simply following each baby step sensibly and slowly, without outdoing yourself.

How Do I Make Smarter Investments?

Here at Investoralist, we’re all about making investments easy. Ramsey s 7 baby steps are a great way to get started on your investment journey, but there are many other things you can do to improve your finance situation, from investing in stocks and shares, to trying out tax tips, venture capitalism and more.

Browse our diverse range of investment blogs and articles and make smarter investment and personal finance decisions today.

How to Generate $1,000 Per Month in Dividends

Business Man With Hands and Coins From a Dividend Stock

The dream of all investors is to build an investment portfolio capable of generating a regular and sustainable income per year or even per month. But, achieving this is easier said than done. Even with the advent of advanced research tools and improved services from investment advisors, there is no assurance that your money can earn as much as you want it to be.

In this article, investors like you will learn what you need to do to earn $1000 a month. Also, we will demystify the concept of dividend stocks to make sure that you get all the necessary information in making the right investment decisions. Lastly, we tell you how much money you need to prepare before you have a portfolio that is giving you regular money per month.


The term “dividend” refers to an amount of money given by a company to its shareholders of its profits on a regular basis. Since each of the shareholders owns a piece of the company, they get to take a slice of the profit as well. It is the company’s sole prerogative to determine the number and the value of each dividend it wants to give to its shareholders.

In the case of investment, the term “dividend stocks” refers to the share of the investors of a company’s profits paid on a regular basis. This share may be paid monthly, quarterly, bi-annually, annually, or in rare conditions, in a lump sum. Also, it may come in the form of cash or additional stocks.


Most dividends are paid in cash. The investor is paid a certain amount of money based on the number of shares he owns. For example, if a company pays 1 dividend for $100, investors with 100 shares will be paid at $10 000. Since dividends are often given regularly, you can expect $10 000 of income on a regular basis.

Another way dividends are paid is in the form of stocks. They are in the form of percentages. For example, if a company issued a 10% stock dividend, an investor who owns 200 shares will have 220 shares after the dividend is given. To turn this into cash, you will have to sell the stocks you own.

Take note that there is no guarantee that you will receive a dividend. The decision to give out dividends is based on what the board of directors of the company has agreed upon. This setup is different from owning a bond where a bond investment earns a fixed-rate income called the “coupon rate.” When it comes to a dividend, the board of directors has the prerogative to reduce the dividend or remove it altogether.

Why Do People Invest in Dividend Stocks?

While there is no guarantee that investors can receive dividends immediately, a lot of people continue to do dividend investing because it can be a profitable investment for the future. We list some of the best reasons why investing in Dividends gives you the best investment options

Regular Stream of Income

Retirees choose to invest their retirement fund in dividend stocks, knowing that they will receive a dividend every month in the future. While they may not get a return on investment (ROI) immediately, their retirement money can give them a regular stream of funds in the future.

Invest while you’re Young

Dividend investing has also become an option for young people because, with the stock dividends option, they get to own more stocks, reinvest it now, and then cash in stocks they have gained in the past years. One important reminder, though, even if you choose to reinvest your dividends, they are still taxed in the same year that you got them. Tax-exemption is only applied to accounts like an individual retirement account.

Secured Investments and Returns

Compared to bonds and mutual funds, dividends gain higher yields when the interest rates are low. Dividends also has the potential for share price appreciation. Meaning, even if the stock market or the share price falls, dividends can survive because of their steady income. If you decide to reinvest the additional dividends you earned, you will have more shares per dividend because of the lower share price.

How to Find the Best Dividend Stocks?

Despite the numerous advantages of dividends, it is not free from market instability and risks. Investors must also be careful in choosing which shares to buy to make sure that their dividends earn a profit. People must look for a dividend portfolio with a high dividend yield. Below are tips on how you can find the best stocks in the market.

1. Look beyond dividend yield

A lot of beginner investors are lured when they see high dividend yields. They believe that buying dividends with high returns or yields guarantees their financial success. But in reality, yields or return is not the bottom line. There are many other factors to consider, including interest rates, fees and expenses, compound interest, market volatility, and more.

For one, you must look at the sustainability of the stock prices. You need to know the history of the stock you are being and the company you are buying it from. Remember that companies can make dividends appear profitable by increasing the yield. As an investor, you have to look for trustworthy companies with established history and reputation.

Also, pay attention to the sector and structure where your investment belongs to. Take note that despite the high yield of your investment structured as real estate investment trusts, they are taxed higher. This means that you must also pay attention to other factors and not only the dividend yield. It is best that you set a realistic goal, so you do not get disappointed in the end.

2. Recognize red flags

As mentioned above, the yield is not the bottom line of dividends. Consider some discrepancies on the yield as warning signs. Here is an example. If a company has a high dividend payout ratio but took debt to pay the dividend, the company is most likely experiencing financial troubles. Instead of paying attention to the yield of the stocks, check if the company has strong balance sheets or has an efficient cash flow.

Also, do not start investing unless you have seen the performance of the company in the past years. If a company faces financial trouble, the dividend investors will surely suffer. Avoid small business companies that have not proven their performance in the market. If you can, choose companies with a good record in the past 30 years or so.

Most importantly, do not be lured by companies assuring you of earning $1000 a month immediately after creating your funds. Any seasoned investor would tell you that earning a regular and sustainable income from dividends takes time. Instead of trying to get as much as $1 000 a month during your first year as an investor, try to grow your shares each month or per year first. It is only through this slow and certain way that you can ensure your income from investments.

3. Diversify to minimize risk

To assure a high return on investment, combine your high-yield stocks with growth stocks. It is risky to invest in growth stocks because it has a high-win high-lose scheme. To balance it out, spend on stocks that have more conservative growth. By doing so, you are making sure that you do not lose everything on a single investment.

Also, try not to pour your investments into one sector or industry. While the technology and communications sector have high yields in recent years, it is not wise to focus on it alone. If the sector experiences a crash, you could lose big. Try to diversify your investments by including other industries like real estate in your portfolio.

Moreover, you need to understand how factors like rising rates, inflation, consumer spending, company balance sheets, and many more affect your investment. As an investor, you can only set your goal if you have the essential information about funds, expenses, income, risk tolerance, and more. Without understanding the stock market data, you cannot get started in building your income portfolio.

How Much Money Do I Need to Invest to Make $1,000 a Month?

So, the million-dollar question is: how much do you need to invest to earn $1 000 a month? If you have a high-yield investment, you might need at least $100 000 invested in your dividend portfolio to make $1 000 per month. In most cases, where the stocks only have moderate growth or yield, you might even need to invest $200 000 to make $1 000 per month.

Income investments of one hundred thousand or more can be overwhelming for many. Do not worry, though, because you do not have to put in these investments all at once. Get started by putting in the money based on your available funds. When you earn stock of cash dividends, put your earnings back into your portfolio. By doing so several times in a decade or so, you will be able to grow your investment exponentially.

When it comes to the stock market, it is best to think of it as a long term investment. It is not a get-rich-quick scheme where investment can make you a millionaire overnight. Instead, it is meant for people willing to take long term waiting. One has to wait several years or even several decades before being able to own a big sustainable investment portfolio.

Final Words

Investing in dividends to earn $1 000 per month can be a challenging feat. You need to spend time, money, and effort before you can expect $1 000 a month regularly coming into your income portfolio. If you are a beginner, you may want to learn basic concepts of stock market investing first before putting all your savings into a single investment. Do not expect 1000 a month of return just yet. Instead, make your goals attainable.

Also, new investors are often lured by unrealistic claims of investment companies and advisors, like 1 000 a month income during the first year of investment. Instead of trying to achieve these extraordinary feats, investors must pay attention to the details of their investment and the mechanics of how their money is earning money. They must read the terms, agreements, privacy policy terms, interest rates, fees, to name a few, before putting their entire retirement savings into investment accounts.

This article is a product of extensive research by the Investoralist team. If you feel that you need more information about dividends, stocks, bonds, and other related topics about investing, the Investoralist team has more articles to help and guide you. We have written materials dedicated to helping out investors who do not have prior knowledge and experience about the trade. Our materials are guaranteed to guide you in navigating the investment industry.