Stock Market for Kids: Simple Financial Lessons for Your Children

kid drawing stock market graph

As early as possible, you can teach kids about the stock market. However, we won’t advise using technical terms you’ll find in online blogs and news websites. Plus, children understand concepts better through play than a lecture. This post will talk to you in-depth about explaining stock markets for kids, we’ll give you some ideas for enriching activities that drive home each point completely.

You own a stock, you own a small share of a company. Getting into a bond binds you into financing a company for a fixed period. All of these are securities that hold great value for investors. Explaining these to kids with terms and objects they’re familiar with makes it easier to understand the stock market.

By going through everything here, you’ll have no problems getting your kids to understand everything about Singapore’s stock market.


The Stock Market: It’s a Marketplace That Sells Different Things

Take your children to the local marketplace. Introduce them to a few shopkeepers, and allow them to explain their daily activities (they’ll likely love doing it for kids). Introduce the idea that a marketplace sells many different things and that a stock market is just the same.

A refresher for adults: A stock market works the same way as traditional goods markets. Legal tender, such as the Singaporean dollar, can purchase goods from both goods and stock markets.

•Buy and Sell Stuff, With a Few Risks

It’s correct for your children to think that both goods and stock markets have the same buying and selling concept. However, it’s critical to tell them that goods markets have fixed, regulated prices. Differentiate the stock market by explaining the products have no fixed values. Instead, they’re allowed to change their prices on a daily and hourly basis.

Explain that children can get more or less chocolate on a daily, hourly, and monthly basis when they buy chocolates from this particular market instead of the goods market

A refresher for adults: The retail goods market has fixed and government-regulated prices because they are necessities. The stock market allows regulated price value changes to accommodate the real-time changes in supply and demand.

•Activity-Based Example

Demonstrate the difference between goods markets and stock markets. Have you or another child play a shopkeeper and another a buyer. Allow them to buy one chocolate from the shopkeeper.

Next, demonstrate the stock market’s dynamic prices. Pose as the shopkeeper, and allow your kids to buy chocolates from you at one dollar during a fixed period. Then, tell your kids to buy from you again after one minute, then increase or decrease the chocolate price.


Stock: Chocolate With Dynamic Values

Tell your children that stocks are similar to retail market chocolates but can change their prices or chocolate content at regular periods. You can use the analogy that retail market chocolate is plain chocolate. Alternatively, stock market chocolate can grow bigger or smaller at any time.

•Saving and Investing

Your children are likely fascinated by the idea of self-growing chocolate. Entertain their astonishment by telling them the self-growing chocolate does not need water or nourishment. Instead, they just need to understand the public’s perception of the chocolate they’re holding.

Explain that if more people buy the same chocolate bar, everyone’s chocolate will increase in size and shape simultaneously. However, if the chocolate runs out, the content or prices will become unstable and inconsistent. While everyone eats theirs, Saving chocolates increases its content or price too — and your kids can sell them when everyone’s chocolate runs out.

However, everyone will become sad if chocolate does run out, even if it is beneficial to your kids to increase when they save it. Therefore, highlight to children that they can give their chocolate bars to chocolate makers to grow more bars, illustrating the concept of investment.

A refresher for adults: Saving stocks retains its immediate value. As the stock’s supply decreases and demand increases, they gain value too. Alternatively, if the stock is in short supply, it’s a one-time, big-profit product for sellers, which they can’t repeat again. Stabilizing prices involve the equilibrium of buying and selling a particular stock.

•Activity-Based Example

Take two jars. Write the benefits of both savings and investment jars in one sentence.
Savings: Chocolate you can eat at any time
Investment: Chocolate that your kids can give to chocolate makers to make more chocolate.


The Stock Exchange: A Regulated Chocolate Marketplace

Explain to your children that the government regulates both retail goods and stock market prices. However, this particular chocolate market has a special regulation that allows prices to change every minute, hour, and day. Name this particular market as the stock exchange.

•Stock Exchange Responsibilities

Explain to your children that the stock exchange is a particular chocolate marketplace that makes it easy to buy and sell chocolate in different sizes or prices. One significant difference between retail and stock exchange chocolates is you can only buy the latter in bulk.

Tell your children the stock exchange makes sure all chocolate your kids’ purchase has the right prices or amounts, and everything is in paper before they proceed to pay and accept the seller’s chocolates.

•Supply and Demand

Earlier, we mentioned to your children that savings can increase in value if supply decreases. Additionally, the chocolate maker’s failure to make more stock will increase their savings value. However, doing so will create instability, an undesirable outcome for any investment venture.

This example demonstrates the law of supply and demand. Chocolate companies must make sure it has enough supply and demand to stabilize the prices. Additionally, explain to your kids that the government urges the chocolate companies to produce enough to meet the demand without devaluing the supply.

A refresher for adults: Stock market prices change due to evolving supply and demand hourly. The economic law states that an item devalues with more supply than demand. Conversely, it increases its value with more demand than supply. Feasible market conditions favor a stabilized and sustainable supply and demand in stock exchanges.

•Activity-Based Example

Present your children with four chocolate bars and some money. Give yourself and each of them one chocolate. Then, ask one of your children the amount they will pay for the last chocolate. Next, ask your other child if they’re willing to increase the price to get it. If one of them reaches their maximum spending amount, he or she gets the last piece. 


Price Determination: Estimated Chocolate Prices The Next Day, Week, and Month

Stock market prices change every hour, making many people pay attention to profits that minute movements can make. Truthfully, it can be too technical even for the average adult to grasp precision stock market pricing. However, by understanding several principles, you can easily explain these concepts to your children.

•Is It Always One Dollar to One Chocolate?

In most examples we’ve listed here, we’ve stressed that it’s often one dollar for one chocolate bar. While it illustrates basic stock market concepts, it does not show some principles of stock pricing. We only explained it to your children that stock prices can change regularly.

You can explain to your children that chocolate makers have different speeds in making chocolate, affecting prices positively or negatively. Makers who have more buyers than others will have higher market value than the rest, allowing them to sell their chocolates at a higher price (or demand higher chocolate content from buyers).

If they can grasp this concept, explain to your children about supply and demand additional chocolate pricing factor.

A refresher for adults: This example talks about revenue growth. It’s the periodic business reports many people and investors read, allowing them to see the trends in the companies’ performances and the industry it belongs in.

•Paid Out Every Four Months

Your children will ask if they’ll receive their chocolate as soon as they purchase it in bulk. Tell your children that chocolate makers take about four months to make new chocolate for everyone.

A refresher for adults: All companies pay their dividends every four months.

•Can You Trust The Chocolate Seller All The Time?

Children easily trust adults who have more knowledge than they do. However, introduce the idea that some chocolate makers might be using inferior ingredients, making their chocolate unhealthy. Additionally, explain that some chocolate makers might have poor-tasting chocolate that no one wants to buy.

In doing so, your children will understand their responsibility to inspect and gauge the chocolate maker’s performance before giving them money or chocolate to make more chocolate.

A refresher for adults: The investigation of a company or investment fund’s credibility is critical to ensure they will provide your dividends and back up their estimates.


Making Investments in The Chocolate Market

Your kids have enough money to buy some chocolate in bulk. They know how they can receive their chocolate and calculate its estimated value increases or decreases. However, tell them they can’t just approach the chocolate company owner. They’ll need to go through a process involving a professional chocolate salesman called stockbrokers.

•Stockbrokers: Chocolate is Mysterious, But Someone Knows Everything About It!

This middleman receives recognition from renowned chocolate makers, allowing them to compile your order and other investors who want to receive more chocolate.

A refresher for adults: A stockbroker is a financial professional responsible for the buying and selling of stocks from traders to companies. Usually, these professional people charge money with a small percentage when you use their services. Additionally, stockbrokers brief new financial traders about money investments, stocks, and first-time use of their software trading facilities.

•Should You Buy Other Brands?

Earlier, we’ve told your kids about chocolate makers making harmful products and some people losing money (or chocolate) because they invested in a poorly-performing company. Tell your child that even those who make the best chocolate can make bad batches.

You can anticipate your child to ask you steps to avoid this. You can tell them that aside from chocolate makers, they can work with candy and toymakers too. Some candy and toymakers accept chocolate to make new candy and toys. Alternatively, your children can ask these companies to convert the candy and toys they’ll receive into chocolate or money.

Once again, remind them that making investments with a company that offers different products or services gives them a safety net for their money (or chocolates). If the candy or chocolate makers fail to make a good batch, their spending on toymakers will give them significant profits and act as a safety net for any situation.

A refresher for adults: Diversification is one of the wisest advice to use for anyone investing in the stock market. Investing in just one market will lead to huge losses if the market underperforms during a period. With diversified assets, investors can have returns that allow them to take advantage of low-priced opportunities from companies with high revenue growth.

•Activity-Based Example

An alternative to chocolates, candies, and toys are games and apps that focus explicitly on diversifying assets. Here are some of them.

Monopoly: A child-oriented board game about ownership. It illustrates commerce by allowing kids to buy properties, earn a profit, manage businesses, and more. It even has fake money for detailed immersion.

Wall Street Survivor: An in-depth (and slightly technical) program and app available on all platforms give you a practice amount of $100,000. Additionally, you can invest in actually-existing businesses and use updated valuation on trends, stock values, prices, bulk requirements, and more.


It’s Easy to Teach Your Kids With These Simple Examples

stock market concept

You can teach your kids about the stock market if you allow them to perceive it as simple as values they see in chocolates, toys, candies, and other objects they have a full understanding of. Truthfully, if you or other adults feel confused about some stock market concepts, allow someone to explain it to you using ideas, concepts, and paradigms familiar to you.

Learning to invest and have exceptional financial management practices doesn’t have to be when you’re earning money. Children with this concept can start early on savings and investment, and this tutorial can help immensely.

Mutual Funds Definition Advantages and Disadvantages

Advantages of Mutual funds

Mutual funds are suitable for those looking to dip their toes in the world of investing. While financial know-how is always a good thing to have when undertaking such ventures, mutual funds ultimately leverage on the expertise of people in the industry, making it accessible to budding and experienced investors.

What are Mutual Funds?

Mutual funds, essentially an entity that acquires ownership in different fund companies. Instead of purchasing stocks individually, you would have a broad portfolio making for a simpler transaction.

This is achieved through pooling resources together into some type of investment vehicle, where investors mutually contribute, or where they purchase a variety of different stocks or bonds or a combination of both and grow it over a period of time.

Types of mutual funds

There are 2 types of Mutual funds: index funds and actively managed funds

Index funds make keeping track of investments easier, as they replicate the portfolio of a particular market index. Investing in index funds gives you the simple goal of buying all the companies in an index. This means that an S&P 500 fund buys all the companies in the S&P 500 index.

Opposite to index funds, active funds are comparatively more of a gamble. They seek to purchase less companies in hopes that these stocks perform better than others in the index, and it is this performance that investors measure the active funds’ failure or success.

Active funds are highly dependent on an active manager’s skill in picking winning stocks; ergo, usually charge higher fees as compensation.

While a valid approach, this might be too fickle a venture for beginning investors, as active fund managers cannot consistently add value through stock picking and market timing. It’s important to consider whether the efforts of the active manager is worth the higher expense ratio and annual.

Mutual Funds: Advantages and Disadvantages

Mutual fund investors may benefit from the convenience, risk reduction, fair pricing, dividend reinvestment, and advanced portfolio management. The less-than-ideal side of the coin includes tax inefficiency, poor trade execution, and the increased likelihood of management abuses.

Advantages of Mutual Funds

1. Diversification

For safe and consistent returns in mutual funds, it is generally a better idea to spread out your investments into multiple funds, as singular, active funds can still be susceptible to market volatility no matter how good the performance record.

Diversifying your money among various funds with different risk profiles will keep your money secure even for a long-term investment. This also has the added benefit of cushioning the effects of market fluctuations due to having your assets allocated among diverse funds, ultimately reducing the risk associated with your return on investment.

Spreading your investments overstocks with different securities and risk profiles helps mitigate loss, as this protects other stocks within the fund when one underperforms.

Simply put, mutual funds are a horse race where there can be more than one winner, and hedging your bets on multiple racers exposes you to less risk.

2. Expert management

Convenience is the main advantage of mutual funds, an efficient way to earn in the stock market without the trouble of navigating it yourself and managing your money.

This is especially true for those without much time and experience in stocks. Your investments will be handled by skilled fund managers, trained in preventing loss and yielding profits through strategic trading, while considering macroeconomic factors, your risk appetite, ideal time horizon, and financial objective, among others, allowing you a less worrisome investment venture.

3. Liquidity

Mutual funds are considered the most flexible form of investment. You can withdraw or redeem all or part of your investment(s) at your convenience. Your money is always accessible to you. Moreover, the method of accessing is standardized, making it swift and prompt.

4. Reinvestment of income

You can purchase additional shares by using dividends and other interest income sources as they become declared in the mutual fund, which can help grow your investment.

5. Range of investment options

Within mutual funds, there are different types in which you can partake: growth funds, income funds, money market funds, balanced funds, index funds, asset allocation portfolios, target-date funds. A diverse portfolio exposes you to these different investments, opens more options and opportunities.

6. Convenience & affordability

Another advantage of mutual funds is that it makes investing accessible to those with a minimal budget. Some mutual funds let investors buy-in with no minimum at all, you can begin your mutual fund investment even with as low as $5.

Disadvantages of Mutual Funds

1. No control over your portfolio

By entrusting your mutual funds to your fund managers, you lack control over portfolio customization. Fund managers are in charge of the decision making when it comes to purchases and sales.

While fund managers honor your investment philosophies, moments of conflict when it comes to strategies are inevitable and is something to consider.

2. Locked in clause

These require investors to hold their money for a specific period, the duration varies on the type of mutual fund you have acquired. Investors are not allowed to buy or sell units until the end of this period.

3. High fees and charges

Another disadvantage when you avail of professional management is the management fees. Management of funds is paid for via expense ratio, which is the percentage that serves as compensation for the fund manager’s time and skills.

Since actively managed funds are more diverse, managers are engaged in purchases and sales more, which increases the expense ratio, as each transaction requires payment. Mutual funds usually charge 1-3% commission per year which eats up your profits in the long term.

4. Over-diversification

When rebalancing stocks and bonds, a diverse portfolio can help stabilize your original asset allocation. However, it takes more time than you should ideally spend.

To acquire a diversified portfolio, you would need to acquire multiple different stocks with different asset classes and risk levels, not to mention the transaction fee you would have to pay for every purchase.

5. Tax inefficiency; high capital gains

Among the disadvantages of mutual funds are tax inefficiency and high capital gains. You are still responsible for the entire year’s taxable gains, no matter when you purchased within the year. These are referred to as embedded gains.

The downsides are you pay taxes and other fees, even after technically having a loss, and it may negatively affect an investor who may not desire to pay the fees required of additional taxes despite not expecting it or an investor who is at the top of the tax bracket where these gains are taxed at higher rates.

6. Poor trade execution

The buying or selling of mutual funds take place at the close of the market regardless of when you entered the order for the transaction. Many advocates of ETFs, however, will point out that you can trade with ETFs throughout the day.

While it’s possibly true that your order can be fulfilled earlier in ETFs than in mutual funds, the time difference is considerably small, and the consistency of singular time for transactions itself can be appealing.

7. Liquidity costs

One disadvantage of mutual funds is that it is not often easy to liquidate a portfolio, and it can be dependent on market liquidity for security.

Are Mutual Funds Right for You?

Determining a road map for any journey requires you to be aware of both the starting and endpoints. This is the same with mutual funds. You must first analyze your situation, specifying your needs and goals, and from here, consider your own risk appetite appropriate to your situation.

For example, if you are investing in mutual funds for your retirement account while your retirement is many years away, it might be ideal to look into considerably riskier, but more rewarding ventures due to the extensive timeframe.

In this case, an aggressive, low-expense fund might be for you, and because you aren’t liable for capital gains on investments in qualified retirement accounts, investing in mutual funds with high turnover that distribute capital gains every year is something to consider.

In the purpose of purchasing real estate within a shorter time frame, a fund that doesn’t often distribute capital gains and isn’t as aggressive will be the better choice.


Mutual funds are the perfect fit for people without the time nor experience to involve themselves in the management of an investment portfolio and do not mind paying annual fees for professionals who make it their responsibility.

Mutual funds are also ideal for people who simply cannot afford the level of diversification that most funds offer. If you are one of the people who desire low expense ratios without the need for professional management, index funds may also be another ideal option.

A Complete Guide to Large Investments | How to Invest $500k Wisely

How to invest 500 000 dollars

If you are a person who has $500 000 in your savings accounts and earns little interest (or sometimes, none at all), well, you are not technically on the “bad side” of the earning spectrum. But did you know that you can do so much more with just earning little interest? If you are one of these privileged people who has these amounts of money, it may be a bit overwhelming, as you might feel pressured to manage the finances and make it roll around. This article will help you figure yourself out!

However, know that having these amounts of money is a good opportunity for you to diversify your personal finance portfolio. Given this, we would highly suggest that you split up your 500 k dollars into investment options –which we will be talking about in this article.

How to Invest $500k Wisely?

500,000 bucks is a huge amount of cash that should be placed into diversified investments. While this article gives you a wide array of options to invest that money properly, we also believe that you should be working this out with a personal finance advisor.

1) Guaranteed Investments

The first and safest option for diversification is to have a set of guaranteed income investments. If you would like to invest everything (let’s say the whole 500- k chunk of the pie), then getting sure income returns for your money can be very interesting to think about.

You’ll first need to have a high-interest savings account. Also, it is best to have an emergency fund as well. This means you’ll have to allocate a portion of this to savings accounts or a retirement account. The amount of your savings should have a monetary value of at least six months of your household’s expenses. This will eventually serve as your financial buffer for six months should unforeseen, and unfortunate circumstances arise.

2) Invest in Stocks

All you have to do for this is to get information from online resources and determine which companies you think can grow big in the future market. Once you have identified your company or companies, purchase their stocks in the market. Be sure to buy individual stocks for each. This will be a great way of investing your $500k.

Doing this can be done in partnership with a financial advisor or a stockbroker, but you can usually get better gains and equities with your stock using online platforms.

3) Robo-investing

Consider yourself getting involved in the stock market. If you are not certain which stocks to pick, then subscribing to Robo-investments can give you the jumpstart you will ever need to get started.

Usually, investing with Robo advisors will make you go through a process that identifies your risk tolerance, assess your funds, annual income, dividend income, and other contributors. Afterward, the Robo-investors will engage in the stocks by investing that best credit for you. They can allocate your budget for individual stocks. Many people usually would prefer this method. For the sake of stock, you might want to try this out, too.

Algorithms programmed in Robo-investors will give you the advantage to lessen your liabilities with taxes and will make sure that you will get the highest yields with the least fees possible.

Lastly, Robo-investments are convenient as you are investing without having to get your hands on it. All you have to do is to trust that your money is being managed properly by the platform.

4) Certificates of Deposit

Certificates of deposit (also known as CDs) are not reported to yield positive things like a justifiable interest rate—CDs workaround by putting your funds into a deposit for the short term and guaranteed return rates.

When the great recession hit the market and the Americans in the US, CDs’ returns dropped to one percent. However, interest rates have risen and gave better deals. This made CDs a more attractive investment for those looking at a guaranteed return of investment for their 500 000 bucks.

5) Exchange Traded Funds

Engaging with Exchange Traded Funds (or ETFs) is also a strategic method to diversify your stocks and investments in the market. One way to invest is that you will only get to make a single trade across a wide array of different stocks.

ETFs are very much similar to mutual funds wherein you purchase a relatively huge number of stocks that comprise one huge fund all at once. ETFs will mean that it is a single stock share that you buy from the stock market. In other words, you are purchasing portions of the fund from the exchange instead of going through a bigger fund group like what you do with mutual funds.

6) Peer-to-peer Lending

Peer lending is essentially lending and investing money on people (or business ideas) whom you think can give you a high return in the long run. Therefore, peer lending excludes you from the stock market, as you invest using your personal finance inventories and cash flow.

Peer lending usually gives you a higher return than other traditional investments, but the risk investments for this might be high. Everyone knows that some borrowers might give a delayed payment or might pay you nothing at all!

This is why it is important to question who or what business you will be putting your risk in. Remember to ideate your share price, and you may want to also balance it off by investing in people with a set, stabilized financial income, and a good financial portfolio. Otherwise, without that data or information, you might run into a problem that could put your financial items at risk as time will age.

Look into their business portfolio, the product they give advertiser disclosure on, and make sure that payouts and payment terms are all explicit. Link this information with a financial site if needed to make sure you give them the best credit possible, which will, in turn, give high-interest gain for your part of the pie.

7) Invest in Annuities

Previous and historical experiences would stigmatize annuities as a way of investing your $500k, or even for retirement. This is because a lot of salespeople have used the complexities of this product to their self-interests. However, there are scenarios where annuities can be that strategic option for a person who has 500 000 to invest. For those huge amounts of funds, that may be the right decision.

While a wide array of choices are available when it comes to annuities, it is important to take note that you will provide a lump sum of funds to insurance companies, which, in return, will give you a high guaranteed yield of that money. The moment you start to draw funds from that annuity is the moment you will get a fixed income as you move forward. Just be sure to consult with the right financial advisor for these ventures.

8) Invest in Gold

It could be a challenge for an investor to invest a half-million in physical gold, especially when one is already familiar with trading stock and bonds on platforms found online. So, when it comes to gold, you would be transacting with everyone outside traditional brokers, and sometimes you will need insurance and storage funds on the investment.

Suppose your main concern is about inflation, for instance, or other emergency index funds. In that case, putting some risk into the gold investment industry may be one of the ways to invest your half to a million dollars in fixed-income investments.

Always know that using this method would need some reflection on your risk tolerance and how you would want to jump off from that nest egg of yours. Either way, this approach will still be a good investment, especially if you do not want to get involved in the stock industry. But again, as we all know, you would still want to diversify your seeds as an investor.

9) Invest in Real Estate

If I were a person to get a hold of $500 000, I would place a portion of the pie to real estate. Data this 2020 show that the market shows a healthy demand in real estate investment trusts and the real estate industry as a whole. With the right information on risk tolerance, you will know that investing in such an industry can give you a high yield in the long term.

10) Invest in Government Federal Reserve Equities

The FRS’s main goal (also known as the Federal Reserve System) is that they would want to promote the aims of stable prices and maximum employment.

How to Manage Your Investments?

1) Keep it Lowkey

Everyone knows that if someone suddenly gets access to a huge amount of money, there is a tendency that new friends would be attracted to them in a way that they never had before. Sometimes even those whom you have already broken ties with could suddenly return to you to rekindle and amend some relationship. This is a very sad yet very realistic example of how money can bring humans down to their worst.

Given this premise, you can manage your investments easier when you keep them lowkey, especially if this is newly-found wealth. Otherwise, you will most likely fall into two scenarios:

Scenario A: You will either meet the requests of your acquaintances, friends of a family — until most your wealth is gone; or

Scenario B: You will keep tons of people on the margins (usually your lost ties and distant family) and alienate them because they think your wealth should be shared with them.

Don’t worry, you can avoid these stresses if you keep everything on the lowkey–at least until you have stabilized or have managed everything out.

2) Pay Off Existing Debts

Debt will always hinder you from your financial goals. Some debts even go to the very bad end of the spectrum, and you must get rid of them by paying them off immediately. Otherwise, your investment efforts will go to waste. Now, if you want higher returns:

  • Pay your loans from your family and your friends. This is not just because we would want us to be responsible not just with their finances but also because of their manifestations on family and friend relationships. As you invest, now is your chance to pay them off–so you can also secure and protect your social relationships in and outside the home.
  • Pay all your debts on your credit cards. This includes that home equity line of credit for your US home. These equity lines are huge credit cards that are secured by your home. No further discussion is needed.
  • Pay all your debts on your student loans. These are also huge, unsecured debt, and you have to consider paying these immediately–even if they have low-interest rates.
  • Pay all your existing car loans. Pay your pending US car loans if your pending loans are not three years of age yet. (or if you aren’t within 2 remaining years of paying the loan off). This will give you a great leeway of margins for your emergency fund in the long run–should you need it.
  • Pay your mortgage. Signing up for a mortgage as an investment makes sense since this is a very long term asset and may take you huge amounts of amortizations per year. It is more strategic to pay off your mortgage immediately. However, if it is an “interest only,” “sub-prime,” “balloon,” or an “ARM” type of mortgage, pay them off, then don’t patronize it. When it comes to mortgages, make sure to be certain and fully-informed.

3) Give Back to Charities

Do not let money own you; prove to yourself that you have full control of your money, not the other route around. One way you can prove this to yourself is to give back to some extent, and at the earliest possible time.

You do not need to be religious to give back to charities. All you have to do is be kind and generous, especially when you have more than enough. Greed will make us want so much money that it could turn us into selfish people who only want to receive and receive.

But if you would want to practice managing your investments, try doing it the other turn around–give.

4) Plan Your Monthly Expenses Ahead

Prepare for your large windfall. Try to predict the worst possible scenarios life might hit you with, then plan to secure resilient money savings ahead. Planning will give you time to handle your newly-acquired fortune more properly. It will give you ample time to make better decisions about it–such as your retirement, how content you would want to become, your life status on health, the right company you want to be with, or how you would want to live your life.

To assess and plan your financial expenses, ask yourself, do you want to have your retirement solution right now? Given that, do you have other income sources that can help make your retirement possible, or will your USD500 000 be sufficient enough for you? Is this something we would want to have high returns for?

You can also ponder if you would want to stay in your company or if you would want to shift to other careers? Are you satisfied with the current money you are getting for your pay? Subsequently, would you want to have some fixed income or something more fluid?

Extend those questions into where you would want to live in the US, what kind of home would you want to have, would you want to start your own company and risk your money there? What index funds would you want to invest in, and what rates of return would you like to have? What dreams do you want to be made fulfilled but couldn’t because of limited money and just a fixed income?

5) Emphasize Safety of Principal Investment

Just like what has been mentioned earlier, going through a windfall might be a game-changer when it comes to aspects of trying to live a life for yourself. What else contributes to that game-changing experience is how you invest that money when such windfalls arrive. Therefore, the key is to make sure that you have full control over your strategy.

The moment you have secured the safety of your principal money, the better emphasized your fixed-income assets will be. Some of the things you might want to consider are:

  • To secure an ample amount of emergency funds. And to secure an ample amount, we are talking about around 24 months worth of financial content and living expenses, so when your windfalls will come, you will be financially resilient–sometimes even up to retirement.
  • To engage in peer lending. Emphasizing your principal investment can diversify your portfolio in various ways. Be an investor in peer lending so that you could secure your money (but with relatively high risks. Create the best personal loans and schemes for your friends. Just make sure to question and be intuitive, and the only risk is the right company.

6) Keep the Investment Risk to a Minimum

To manage your stock and financial resources properly, it is important to know that if you put these at high risk investing in the market, a ton of the hard work you have gone through might be jeopardized. This is why you would want to become not just fully aware of the things you are investing in but also on and act on it–by adding measured and well-calculated risk strategies.

A typical financial advisor would say that with 500 000 USD, you are considered a huge investor, and you should think and act like one, especially on income, index funds, and returns from the market. You should be able to diversify your portfolio and to make your money rolling–amidst inflation. That is what the stock market is for, at least in the life long run-up to retirement. Do not, however, overdo it, and learn to be content.

Ensure that you still have your stock allocation on close monitoring and do not exceed 50% of your total capital. This will provide you the growth and diversity you need, minus the high risks.

To further create calculated and measured risks, consider subscribing to ETFs or even mutual funds. Robo advisors are also available online, just if you need help on reviews on your a part of your credit cards or your investment vehicles in the market. They can also calculate returns and items on the stock–given available financial data.

7) Invest in Yourself

Self-care does not just apply to your mental and physical well-being, but it also manifests in your relationship with your finances. This is the time to spend on a few things you have wanted to have for the longest time.

Do not go all-grand and get carried away in this part of the process, though. Just spend on a little, and to those that are urgently necessary (just like your 401 k). In light of higher returns, focus on investing, and be content.


We hope you have had an informative read as we have talked about steps to make sure your large items for investment are manageable and accounted for. Always remember, with the right passion, data, and attitude for things, getting to the financial goal you’ve always dreamt about will always be one step closer to reality. Read more about Investoralist personal finance articles and be knowledgeable on the current economic situation about finances!

A Quick Guide to Schwab S&P 500 Index Fund

Schwab S&P500 Index Fund What You Need To Know

For those who have no idea, the Schwab S&P500 Index is one of the benchmarks that is most observed when it comes to U.S. stocks. This index has around 80% coverage of the country’s equity market on investable market capitalization. The fund’s expense ratio is the characteristic that differentiates the return of the fund and the index itself.

Let’s dig deeper into this article and find out about a quick guide on investment, particularly the S&P500 Index Fund.


What is Charles Schwab?

The Charles Schwab Corporation is a company that succeeded in making a remarkable place in the arena of investment. Having started in 1971, the company was able to launch its retail brokerage branches and has now established about 350 brokerages around the United States, and has been offering more than 50 funds to entrepreneurs, and has been ranked as the top three largest mutual company in terms of assets measured under management.

Charles Schwab offers empowerment for those who would want to invest individually, as they have this belief that it would want to help benefit its investors through numerous types of available investment services and product development.

It is essential to know that they have a global account that gives access to the world’s top stock markets right at the tip of your fingertips. Their global account has an architecture for accessibility especially for those who are not tech-savvy providing low-cost futures contracts. You wouldn’t have to have an account minimum for this, nor a trade minimum.

This means that you can trade stocks on your own terms, and during your own time to top world markets across the world, including, but not limited to European countries, Australia, Canada, and some Asian markets.


What is Schwab S&P500 Index Fund?

The S P500 index fund SWPPX is the index investment that seeks to track the “Standard and Poor’s” performance of the index which is also being widely observed for stocks in the United States.

This fund essentially falls under Morningstar’s large blend and mixed category and is known as the large-cap stock holding. Its largest holdings consider themselves those as large as Apple’s Microsoft Corp, JP Morgan Chase & Co. Amazon Com Inc., among other software companies.


How Can I Buy an Schwab S&P500 Index Fund?

You wouldn’t have to worry much if you are eager to invest in S&P 500 stocks, but without the patience to properly look through the financial information of 500 individual companies.

This is because an S&P 500 index can help you get the exposure you need to such stocks, wherein it ensures that the investment seeks to track typically the actual percentage of your investment return without having to analyze much.

This index is one that observes, and keeps track of not just the most powerful, but also the largest companies across the U.S. These stocks are curated by the S&P Index Committee, which chooses companies based on criteria including a large-cap, expense ratio 0 02, financial liquidity, and even sector asset allocation.

It is helpful to know that the Vanguard 500 index fund introduced individual investors to the country’s first mutual fund. This was formulated to somehow mirror the S&P 500 Index.

Today, however, almost all brokerages, as well as fund companies, now offer some sort of S&P 500 fund with return ration and the percentage is considerably higher. All these can be accessed through discount brokers, full-service brokers, or even financial advisors across the nation.


Things to Consider Before Buying Schwab S&P500 Index Fund

1) Investment Strategy

Based on the information of the fund, the investment’s goal is to be able to observe and track the return of the S&P 500 index as well as other factors such as tracking error tools and benchmark index. It is important to consider that this return usually gives the same value factor to a given stock just the same as the index.

Now, you may know that the return fund and expense ratio would usually place the investment in derivatives, the contracts in the future and that it would lend the securities to put the gap in performance down to a minimum, especially to that that exists between any index funds, ETFs and the corresponding index associated with it.

2) Rankings

Based on a variety of data, news outlets in the United States have evaluated 1,265 large blend mutual funds, and have come up with a top-rated list of ETFs and return funds for those who would want to invest in the long term.

3) Role in Portfolio

It has to be noted that the fund exists as a large-cap core holding when it comes to financial portfolio including information on the return, inception date, standard deviation, tracking error, and return.

4) Management

Another thing to consider is management. It would help you to know that the fund, since 2012 had been managed by a person named Agnes Hong. It was then managed by Juwono, Ferrian, from 2013, and 2015 onwards by David Rios. All these three are known as professional and expert mutual fund managers who supervise and manage a couple of other funds for Schwab.

5) Performance

Another thing to consider is the performance of the fund as a whole. Just over the past year, the fund has returned 15.14%! And over the previous 3 years, it returned 12.25%. Similarly, throughout the previous 5 years, it returned 14.09% and when it comes to looking at data for a decade, the fund has returned a staggering performance of 13.66%.

6) Fees

In this section, it is important to know that the fees, as well as the expenses of the mutual fund, are known as charges that could be accosted by the investors who have gotten a hold of mutual funds or ETFs.It is common knowledge to know that if one generally invests at least in a mutual fund like S P 500 index fund, it will obviously involve costs and content measurement expenses.

This will include costs on shareholder transactions, distribution, and marketing expenses, as well as investment advisory feeds. You should know that the costs mentioned above are usually passed along to investors in multiple ways imaginable. To further get down to detail, know that initial sales fees are those costs that are generally being used to pay brokers through a commission.

On the other hand, deferred sales fees are what you call those weight to a given cost when investors would want to have their investment return from inception date, and redeem their shares, from the inception date.

Furthermore, there are other fees that are being charged annually to those fund holders. In this category, there are administrative, management, and redemption fees.

Administrative fees are those costs that are considered to be a part of the fund’s data overhead expenses so that they could operate. In other words, these are the costs being used by the business so that they could efficiently run the fund.

Administrative fees include rental fees, for instance, or even office supplies, and even utilities. Now, because expenses are being paid from fund assets, investors usually pay for these fees indirectly, rather than direct payments through separate line items.

Management fees on another hand, are the costs that are the actual percentage is considerably being used to pay for the manager or the firm that handles your S & P 500 index funds. They use this to make the decisions necessary when it comes to which securities should be purchased for instance, or even the strategic return date or time the firm or the managers should buy or sell.

These costs usually defer between firms but are typically the actual return percentage of the assets under management. Some firms would waive a category of this fee, usually around 2-3 years. Waiving this would not just help firms accumulate assets, but also lower the expense ratio down to a minimum.

Lastly, Redemption fees are experience costs that come in the form of penalties so that investors will get discouraged to transact with short-term market timing. These are fees being charged to the investors if they sell the funds before the expiration date of the funds’ holding period. Usually holding periods last between 30 days to a year and may take a longer period of time.

7) Volatility Measurements

Another thing to consider is device volatility measurements and tracking error tools, which are the tools that mirror the risk or those that are giving the same weight of uncertainty in the market capitalization return value of the security.

8) Fund Performance

Fund performance is something that you should really consider because investments are serious business. it is important for investors and funds to track the total return of their investments. In this context, it has been mentioned earlier that the large-cap SCHWAB funds have been performing throughout the previous decade, and even though the past three and five years.


Schwab S&P 500 Index Fund: Hypothetical Growth of $10,000

With trading stocks typically the actual amount, or with low and minimum investment requirements on a variety of funds, SCHWAB usually becomes a very good deal to those who are investing in the long run, or to those who are looking for a new brokerage that they can call home.

While Schwab does not have as many funds when compared to other stock as the index category, ample information would tell you that you can make a successful deal that the broker already offers ample choices for one to meet the needs of most entrepreneurs and investors that are also mindful of the market cap.

Now whether you would go for large or small caps to index the fund, Schwab funds would usually provide cost-efficient solutions that are ready for you to choose from. All you have to do is to access this information online.


This index fund is something that can really help you with your investments and net assets. The fund generally invests in long-term solutions. The Schwab seeks to track the investments being done in the market and will help you give your total return of funds whenever you need them. You must consider a set of things though, such as your fees, net expense ratio, and rankings, before choosing the right company for you. At the end of the day, everything will be a great experience, especially for large blend investors like you.

Check out 8 Best Charles Schwab Index Funds for Your Investment Portfolio.