StudentShare solutions
Triangle menu

Money Management: Exchange on Trade Fund (ETF), which is associated with the stock market - Assignment Example

Not dowloaded yet

Extract of sample
Money Management: Exchange on Trade Fund (ETF), which is associated with the stock market

Money management is the process of being a custodian of one’s finances by knowing where today’s finances are being spent, and drawing a well thought out plan showing where one wants this money to go. Therefore, it calls for one to be well organized; have set goals, which would gear this investment to success; have a track of one’s spending by putting in place a realistic budget, and above all have a well thought-out savings strategy. The paper takes cognizance of the Exchange on Trade Fund (ETF), which is associated with the stock market. Carrel (2008) explains that ETF is an investment fund or security that is entrusted with the stock exchange market. ETFs resemble a commodity, an index or a basket like an index fund; thus it is designed to trade like a stock on an exchange market. The paper would, therefore, discuss the aspects surrounding the financial market as far as ETF is concerned (Carrel 2008). My risk profile evaluation reflection As an investor, I would seek to establish a strategy that matches my risk profile so that I may not be caught off guard should such risks occur. I would, therefore, work towards ensuring that I cushion myself against any short- term loss. This becomes possible if I ensure long-term growth in the value of my investment and by being cautious on inflation. My investment objectives would only be pegged on the long-term investment; therefore, I will have to take risks in order to get higher returns (Scott 1975). To demonstrate my risk profile and asset allocation, I will use the model shown in the appendix III. Under this profile, my risk profile falls under 44-58 score, which means that my risk taking profile is moderate. This will inspire my selection for passive participant portfolio that will be explained later. In view of this, my portfolio selection will depend on my key objectives including time horizon, risk tolerance, and other assets held out of the plan. The original amount or the principal investment is not assured at any time, including the proposed year of allocation. I will seek to establish my risk tolerance, so I can know my level of investment risk, with which I am comfortable. I will do this through the investor profile quiz as shown in Appendix I (Milevsky 2001; Milevsky 1998). ETFs verses Mutual funds In this study, I will prefer ETF to mutual funds, because ETF has some potential advantages compared with mutual funds. Most importantly, my aim is to choose an investment that will improve my rate of return on investment, while minimizing the risk profile as much as possible. ETFs are operated at low expenses because they are passively invested unlike mutual funds, hence improving my rate of return. In addition, I will prefer ETFs to mutual funds because of their tax efficiency, due to their structure that makes them avoid capital gain tax. The following are some specific advantages of ETFs. Condensed Risk Hedging Vehicles Hedging is an effective risk diversification technique employed by buying an investment that is inversely associated with other assets in a group. An Inverse ETF is designed to shift in the reverse direction of a particular index. A portfolio manager, with the use of Inverse ETF, can reduce the market threat of an entire group or precise part of a group. Increased Diversification When circumstances are in need of a basket of stocks, ETFs helps in diversification. Diversification is the situation of being in possession of enough personal investments in an asset category or ...Show more

Summary

Money Management Name: Course: Professor: Institution: City and State: Date: Money Management Introduction For the realization of a better result in any venture, regardless of whether it is a business venture or any other venture, there is a need to have a good management to steer the investment to success…
Author : elfriedajast
Money Management: Exchange on Trade Fund (ETF), which is associated with the stock market essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the assignment on your topic
"Money Management: Exchange on Trade Fund (ETF), which is associated with the stock market"
with a personal 20% discount.
Grab the best paper

Related Essays

Fund management
These forms of management are particular for a particular country, and determine the economic success of the country. For example, Switzerland has a fantastic economic growth rate per year due to its noteworthy private banking which is renowned around the world.
9 pages (2250 words) Assignment
Money Management Final-1
es, and derivatives where an investor invests his or her money to mitigate the risk of holding a particular asset through diversification. Diversification of investment spreads the risk over many assets. The concept of simple portfolio diversification is that some securities may not perform as anticipated but other assets might exceed in performance making the actual return of the portfolio reasonably close to anticipated return.
12 pages (3000 words) Assignment
Personal Financial Planning
a) The total wealth portfolio of the couple is as follows: David has 80,000 held in a building society 30 day notice account. Given an 8% annual return, he gets to earn 6,400 annually from this investment. He has 760,000 invested in equity unit trusts which earns annually.
12 pages (3000 words) Assignment
Canadian stock market
A mutual fund is a convenient and affordable means of having an access to a diversified collection of investments that would be cumbersome to buy and control individually. Since mutual funds normally entail more than 50 different
5 pages (1250 words) Assignment
THE STOCK MARKET GAME
They do a lot of research worldwide to get new ideas and possibilities of partnerships and expansion to untapped market opportunities. The company’s products and
3 pages (750 words) Assignment
Money Market violations
Finally, the paper delves into the London Interbank Offered Rate (LIBOR) controversy and gives a synopsis of the primary issues related to the same. The act of hiding the money source that was earned via illegal means is often mentioned as money laundering.
18 pages (4500 words) Assignment
Stock market competition
ndex, companies must have been listed on the Toronto Stocks Exchange for at least twelve months and must meet certain size and liquidity requirements. The value, volume, and number of transactions taken together must be at least 0.025% of the same sum done for all the companies
8 pages (2000 words) Assignment
Foreign Exchange Market
For example, the seller agrees to convert the customer’s $100 to the London pound. The American tourist agrees to convert his $100 to the London pound at the April 5, 2015 spot foreign_currency conversion rate, $ U.S. 1.00 =
2 pages (500 words) Assignment
Stock Market Recap
It has expanded its applications through product acquisitions and this is likely to continue in the future. In addition, its popularity as a social media informed the choice. I would buy more shares of Facebook Inc. Even though the company’s daily
2 pages (500 words) Assignment
Stock Market Investing
However, even when looking for a company with “best results”, the business is still risky due to many different economic, political, geographical and other factors easy to miss. Among three pairs of stocks, Coca Cola and Exxon Mobil seems most worth of investing
2 pages (500 words) Assignment
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation