Search results for: “index fund”

What Is UVXY? The ProShares Ultra VIX Short-Term Futures ETF [UVXY] is among the most infamous of all exchange-traded funds.

You can buy the ETF the same way you would purchase a stock at a broker like thinkorswim or tastyworks. But don’t expect a buy-and-hold strategy will lead to portfolio returns that rival those of the Oracle from Omaha.

Any daring investors who have bought and held UVXY for any lengthy timeline know its perils. In fact, we couldn’t find a single year since inception when the UVXY price was higher at the end of the year than when it began the year!

Below we’ll cover the dangers of trading UVXY as well as the ways to make money from it, so let’s dive in!

How Does UVXY Work?

The ProShares Ultra VIX Short-Term Futures ETF tracks the performance of the S&P 500 VIX Short-Term Futures index for a single day.

But it doesn’t track it on a 1:1 basis. Instead UVXY is 1.5x leveraged meaning that its results (before fees and expenses) correspond to one and one-half times the performance of the S&P 500 VIX short-term futures index.

It is designed for investors who want to gain exposure to stock market volatility via the futures market.

So how does UVXY work?

In a nutshell, it measures the return from a rolling long position in the first and second month VIX futures contracts.

Generally, this will mean that UVXY will fall over time but every once in a while expect it to skyrocket higher as volatility spikes.

Because of its tendency to decline in price over the long-term it frequently undergoes a reverse split, meaning that the share count is reduced and the price is increased.

UVXY reverse splits can be 1:2, 1:3, 1:4, or even 1:5, meaning that the price spikes 5X while the share count is reduced proportionately to keep the overall “market cap” the same.

UVXY Explained

Some traders assume that UVXY tracks the CBOE Volatility Index [VIX] but in fact that is not true.

Instead, UVXY tracks VIX futures, which are a different animal altogether.

Here’s why.

If you were to bet on a spike in volatility, the VIX may rise big time. But the futures may build in a forecast that share prices will return back to median levels.

So, when you bet on higher VIX prices, you may not see the same returns by gaining exposure to the futures market!

With that said, historical results show that the UVXY correlates fairly closely (>90%) with the movements of the Volatility Index, or VIX.

Getting complicated huh?!

Trading the UVXY is not for the faint of heart.

Before diving in you should know the risks. And most importantly, you should know why the UVXY price history shows a regular downtrend with infrequent spikes higher.

Why Does UVXY Share Price Fall?

A process known as contango loss negatively affects the UVXY share price.

Contango loss is the process of VIX futures declining in value as they approach the value of the VIX.

The declines in price on most days weigh down the underlying UVXY index and is amplified by the 1.5X leverage.

What Is UVXY Stock Price History?

While some stocks and exchange-traded funds are meant to be held for the long-term, UVXY is not among them.

Companies like Facebook, Alphabet, or Amazon are plays on the long-term.

When Facebook sells more advertising, it makes more.

When more people click, Google enjoys rising revenues.

And when Amazon ships more goods and sells more services, it sees its top line grow.

By contrast, the UVXY stock price history is in perpetual decline. In fact, since UVXY was created, you can see the ROI year-over-year performance is highly negative.

NYSEARCA:UVXY Stock Quote Accuracy

When you look up online a UVXY quote or UVXY after hours price, the number will generally match the S&P 500 Short-Term Futures Index.

However, so-called whales will cause the price to spike from time to time when making large purchases or indeed cause it to dip when shorting a large number of shares.

To ensure the UVXY stock quote closely matches the underlying index it tracks, market makers step in when needed to take the other side of the trades.

Much of the order matching and market-making is done by computers however, so few human market makers are needed to ensure price stability.

Can UVXY Fall To Zero?

Yes. In fact, UVXY has historically been known to effectively “blow up” and wipe out buyers.

Contango losses can cause the UVXY price to change dramatically in the blink of an eye.

Buy-and-hold investors should look elsewhere.

Usually, when the UVXY price is close to zero, a reverse split takes place to boost the share price back up to a higher level and the process starts all over again?

>> 3 Ways To Trade The Most Volatile Stocks

What Is The UVXY Expense Ratio?

According to ProShares, the expense ratio for UVXY is 0.95%.

With over $500 million in assets under management, this means that the managers would make over $4.75 million per year if every penny was invested.

But UVXY usually holds a large cash position and collects interest when invested in Treasury bills and other fixed-income investments.

Should You Buy UVXY?

It is tempting to jump in feet first and buy the ProShares Ultra VIX Short-Term Futures ETF because the price can soar, and even double, in lightning speed.

For risk-takers and gamblers, the appeal may be too great to resist.

But for conservative investors looking for predictable income, it’s worth looking at more conventional dividend-paying stocks and perhaps selling covered calls on them for extra yield.

The flipside is if UVXY has such a predictable history of declining, why not short it?

Shorting can be highly lucrative. And if you had to choose between buying UVXY vs shorting UVXY, shorting is probably the wiser choice.

But shorting UVXY is by no means a golden ticket. The danger of shorting it is that it can skyrocket higher in the blink of an eye, causing untold losses.

In fact, the volatility is so high that whether you are tempted to buy or short, you will probably need to fasten your seat belt and prepare for a wild ride!

How To Trade UVXY

If the volatility spikes don’t scare you off, you can trade UVXY at almost every top online broker.

Because UVXY is an exchange-traded fund that is based on the price of futures, a broker who understands derivatives, like options and futures, is going to be your best bet.

Both the industry leader when it comes to tools and screeners, thinkorswim, as well as tastyworks, which is nipping at its heels are experts in options trading and futures trading.

No matter which you choose, you will find top notch customer support staff able to help you buy or short UVXY.

Does the UVXY chart scare you or entice you to trade the exchange-traded fund? Let us know if you have bought or shorted UVXY? How did it go? We would love to hear from you.

>> Is Twitter Stock A Buy Or A Sell?

>> What Are The Best Online Brokers?

>> Fix Your 401(k) Easily With Blooom!

Wealthfront is a robo-advisor that relies on computer algorithms to manage client investment portfolios while Robinhood is a trading app for investors who are actively buying stocks, options and exchange-traded funds (ETFs).

Both companies offer mobile-first platforms, but which one is right for you? In this Wealthfront vs Robinhood review we compare costs, investment minimums, tax strategy and more to help you decide.

Robinhood vs Wealthfront Features

• InvestorMint Rating

  • 1
  • 2
  • 3
  • 4
  • 5
• Standout Feature
  Tax-loss harvesting expertise
• Management fee
  $0 for first $10,000 0.25% thereafter
• Account Minimum
  $500
• Get Started Now

• InvestorMint Rating

  • 1
  • 2
  • 3
  • 4
  • 5
• Standout Feature
  Zero Commission Trading
• Commissions
  Stocks, ETFs, Crypto: $0
• Account Balance Minimum
  $0
• Open an Account

Why Wealthfront? Wealthfront is one of the first and most successful roboadvisors; it currently has north of $11 billion in assets under management.

It’s a solid choice for a hands-off investor who wants to park his or her dollars away and let them grow in peace.

Why Robinhood? Robinhood has 4 million customer accounts, and processed over $150 billion in transactions since the company was first founded in 2013.

Robinhood’s allure is commission-free trades with no minimum investment requirement. This may make it ideal for millennials who are interested in the stock market but don’t want to spend scant cash reserves on broker fees.

ROBINHOOD
InvestorMint Rating 1 2 3 4 5 4 out of 5 stars	Stock, ETF, Crypto Commissions: $0 Account Minimum: $0 Robinhood Gold: Tiered monthly fees Get Started

Fee Comparison

How Much Is Wealthfront?

Wealthfront bills clients at a flat rate of 0.25% per month on all investments held with its service. There are no hidden fees or other invisible costs.

Your average monthly balance is used to calculate the fee, and it is deducted from your account on a monthly basis.

For account holders with under $10,000 in assets, Wealthfront waives its management fees.

What Does Robinhood Charge?

Robinhood charges no commissions to buy and sell stocks, but it does charge an outgoing transfer fee of $75 for each automated customer account transfer.

The company’s monetization strategy rests with its premium Robinhood Gold service, which offers investors extended-hours trading as well as the ability to trade on margin.

Depending on the service tier you choose, you may be charged between $6 and $200+ a month for the Gold service.

This is based on the amount of money you deposit and the level of “Instant Deposit” to which you have access. The higher your “Instant Deposit” power and account balance, the higher the fees you will pay.

>> Compare Robinhood Vs M1 Finance

Investment Minimums

Robinhood Investment Minimum

Robinhood doesn’t impose an investment minimum on standard accounts. But for its Robinhood Gold premium margin account service, a $2,000 minimum balance is required.

This is in keeping with the regulatory minimums required both by the New York Stock Exchange and the National Association of Securities Dealers.

Robinhood also offers Robinhood Crypto, which is an account designed for investors who are interested in cryptocurrency trading.

To trade bitcoin, you will need $0.10 in your account, and to trade Ethereum, you will need $0.01.

>> Compare Stockpile Vs Robinhood

Wealthfront Investment Minimum

In order to open a standard Wealthfront account, you’ll need to deposit $500.

For premium account services, such as stock-level tax-loss harvesting and Smart Beta (an advanced indexing service), the minimums are $100,000 or $500,000, respectively.

WEALTHFRONT SPOTLIGHT
InvestorMint Rating 1 2 3 4 5 4 out of 5 stars	Management Fee: $0 for first $10,000 An additional $5,000 managed free for each friend invited who signs up Management Fees thereafter: 0.25% Account Minimum: $500 Get Started via Wealthfront secure site

Account Types

Individual Non-retirement	YES	YES
Joint Non-retirement	YES	YES
Roth IRA	NO	YES
Traditional IRA	NO	YES
Rollover IRA	NO	YES
Trusts	NO	YES
Custodial Accounts	NO	YES
SEP IRA	NO	YES
529 Plans	NO	YES
401(k)	NO	NO (will advise)

Wealthfront Account Types

Wealthfront handles the following types of accounts:

• Personal investment accounts
• Joint accounts
• Traditional and Roth IRAs
• Simplified Employee Pension (SEP) IRAs
• IRA and 401(k) rollovers
• 529 college savings plans
• Trust accounts

>> Compare M1 Finance Vs Wealthfront

Robinhood Account Types

Robinhood is strictly an investment platform for standard brokerage accounts. It offers these securities:

• Stocks
• ETFs
• Options
• Cryptocurrencies

Tax Strategy

Type
Tax Loss Harvesting	N/A	YES
Free Account Balancing	N/A	YES

Wealthfront Tax Strategy

Wealthfront is firmly committed to reducing its clients’ tax liability and maximizing their after-tax returns. To accomplish this, it seeks to offset capital gains by selling securities that have suffered losses.

Another investment that’s been correlated with the portfolio’s risk and return profile will then be substituted for the security that’s been sold. This practice is known as tax-loss harvesting.

Wealthfront also looks for ways to minimize clients’ taxes when they are transferring assets from other brokerage accounts.

The company will wait to transfer securities that have been losing value until they have become “long-term” assets as defined by the IRS. At that point, Wealthfront will sell those securities and pass the savings along.

For asset investitures of more than $500,000 that qualify for the Smart Beta investment feature, Wealthfront offers both ETF and individual stock tax-loss harvesting.

Opportunities to lower tax losses can be numerous with this strategy since stocks typically demonstrate more volatility than other securities.

>> Compare Personal Capital Vs Wealthfront

Robinhood Tax Strategy

Robinhood supports brokerage accounts, and the only types of accounts it offers are individual taxable accounts.

The company does not offer retirement accounts that come with specific tax benefits.

You will be able to access a consolidated tax 1099 document that contains the information most often found separately on 1099-DIV, 1099-MISC, 1099-INT and 1099-B forms.

As the client, you are responsible for making sure this information is entered properly on your tax returns.

Tools and Calculators

What Tools Does Robinhood Offer?

You won’t find robust research materials or sophisticated analysis software on Robinhood.

The company’s web interface, which launched in the spring of 2018, contains more bells and whistles than the smartphone app but is still skimpy in comparison with the tools offered by some other leading online discount brokerages.

Both the mobile app and the web interface offer the following tools:

Earnings: Robinhood describes this as a report card. It’s a dynamic page that aggregates financial information on a specific company’s earnings and its next earnings announcement date.

Watchlist: Allows you to customize a catalog of stocks and cryptocurrency opportunities that you want to keep an eye on.

Candlestick Charts: Candlestick charts are a type of financial chart that describe a security’s price movements on a particular day so that you can keep an eye on variables like the opening price as well as the high, the low and the closing price.

Additionally, the web interface aggregates analysts’ rankings so that Robinhood clients can break them down into Buy, Hold and Sell percentages.

The web interface also offers curated collections of stocks with names like “100 Most Popular,” “U.S.” and “North America” as well as a “People Also Bought” option for any stock you’re researching.

What Tools Does Wealthfront Offer?

Wealthfront’s Path tool is a piece of scenario-planning software that lets you do reality testing on the assumptions you’re making about your financial future.

The Path tool combines your risk profile and your real transaction history over the past 12 months with assumptions about inflation rates, changes in consumer spending habits and other economic criteria gleaned from the Bureau of Labor Statistics’ Consumer Expenditure Surveys.

This allows you to see the potential impact various decisions may have on your financial future.

Get Started At Robinhood >>

Stocks, Bonds, ETFs – What Can You Trade?

Wealthfront Asset Classes

Wealthfront clients have access to three portfolios:

The portfolio the robo-advisor assigns each individual client is determined by the amount of risk that the client is comfortable assuming (based on client responses to his or her initial interview questions).

Each portfolio is balanced according to the principles of Modern Portfolio Theory with between six and eight ETFs representing stocks, bonds and assets like Treasury Inflation-Protected securities.

>> Compare Betterment Vs Wealthfront

Robinhood Asset Classes

Robinhood lets clients create their own portfolios from stocks, ETFs, call and put options and cryptocurrency.

It does not offer access to mutual funds or bonds.

Customer Support Comparison

Wealthfront and Robinhood both offer phone and email support for clients who are experiencing technical issues with the apps or with the web interfaces.

You can call Wealthfront’s help line between 11 a.m. and 8 p.m. EST, Monday through Friday.

Robinhood’s helpline is available Monday through Friday between 8 a.m. and 6 p.m. EST.

Mobile App Comparison

Robinhood’s user-friendly mobile app is available both for iOS and Android smartphones.

The mobile app supports market orders, limit orders, stop limit orders and stop orders, and it also allows users to program customizable alerts.

Users can sign up for a news feed. They can also listen in to earnings calls on their smartphones.

Wealthfront clients can monitor their accounts throughout the day on their iPhones or Android smartphones.

Users can generate charts and tables that will help them track their investment portfolios’ performance. Wealthfront also offers a subscription investment news feed.

Overall Winner

What’s the best way to grow wealth? Would you be better advised to turn financial decision-making over to an advisor or to take control of the process yourself?

The answer to that question depends on whether you have the knowledge, the time, the inclination and – most important of all – the temperament to manage your own investments.

If you’re lacking in any one of those areas, then you’d probably be better off working with a planner, which means you’d be better off with Wealthfront than you would be with Robinhood.

Both Wealthfront and Robinhood considerably lower the barriers to entry into the realm of financial investments. Both also offer a robust suite of services.

There is no clear winner here in terms of the quality of the products offered, but since Robinhood requires no investment minimum, it may be more tempting to beginning investors who are confident in their own ability to make smart investment choices on their own.

The key word, though, is “confident.” Robinhood’s platform is very basic: The service doesn’t offer a lot of data on its site, which means you may have to track down third-party research. That can turn into a time-consuming process.

If you are unsure about where to begin, then a robo-advisor like Wealthfront may be the better starting point. In fact, you could fund your tax-advantaged retirement account through Wealthfront and then open an account with Robinhood to learn the basics of stock trading.

Which Robo Advisor
Is Best For You?

Wealthfront is the best choice if:

• You want to work with a low-cost service that has an excellent reputation as a roboadvisor
• You’re a hands-off investor who’s comfortable sticking with one risk strategy while saving toward a long-term goal like retirement or college education for your child
• You’re looking for a service that will optimize your tax savings

Robinhood is the best choice if:

• You want to take advantage of commission-free stock, ETF and options trades.
• You want to begin trading securities, but you don’t have a lot of money available with which to open an account
• You’re very comfortable using a smartphone for sophisticated transactions.

	Costs	Account Minimum	Rating	Best For	Open Account
Full Review	$0 for first $10,000 0.25% thereafter	$500	1 2 3 4 5	Hands-off Investors	Get Started
Full Review	$0 Commissions	$0	1 2 3 4 5	Beginner Stock Traders	Get Started

Have you ever been tempted to sell shares and lock in gains when stocks in your portfolio rose?

Have you ever impulsively sold stocks that were nosediving because you were afraid they would fall further and lead to bigger losses?

If so, here’s what you need to know before selling a stock. When should you sell a stock?

Selling A Stock Has Bigger Tax Implications Than You Might Think

Paying taxes on gains, especially short-term capital gains taxes, can drastically lower your portfolio net worth over long time periods compared to a buy-and-hold strategy.

When you are selling a stock that has risen in price from the time you bought it in a brokerage account, you will need to pay taxes on the gains. The impact of these taxes over time is much bigger than most investors realize.

To understand just how much regular tax payments on gains hurt portfolio growth over time, imagine going back in time when a 30-year old Warren Buffett had a goal to build enormous wealth.

The year is 1960 and young Warren Buffett is looking to the future imagining how to become the most successful investor of all time. He calculates how much money he will make if he can earn 15% each year for the next 60 years.

Although we don’t quite know when Mr. Buffett made this calculation, it is clear from his investing method he ran the numbers at some point because his investing approach resulted in him becoming one of the richest investors in the world.

Let’s imagine back in 1960 Mr. Buffett compared two portfolios growing at 15% annually. One portfolio is taxed each year by Uncle Sam at the rate of 30% on short-term gains, and the other is not taxed until 60 years later at a long term capital gains rate of 20% (we’re making these numbers up as the year is 1960!).

Although this is a hypothetical example, it is helpful to compare the effect of taxes over time.

You can see in the table below that holding a portfolio growing at 15% each year and not paying taxes until the final year results in $100 growing to an astounding $381,217.

By contrast, paying taxes on gains each year results in the second portfolio growing to $61,576, meaning that the cost of paying Uncle Sam regularly is to amass a portfolio about one sixth the size it otherwise could be!

While paying taxes by selling winners regularly can hurt portfolio growth over the long term, it is generally a bad idea to hold onto a stock simply to avoid paying taxes – especially if it is fundamentally weak.

Nevertheless, the next time you are tempted to sell a stock simply to lock in gains, take a step back and think about how the cumulative effect of paying taxes regularly on portfolio gains can severely hinder the growth of your portfolio over the long term.

TAXES ON STOCKS IN THE RED

Stocks in the red – those that have fallen in value and are underwater – will not be subject to taxation in a brokerage account.

But selling losers can help you offset taxes owed on winners. You can offset capital gains on winning stocks by selling losers in a process known as tax loss harvesting.

Many of the leading robo advisors, such as Wealthfront and Betterment, specialize in tax loss harvesting.

Not only do these robo advisors manage your portfolio automatically but they harvest tax losses so well that in some cases the benefits can entirely offset management fees over time.

>> Related: How To Pick The Best Robo Advisor

TAXES ON RETIREMENT ACCOUNTS

If you are selling a stock in a retirement account, such as a 401(k) or IRA, taxes are not something you need to worry about until you start taking withdrawals.

You can buy and sell as often as you wish without concern for the tax impact. However, you will still pay commissions when buying and selling.

>> More: Is A Roth IRA Better Than A Traditional IRA?

Am I Selling A Stock Too Soon?

Nobel prize winning research shows that it feels better to lock in gains when stocks rise in value than to risk them falling back to breakeven or worse. When you understand your own cognitive biases to make irrational investment decisions, you can consciously make better investment choices.

SELLING A STOCK BASED ON COGNITIVE BIAS

A Nobel prize winning theory, called Prospect Theory, states that people hate losing more than they like winning.

So, how does Prospect Theory affect your investment decision-making?

It turns out that by fearing losses more than we enjoy gains, we humans have a tendency to sell winning investments too soon.

It feels good to lock in profits and bank gains by closing out positions. But what feels good short term can hurt us over the long term.

As John Maynard Keynes once stated:

“The market can remain irrational longer than you can remain solvent”

Another way of saying this is that stocks can move further than you ever imagine possible.

As stocks rise, bearish voices clamour to rationalize why further upside is limited. But the old adage “stocks climb a wall of worry” has become famous because share prices often rise in spite of the doom and gloom prognostications of skeptics.

Selling a stock too soon is a common stock trading mistake but once you understand Prospect Theory, you become more aware of the risks of making irrational investment decisions based on a human cognitive bias.

SELLING A STOCK BECAUSE OF VOLATILITY

When fear grips investors, stock market volatility can spike higher and catalyze impulsive reactions. Buying and selling a stock because of share price swings is a common trading mistake, so how do you improve your chances of side-stepping these pitfalls?

First, ask yourself if anything fundamentally has changed? Is the stock rising or falling because the overall market has started to soar or a stock market crash is in full force?

If you buy a stock based on its share price, you may sell it based on its share price too. And if the overall market is soaring higher or crashing lower, your stocks will probably tag along for the ride.

But just because the S&P 500, Dow Jones Industrial Average, Russell 2000 or NASDAQ is rising or falling doesn’t mean the thesis behind why you bought a stock has changed. Maybe it has, but maybe the market swings and roundabouts are just noise to be ignored.

SELLING A STOCK BASED ON NEWS EVENTS

A news event about a stock you own may be important enough to warrant selling a stock, but to know one way or the other with certainty you should understand how to research stocks.

If a company missed earnings this quarter or management lowered forward guidance, nervous nelly shareholders may have a negative knee-jerk reaction and sell.

But if you understand how to research stocks properly, you will know how to distinguish fundamental shifts from news events that only have a temporary impact on share price.

For example, a company like Pepsi may miss earnings from time to time but if its brand value remains strong in consumers’ minds, its distribution network unaffected, its sales remain strong, and its market share resilient, the earnings miss may just be a temporary bump in the road.

>> MORE: What Are The Best Stocks To Buy?

Am I Selling A Stock
To Buy A Better Stock?

It is better to buy, at a fair price, a company whose intrinsic value is constantly increasing than to buy at a discount a decent company whose intrinsic value is not growing by much.

When you buy a stock, you miss out on another. But what if the other stock rises more than the stock you own? That is the opportunity cost you must come to terms with when you buy a stock.

When you see another stock rising in share price more, it doesn’t necessarily mean you should jump ship, sell your stock, and buy another.

Forget about share price for a moment, and focus on what the company is truly worth – its intrinsic value.

What you want to find are what Warren Buffett calls:

“Wonderful businesses at a fair price”

By fair price, Buffett means share prices close to intrinsic value. And by wonderful, he means that over time the intrinsic value of these companies will grow.

Perhaps it seems obvious, but this philosophy was not the original investing framework that Buffett used.

When he began investing, Buffett bought:

“Fair businesses at a wonderful price”

These were business trading below intrinsic value that had pretty good business models. By buying decent businesses at a discount to fair value, Buffett could make money when the share price rose but he learned that it’s much better to buy a business whose fair value is increasing too.

Greater long term wealth is accumulated by buying businesses whose intrinsic value increases over time than is amassed by buying businesses temporarily “on sale” in the market.

Should I Sell Stock Because
My Portfolio Is Not Balanced?

Make sure your overall portfolio is balanced and in alignment with your overall financial goals and risk profile, especially when one stock appreciates in value so much that it skews the weightings in your overall portfolio mix.

When you start investing, you may have your money spread across a number of stocks. But as time goes by, some stocks soar. Maybe you bought Facebook or Google when they came public.

When a company grows its intrinsic net worth fast, it generally doesn’t take too long before its share price reflects the increased value.

But when one company in your portfolio grows much more rapidly than others, your overall portfolio can fall out of balance.

It is tempting to hang on to a winning stock but if it becomes such a large part of your portfolio that swings in its share price significantly impact your overall portfolio, then it may be time to pare back the holding so your overall portfolio is aligned with your risk profile and financial goals.

To avoid the tax impact of selling your stock, you could look to hedge it from time to time during downturns using married put options strategies.

Another way to hedge somewhat and also generate income is to sell calls against your shares as part of a covered call strategy.

>> Related: Learn How To Trade Options

Will Selling A Stock
Trigger A Wash Sale?

Avoid selling a stock if you plan to repurchase it again within 30 days, otherwise it triggers a wash sale.

As a calendar year end approaches, it becomes tempting to sell losing stocks in order to generate tax losses that can be counted against winners you have sold.

But selling a stock and buying it again a short time later – within 30 days – triggers a wash sale, meaning your tax losses cannot be counted.

The IRS views selling a stock in order to capture tax losses and subsequently repurchasing it within 30 days as an attempt to “game” the tax system and disallows it.

To “get around” this tax rule, some robo advisors, such as Betterment and Wealthfront, provide advanced tax-advantaged portfolio management strategies, such as Direct Indexing, whereby losers are sold and similar (but not the same) securities are bought.

By so doing, tax losses can be counted while reducing the risk of missing out on upside share price movement in a given sector.

BETTERMENT SPOTLIGHT
InvestorMint Rating 1 2 3 4 5 5 out of 5 stars	Promo: Up to 1 Year Free Management Management Fee: 0.25% – 0.40% Account Minimum (Betterment Digital): $0 Account Minimum (Betterment Premium): $100,000 Get Started via Betterment secure site

Plan On Selling A Stock
Before You Buy

Whether selling a stock or buying a stock, dollar cost averaging is a smart strategy.

Timing the market well is really hard. Any day trader who has been around the block will be able to share stories of regret about buying too soon or selling too late.

How many Twitter stock traders wish they bought or sold earlier? How many AutoZone stock traders have suffered from the swings in its share price?

The reality is nobody can time the market perfectly, so looking back at what should’ve, could’ve or would’ve been only wears investors down psychologically.

Rather than choose an all-or-nothing strategy, much better to build up a stock holding by dollar cost averaging in.

When you dollar cost average, you buy shares slowly and steadily over time until your full position is owned.

You won’t ever buy at the bottom, but equally you won’t ever buy at the peak when the risk is highest.

Before a first purchase is made, you should have your plan to sell the stock.

Without a strategy to sell, you are more likely to succumb to emotional trading and a knee-jerk reaction.

A simple plan to sell is to pick a share price and dump your shares when the price is hit.

But many traders have suffered from picking a big round number as a target only to see the share price come within a few pennies of the target yet fall short before cratering lower.

To avoid the heartache of “almost” selling for a profit, and snatching defeat from the jaws of victory, consider dollar cost averaging when you sell too.

Your decision to sell a stock doesn’t have to be binary whereby you sell all your shares at once.

Instead, you can decide to sell some shares consistently over a fixed time period, say a few weeks or a few months.

You will never sell right at the top by choosing to dollar cost average out but the chances are slim of consistently selling at the top anyway.

>> MORE: How To Short Stock

Are You Selling a Stock Because of Greed or Fear?

Emotions like greed and fear have helped humans evolve into what we are today. Without them, your distant ancestor might not have hoarded the food needed to keep her family fed or she may have wandered into a field full of lurking predators.

As animals, we need greed, fear, and other emotions.

As investors, we need to build a wall between our feelings and our actions.

When a stock’s price changes suddenly, you may experience strong emotions that tell you to sell a stock. Perhaps the price just skyrocketed, and you want to earn a quick return on your investment. On the other side, the stock’s price might have plummeted, and you want to sell your stake to make sure you don’t lose more money.

Letting your emotions rule your behavior will almost always point you down the wrong path. Instead of letting greed or fear guide you, use logic and patience to get the highest returns on your investments.

If you know that you own stock in a company with good business practices and room to grow, then you need to sit back and watch the stock’s value increase over time.

Emotions might have worked well in the distant past, but they have no place in today’s marketplace. Do your homework, have faith in logic, and gain wealth over many years instead of responding to immediate changes in the market.

Are You Selling a Stock Because You Got a Hot Tip?

If you talk to enough investors, you will hear a constant stream of hot tips. “Company X is going to tank next week because its new product hasn’t met expectations!” “Company Y’s value is set to flatline tomorrow because the CEO got caught in a compromising position!”

How often do these insider predictions come true? If the people you talk to had such great information, then they wouldn’t want everyone else to know about it.

Ignore hot tips and focus on legitimate news sources. Your brother-in-law doesn’t know what’s going to happen to AAPL’s value. He’s probably getting his information from websites that post wild speculations.

Rely on vetted information from professionals; follow the news; and pay attention to trends. You may not make a quick buck this week, but you will build a robust portfolio that continues to earn money throughout your life.

Be Smart When Selling A Stock

The long and the short of selling a stock is to be smart about the steps you take before pulling the trigger:

• Plan when you will sell before you begin buying
• Consider dollar cost averaging in and out
• If you plan to sell, avoid buying within 30 days or it will trigger a wash sale
• Know your opportunity cost when you buy or sell a stock
• Calculate the tax impact both short-term and long-term of selling a stock
• Verify your decision to sell is based on a fundamental reason

What factors do you consider when selling a stock? What investing tips and trading lessons can you share? We would love to hear from you in the comments below.

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>> Discover Stocks To Buy Now

Exchange-Traded Funds (ETFs) offer an interesting alternative to mutual funds. Both allow you to buy shares in a pool of stocks, so you get automatic diversification without the pressure of selecting individual securities.

While most mutual funds are actively managed, there are some that passively track specific indexes. On the other hand, most ETFs passively track specific indexes. Very few are actively managed.

The biggest difference between the ETFS and mutual funds is how shares are traded.

Mutual fund shares are bought and sold once a day, after the market closes. ETFs can be traded throughout the day, so investors who want flexibility in timing purchases and sales are better off with this type of product.

Are ETFs Better Than Mutual Funds?

Actively managed mutual funds and actively managed ETFs have higher fees than their passively managed counterparts.

Morningstar notes that the average for actively managed mutual funds is 1.09 percent, the average for actively managed ETFs is 0.76 percent, the average for passively managed mutual funds is 0.79 percent, and the average for passively managed ETFs is 0.57 percent.

If you have determined that ETFs are right for you, the big question is which one to choose. There is a long list of options from a wide variety of reputable financial service providers, and even market experts struggle with this decision.

Vanguard has a variety of products to suit every level of experience and to meet all sorts of financial goals. Two of Vanguards most popular ETFs include the Vanguard Total Stock Market ETF (VTI) and the S&P 500 ETF (VOO). Here’s what you need to know before you invest.

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VTI vs. VOO: The Indexes

VTI tracks the entire stock market, while VOO focuses on the major players that make up the S&P 500.

This is Standard & Poor’s market-cap index of the 500 largest US companies that are publicly traded. Taken as a group, this covers approximately 80 percent of the market.

The primary difference between the two ETFs here is the level of diversification in each fund.

VTI offers exposure to all of the companies in the S&P 500, as well as a variety of other large cap, mid cap, and small cap stocks, while VOO is limited to large cap.

VTI vs. VOO: The Details

While VTI holds shares in a total of 3615 different companies, VOO has just 510.

Expense rates are the same for both at 0.03 percent.

VTI vs. VOO: Returns

Though past performance doesn’t predict future performance, a look at each fund’s returns compared to each other and to the benchmark offers a glimpse into how performance differs.

VTI

• 1-Year VTI 12.67% Benchmark 12.72%
• 3-Year VTI 14.77% Benchmark 14.77%
• 5-Year VTI 11.20% Benchmark 11.20%

VOO

• Year to Date VOO 13.65% Benchmark 13.65%
• 1-Year VOO 9.40% Benchmark 9.50%
• 5-Year VOO 10.86% Benchmark 10.91%

Overall, the total stock market approach has historically been more successful.

VTI vs. VOO: Market Sectors

While the S&P 500, and therefore VOO, ensures representation across industry sectors, the way each sector is weighted is not identical to the total market. Here is a comparison:

Sector VTI VOO

• Information Technology 20.40% 21.2%
• Healthcare 13.20% 14.6%
• Financial Services 19.00% 12.7%
• Consumer Discretionary 13.40% 10.2%
• Communication Services 1.90% 10.1%
• Industrials 13.50% 9.5%
• Consumer Staples 7.90% 7.3%
• Energy 5.10% 5.4%
• Utilities 3.20% 3.3%
• Real Estate N/A 3.1%
• Materials 2.4% 2.6%

If you are interested in a certain level of exposure to specific industries, it may impact which fund you choose for your portfolio.

> Compare VFIAX vs VTSAX

VTI vs. VOO: Top Holdings

The top 10 stocks held in each fund can offer a better perspective on the similarities and differences between ETFs.

VTI

• Microsoft Corp.
• Apple Inc.
• Amazon.com Inc.
• Alphabet Inc.
• Facebook Inc.
• Berkshire Hathaway Inc.
• Johnson & Johnson
• Exxon Mobil Corp.
• JPMorgan Chase & Co.
• Visa Inc.

VOO

• Microsoft Corp.
• Apple Inc.
• Amazon.com Inc.
• Alphabet Inc.
• Facebook Inc.
• Berkshire Hathaway Inc.
• Johnson & Johnson
• Exxon Mobil Corp.
• JPMorgan Chase & Co.
• Visa Inc.

As you can see, the top ten holdings are nearly identical between the two funds.

VTI vs. VOO

VTI and VOO both incur risk simply because any investment in the stock market carries risk. Vanguard publishes the following analysis:

“Stock markets tend to move in cycles, with periods of rising stock prices and periods of falling stock prices.

The fund’s target index may, at times, become focused in stocks of a particular sector, category, or group of companies.

Because the fund seeks to track its target index, the fund may underperform the overall stock market.”

VOO may also have some additional risk due to the strategy of focusing on large-cap stocks. Vanguard says this about the investment style risk:

“Large-cap stocks tend to go through cycles of doing better–or worse–than other segments of the stock market or the stock market in general.

These periods have, in the past, lasted for as long as several years.”

>> 9 Top Financial Magazines To Read

Smart investors make a point of keeping up with trends – in markets, in industry sectors, and in the world at large.

Savvy financial reporting is a reliable way to get access to the information, insights, and analytics that will help keep you at the top of your financial game.

But what are the top financial magazines to read to stay informed? We researched the best financial publications for you to keep you ahead of the curve.

How to Choose a
Great Financial Magazine

Financial magazines aren’t all the same.

Some can be annoyingly preachy, repeating the same old chestnuts that you’ve heard a hundred times before about asset allocation, portfolio diversification, and hanging on for the long term.

Others can be dry and peppered with hard-to-understand jargon linked to numbers that writers make little or no effort to explain.

The most useful financial magazines offer valuable insights and easy-to-understand analysis, whether the topic is the best mutual funds to invest in or the smartest ways to save for your retirement.

The editorial and writing teams should be made up of names you recognize as experts on other media outlets and who you have learned to trust.

The ideal financial magazine is authoritative, renowned in its specialized niche, and proud of its reputation as a trusted source of financial news.

Here are our choices for the nine best financial magazines to read that belong in every investor’s library.

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The Economist

The Economist is an indispensable resource for any investor who wants to understand the geopolitical interconnections underlying the movement of money across global boundaries.

This London-based weekly has been going strong for 176 years and shows no sign of slowing down, so you know it’s doing something right.

The magazine covers an abundance of political, social, scientific, and business topics from the perspective of marginal costs and benefits – an essence of economic analysis.

The Economist maintains news bureaus and correspondents in more than 200 countries worldwide.

Its reporting is thoughtful, and its writers make a point of explaining complex concepts in terms that intelligent laypersons will easily to grasp. Stories are often accompanied by infographics.

The Economist’s greatest failing may also be its greatest strength: It contains so much information that it can be very difficult to take it all in. Unread issues may begin to pile up.

Additionally, since the magazine is published in the U.K., Briticisms and grammatical syntaxes unfamiliar to the American reader occasionally appear.

Grab Your Copy Of The Economist Here >> 

Investor’s Business Daily (IBD)

Investor’s Business Daily might best be described as the day trader’s bible. This Los Angeles-based newspaper contains all the latest info on and analysis of stock market fluctuations.

If you’re interested in the technical analysis of index securities and buy/sell signals, this is the publication for you.

IBD offers a host of tools and apps on its website that can help simplify investing decisions.

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Every Monday, Investor’s Business Daily updates its IBD 50 Index, which is a list of market-leading growth stocks generated by the founder’s proprietary algorithm and a benchmark the entire U.S. stock market relies upon.

IBD is well-known for the acumen of its in-house analysts. While it still updates the website available to subscribers on a daily basis, these days, IBD only publishes and distributes one paper copy per week.

IBD’s editorial leanings are decidedly conservative, and this bias occasionally spills over into its market analysis.

This publication assumes you already know trading concepts and does not spend time explaining them.

Grab Your Copy Of Investor’s Business Daily Here >>

Barron’s

If you want to drill down deeply into the fundamentals of the industry and business trends that are shaping the world’s supply and demand curves, Barron’s is the go-to.

Barron’s typically tackles business trends one at a time. Each issue is devoted to an in-depth exploration of a product, issue, or industry that is currently dominating the business headlines.

This weekly publication supplements its intensive reporting with features such as:

• “Market Week,” which is a news-driven review of the previous week’s activity;
• “Barron’s Roundtable,” which features interviews with famous investors;
• “Best Online Brokers,” which rates online brokerages;
• “Top Financial Advisors,” which is a city-by-city breakdown of top financial planners; and
• “Barron’s Picks and Pans,” which is the magazine’s definitive list of the good, the bad, and the ugly in this week’s stock market.

If you’re not a Certified Financial Planner, at first, you may have a difficult time understanding what the article you’re reading in Barron’s is all about since it’s likely to be peppered with technical terms like “alpha,” “beta,” and “yield curve.”

Barron’s offers both a digital subscription and a digital-plus-print subscription.

Get Your Copy Of Barron’s Now >>

Forbes

While Forbes may be most famous for its lists of the richest individuals in various niches, the magazine and its website are also great sources for news and commentary on social, economic, and cultural issues that affect the national and global financial outlook.

Forbes’ writers understand the value of a good story. Though packed with useful financial info, the New Jersey-based biweekly’s profiles, statistical analyses, and other features are entertaining as well as edifying.

The publication is known for its investigative journalism.

In 1998, Forbes was the first to accuse journalist Stephen Glass of making up sources, and in 2010, Forbes correctly identified the runaway Prius dominating California headlines as a hoax.

>> Will The Stock Market Crash?

Forbes is published in 15 languages, and the magazine’s writers offer investment advice on the weekly TV show “Forbes on Fox.”

The magazine’s subscribers can also elect to have targeted investment newsletters delivered regularly to their email boxes.

It has a distinctly conservative bias which frequently finds its way into the magazine’s reporting.

One thing that may irk readers is that the magazine seldom misses an opportunity to tout the luster of its brand, and this self-promotion may get tiresome for some readers.

Every year, Forbes publishes definitive rankings of the wealthiest individuals in the U.S. and the world. It also publishes various “30 under 30” lists, recognizing Millennial influencers on several continents and in a variety of industry niches.

Get Your Copy Of Forbes Today >>

Bloomberg Businessweek

If you want to understand how current events are likely to affect your portfolio, Bloomberg Business Week is the publication to read.

Bloomberg Businessweek covers that juncture where politics and economics intersect.

The New York-based weekly was founded in 2009, when the financial data company purchased the financial weekly Businessweek.

The publication focuses on in-depth explorations of the way political and social events influence business trends, market opportunities, and best practices.

In 2014, Bloomberg Businessweek won an award for excellence from the Society of American Business Editors and Writers.

Bloomberg Businessweek is heavy on verbiage and light on the types of charts, infographics, and visuals that are increasingly becoming Americans’ favorite ways to absorb financial information.

For a limited time, you can get either a digital or an all-access subscription to Bloomberg Businessweek for a low monthly rate.

Grab Your Bloomberg Businessweek Copy Here >>

Kiplinger’s

Kiplinger’s is an excellent magazine for anyone who wants to get smart about financial planning.

The publication especially shines when it comes to personal finance topics.

If you’re interested in achieving the financial security that will allow you to buy a home, to send your kids to college, and to achieve the retirement you’ve always dreamed about, this weekly publication will give you the guidelines you need.

>> Budget Smarter via the Personal Capital App

Kiplinger’s is famous for its careful research and extensive fact-checking. In addition to the magazine, the parent company also publishes daily e-newsletters on topics like taxes, credit card management, and retirement planning.

Kiplinger’s is a personal finance magazine, so if your interests are more in the realm of investment, this may not be a publication you’ll need to read regularly.

Kiplinger’s website offers an introductory deal on its print, digital, and print-plus digital first-time subscriptions.

Grab Your Copy Of Kiplinger’s Here >>

Money

If you’re new to the worlds of investing and personal finance, reading Money is a great way to increase your knowledge.

Want great tips on saving for retirement or on increasing the resale value of your home through capital improvements? You’ll find them here.

In addition to covering family finance subjects, this monthly publication offers advice on improving credit scores and avoiding financial scams.

The magazine is also known for its annual lists of “America’s Best Places to Live” and “The Best Mutual Funds.”

Money seems to be written for people with more-or-less conventional lifestyles. If you’re happily single, self-employed, or have no interest in owning a home in the suburbs, you may find very little of relevance when you peruse the magazine’s articles.

Grab Your Copy of Money Magazine Now >>

Inc.

Anyone who owns a small business and who dreams of scaling up that business will benefit from reading Inc. Its content focuses heavily on the interests of startup and small business owners.

The New York City-based weekly is chock-full of useful tips about how to lower your business’s operating costs, target your marketing, maintain your cash flow through tough times, and reduce your tax liability.

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The magazine frequently profiles the CEOs of successful companies who speak candidly about the challenges they incurred while starting and expanding their businesses.

Every year, Inc. publishes the Inc. 500, which is a list of the 500 fastest-growing small companies in the U.S.

Though Inc.’s business leader profiles are informative and fun to read, they don’t include a lot of hard-hitting statistics, infographics, or granular research.

Get Your Copy of Inc Now >>

Fortune

Fortune is a resource for beginners and seasoned investors who are intrigued by the inner workings of the business sphere.

These days, Fortune may be best known for its lists of the top 500 corporations, 1000 business movers and shakers, and best workplaces.

However, the New York City-based triweekly also publishes extremely well-researched and entertainingly-written articles about practically every aspect of the business world.

Fortune often runs theme issues such as guides to basic investment or up-close looks at a particular industry sector or niche.

The magazine is also known for its profiles of business leaders and for looks at the ways that particular companies have grown and evolved as they’ve struggled to stay relevant to changing market trends.

Fortune has gone through several owners in recent years, and those changes seem to have diluted the brand.

Though the magazine publishes many good articles that are worth reading, some readers feel as though it’s no longer delivering a consistent message.

On the magazine’s website, you can purchase a seven-issue subscription to Fortune for a low monthly and annual rate >>

Best Financial Magazines To Read:
The Bottom Line

Any one of these publications can help you stay on top of changing trends so that you can have a better idea of where to invest, and you can trust them to be reliable and helpful authorities on the market.

Consider taking advantage of their subscription discounts to sweeten the deal and get the information you need.

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