An ETF, which stands for Exchange Traded Fund, is an investment fund that controls large amounts of investments in a specific field, industry, or commodity. Though an ETF is industry or commodity specific, it is highly diverse, with respect to companies inside the industry. For example, if you wanted to invest in oil, but not a single company, you could choose to invest in an ETF which owns stocks in numerous oil companies. ETFs have no minimum investment, trade like stocks on the market, and are considerably cheaper to maintain than mutual funds.
While each type of ETF pays differently, the primary method of them paying out is based on dividends. Stock ETFs pay from Dividends, split between all holders of the fund minus the fund managers commission, as well as from increases in the stocks price. Real estate ETFs pay from profit generated from properties owned by the fund. Commodity ETF dividends generally go into buying more of the commodity, follow the market value closely, and as such, they are often traded instead of paying out to investors. Many ETFs are considered bonds and will pay back the initial investment upon maturation.
While some ETFs use in-kind trades instead of sales, as an index ETF, an actively managed ETF may not. If an ETF has capital gains, they must distribute the profits to fund holders, and this can incur taxation costs. Some countries don’t allow in-kind trades, and some ETFs use derivatives, meaning there will be Capital Gains, and thus taxation. Since ETFs are tradeable as stocks, you may try regularly trading them, and the trading costs may eliminate the ETF’s low fee benefit. Furthermore, ETFs are susceptible to market, business, and political risks.
With Nasdaq poised to allow Bitcoin Futures in the coming days, Bitcoin has skyrocketed to over 16.5k USD, its highest ever rate, and it is expected to rise. While no Bitcoin ETF is currently available in the United States, in Sweden, their Bitcoin ETF is larger than close to 80% of American ETFs. When they are launched in America, they are expected to not only gain capital quickly but begin the process of stabilising the Bitcoin value. While this may cause it to crash from its current rates, the lack of volatility will help make Bitcoins and Bitcoin ETF investments more secure in the future.
Exchange Traded Funds may be suitable for those who wish to track an entire market or industry, since they are diversely spread, however, they are not without their risks. Though the yearly payout offered by some ETFs may be ideal for particular investors, it may be averse to others. Many commodity ETFs aren’t secured, meaning that they are not covered by insurance, and you take any losses directly. However, in developing fields, like artificial intelligence, or Bitcoin, ETFs can offer a low risk, high return, investment for savvy investors, while also helping the market stabilise. Like any investment, investors should weigh the pro’s and cons, before committing, and never make a hasty decision.
There have been dozens of theories and guidelines on how business owners or entrepreneurs should and should not spend money. Really the main idea is to always spend your money wisely, always see the bigger picture when spending, and know its value.
Typically these days spending too much money is not the major problem but spending your money on the wrong things or at the wrong time, are avenues where the mistakes could be made. Below points that should not be miscalculated.
Making realistic budgets around your income and needs is the first step in keeping the balance. Identifying your needs and trying to save as much of the profits as possible for the growth of the business, keeping your needs in hind sight.
As an entrepreneur you always have a product that is for sale, be it goods or services. It is best to put in more resources in developing a product, and less on anything else. Once the product is sellable, it will be only a matter of time everything falls in place.
Once the business is running well, and there is eminent growth ahead. There might be a need to be ahead in other to maximize growth, and not letting the opportunity pass by, which would then lead to spending too much too late. It could be necessary to spend money on increasing the sales of a product and also on marketing it, or spending more money in creating the systems and architecture to accommodate the future growth. All to stay ahead of the growth.
Most business owners are naturally frugal, but many still fall for a picture-esque office space. It could be very tempting, being able to: attracting employees, impressing clients as well as the press. But the truth is often times the cost is not worth it. What could be even worse is having an office that says “Accomplished”, where as you are not. This has a world of problems on its own.
You can always get help from advisers and the board members. The board members are not only there to tell you what to do. Know how you can leverage their network, and do not shy away from asking for introductions and advice from them.
It is not ideal for any entrepreneur not to invest their income or profits. Hence, it is a good idea not to place all your investment-eggs in one basket. One should diversify their investment and income portfolio. It gives a wide range of future benefits and during downtime you could find repose in other places you might have invested.
Time is a valuable as money. So therefore capital should be time and money. So it is crucial for business owners and entrepreneurs to manage broth properly. This also called “putting the work in”. Being able to do as much work that could be done in a day, every day of the year. This is also a habit that could rob off on some of your employees.