FINANCIAL HOUSEKEEPING | Set guidelines for your investment club
Getting involved in an investment club can be fun and educational, allowing a group of friends – or strangers, even – to pool resources and knowledge in the hope of generating a profit.
But even in the most friendly of clubs, the underpinnings for success are rules and guidelines that will keep everyone happy if and when the profits start flowing.
That National Association of Investors Corp. – the organization to which most clubs belong – recently laid out comprehensive guidelines explaining the issues that clubs routinely encounter. You can find the article – and much more help for clubs – at the “Clubs and Chapters” section at www.betterinvesting.org, or you can get there directly by setting your Web browser to www.betterinvesting.org/articles/bits/1479/12410.
SHORT COURSE | Exchange-traded funds
An exchange-traded fund, or ETF, typically is built like an index mutual fund, but trades like a stock.
Where a traditional mutual fund can be purchased or sold only at the daily closing price, an ETF can be bought or sold moment by moment. Because it trades like a stock, it can also be purchased on margin or sold short (a way of betting against the market and profiting on a decline).
ETFs may offer some additional tax and cost benefits as well, although that is best determined on a case-by-case basis.
Financial services firms have been developing ETFs at a fast clip, with many new products dedicated to thin or esoteric slices of the market, or new and unproven indexes. It is expected that actively managed ETFs – more like a traditional, non-index mutual fund – will also be available in the next year or two.
