An exchange-traded fund (or ETF) is a fund that owns a basket of financial instruments (e.g., stocks or commodities) that reflect the composition of a market index (e.g., the Dow Jones Industrial Average). Somebody looking to buy ETF shares would do so the same way he or she would buy stocks, that is, on a stock exchange, with the help of a broker who charges a nominal fee.
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An Exchange-Traded Fund (ETF) is…
Monday, March 8th, 2010Outsourcing is…
Monday, March 8th, 2010Outsourcing is the practice of using third-party service providers. Companies typically outsource in order to reduce costs or enhance their product, as other companies or service providers may be more experienced or effective in that particular area of production.
Wall Street Hurt Just As Much As Everyone Else
Wednesday, March 3rd, 2010In terms of job creation for the mid-level managing types, yes, they too are hurting.
- While the market has somewhat recovered and stabilized in the past year or so, and big banks have begun to bounce back, former mid-level executives of banks and financial firms have had a hard time finding work.
- Many banks and finance companies fear that the stock market boon that helped catalyze the recovery in 2009 may not last, and, to make matters worst, that pending trading regulations will inhibit profitability.
- It may take months for banks and financial companies to start hiring mid-level executives, but there are currently a plethora of opportunities for senior-level bankers and executives.
Facts & Figures
- Financial companies have cut nearly 80,000 securities, commodities and investment jobs in the United States since mid-2008.
- During the recession, New York’s financial services sector shed 44,200 jobs (a 6.1 percent reduction).
- All told, Goldman Sachs cut 4,800 jobs, Citigroup, 75,000, Bank of America, 45,500, JPMorgan Chase, 23,700, and Morgan Stanley, 8,600.
Best Quote
“The reality is that you get used to a certain level of compensation that is hard to match elsewhere.” – Matt Prendergast, Former Managing Director at Bear Stearns
Gold Medals – How Much Are They Really Worth?
Friday, February 26th, 2010The 2010 Winter Olympics started this past week in Vancouver, and when considering these prestigious games, one must ask oneself the question: if I were to take up curling, would winning a gold medal make up for all those years of chronic boredom and embarrassment, you know, money-wise? Well…
- Gold and silver have appreciated in value over the past ten years—a result of the current credit explosion and financial crisis—which has shaken investor confidence in currencies, making gold and silver a safer, more desirable bet.
- At the turn of the century, on the other hand, pawning off gold and silver medals would not have been as wise as it would today, since the value of both commodities was exponentially smaller then.
- 1980 was the golden year (pun intended) for hocking gold medals, but one in possession of an Olympic medal in these modern times would probably be best served by selling said medal on eBay (unless, of course, it’s a bronze).
Facts & Figures
- Gold is currently valued at $1,100 per ounce, but gold medals are primarily made of silver, with about 6 grams of gold plating on top.
- The medals handed out in Vancouver are substantially larger than medals awarded in years past—this year’s medals are about 100 millimeters in diameter, 6 millimeters thick, and weigh between 500-576 grams (a little over a pound). The medals from the last two Winter Olympics (held in Turin, Italy and Salt Lake City, UT, respectively) weighed less than 500 grams.
- Vancouver’s gold medals are worth approximately $500, while silver medals are valued at a little over half of that.
- In 1980, after adjusting for inflation, gold medals were worth around $1,000.00
- Silver medals on eBay have been known to sell for $7,000.00
The Economy Is Looking Up, But That Might Not Mean More Jobs Tomorrow
Friday, February 26th, 2010For now it seems as though the eye of the storm has passed, but we’re not out of the woods yet, especially those of us looking for jobs…
- Throughout the course of a nation’s economic history, job markets fade and expand, but this recession has thrown a wrench into this natural process of economic evolution—some of the jobs lost in this recession will never come back.
- With corners being cut and companies outsourcing work to more efficient producers, businesses have altered their business and learned new techniques and methods for doing more with less.
- Though the economy is beginning to recover and jobs are coming back, the rate of job creation has slowed considerably. That, coupled with many people joining and rejoining the workforce, means that unemployment and economic growth indicators will continue to be somewhat stagnant in the foreseeable future.
Facts & Figures
- Nearly a quarter of the 8.4 million jobs have been lost since 2007 won’t ever be coming back.
- About 133,000 jobs will be created each month of this year, but economists predict that the unemployment rate will fall only to 0.3% by year’s end.
- In order for unemployment to fall at a faster rate, economists say that over 200,000 jobs will need to be created each month.
Best Quote
“There’s a certain Darwinian angle to recession. Firms that survive are stronger for having the experience. They tighten down and look for ways to cut waste.” -–Sean Snaith, Economist at the University of Central Florida.
A Corporation is…
Tuesday, February 23rd, 2010A corporation is a business organization that is chartered by a state and given legal status as a single entity separate from its owners. This basically means that a corporation can open a bank account, do business, and own property all under its own name.
Rule of 72?
Tuesday, February 23rd, 2010The Rule of 72 is a simplified method for calculating approximately how long it will take for an investment to double. In order for the rule to work, you have to know the rate of return on the investment, the rate of return has to stay constant, and you can’t add or take away any money from the investment.
The rule is simple: just divide 72 by whatever your rate of return is and you’ll get the number of years it’ll take the investment to double. For example, if your rate of return is 3%, you divide 72 by 3 and get 24. So your investment will double in about 24 years, assuming the rate of return doesn’t change and you leave the investment alone until then.
Will The EU Save One Of Its Own?
Wednesday, February 10th, 2010The European Union hasn’t been faced with the possibility of default by one of its member countries before. The world is watching as the relatively new eurozone figures out how to deal with the bad times as well as the good.
- Greece (a member of the European Union) may not be able to meet all of its debt obligations, so the European Central Bank is meeting to consider what to do to protect the stability and credibility of the euro.
- While there is no official bailout plan in place, certain countries within the eurozone (the group of EU countries that have adopted the euro as their currency) are piecing together aid plans that would transfer some of Greece’s debt burden to taxpayers in their own nations.
- The EU’s rules require eurozone countries to keep their debt below a certain level, which Greece has repeatedly failed to meet. But the rules also state that the European Central Bank and central national banks cannot bail out countries, so Greek recovery may be left up to the will of individual eurozone countries.
Facts & Figures
- The EU’s limit on debt ratios for eurozone nations is 3% of GDP.
- Greece is expected to show a 13% budget deficit this year.
- Greece owes a total of $303 billion to foreign banks.
Best Quote
“As long as it is very clear that any support only comes with very, very stringent conditions attached, it would not affect the moral-hazard question. It is a choice between two evils.” – Fabian Zuleeg, Chief Economist at the European Policy Centre
What’s the difference between stocks and bonds?
Wednesday, January 13th, 2010When you buy stock, you own equity – that is, you are actually buying partial ownership of a company in the form of shares. The percentage of the company’s total shares that you own is how much of the company you own – for example, if the company has 100 shares and you buy 50 of them, you own 50% of the company. This means that you share the company’s ups and downs: if the company does well, your stock becomes worth more than what you paid for it, and you make a profit, but if the company does badly, its stock decreases in value, and you suffer a loss. Equity holders are last in line among creditors if the company’s value goes to zero. This is why the stock market always has a certain amount of risk attached: you can never know for sure what’s going to happen to your stock.
With bonds, on the other hand, you virtually always know exactly what you’re going to get. Bonds are not shares, so they don’t give you any ownership. Rather, when an institution wants to raise money, it sells bonds, which are like IOUs; they’re basically promises to pay your money back later, with interest in the meantime. The interest rates are usually fixed, so you can calculate your profits. For example, a company could sell you a bond for $1,000, and under the terms of the agreement, you’d get 5% of that $1,000 every year for the next ten years, and then your original $1,000 back at the end of that decade. Of course, this means you’re only going to make a profit of $500 over ten years, but you are guaranteed that money. If the company goes bankrupt, bond holders are usually first in line to be paid among those owed money. So people who prefer bonds like the security they offer, and people who prefer stocks like their potential to make their owners an incredible profit in the future.
One final note – there are three main types of bond: government, municipal, and corporate. Government bonds are sold by the government, municipal bonds by cities, and corporate bonds by companies. Government bonds are the most secure, followed by municipal, then corporate (because a company is much more likely to go bankrupt than a government is). However, because corporate bonds are the most risky, they also offer the highest rates of interest.
What is the routing number on your checks?
Monday, January 11th, 2010There are a ton of numbers and information on a check that can make it confusing to use or even to understand. One of the most important things to know about your check is the routing number. If you are looking at a check, the routing number is the 9-digit code in the bottom left corner.
The routing number is important because it is used to set up direct deposits and other electronic transfers into your checking account. It identifies the banking institution where your money is held, as well as your specific account. This can be getting a paycheck directly deposited into your account (as opposed to having to deposit it yourself… manually… at a bank…) or having someone (like your parents) transfer a monthly allowance. In essence, it is the number that makes sure the money gets to the right place!