The Complete Guide to Investing in Exchange Traded Funds: How to Earn High Rates of Return - Safely

Overview

The growth of Exchange Traded Funds (ETFs) in recent years alongside an unprecedented access to investment resources by any individual with a computer has led to a major boost in the market for many of these funds. According to recently released numbers reported in the Chicago Tribune, there are more than $608 billion in assets within ETFs, with almost $400 billion of that in domestically traded assets an increase of almost 40 percent in one year. This book will provide for you a complete guide to both ...

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Overview

The growth of Exchange Traded Funds (ETFs) in recent years alongside an unprecedented access to investment resources by any individual with a computer has led to a major boost in the market for many of these funds. According to recently released numbers reported in the Chicago Tribune, there are more than $608 billion in assets within ETFs, with almost $400 billion of that in domestically traded assets an increase of almost 40 percent in one year. This book will provide for you a complete guide to both understanding how to invest in Exchange Traded Funds and to earn the highest possible rates of return without risking your financial future.

You will learn why the ETF has become the next major addition to essentially every casual trader s portfolio, offering a viable alternative to high-fee mutual funds and Wall Street infused stock trading. You will discover the multiple ways in which you can build the stock equity side of your portfolio, through large and small growth, sector investing, international investing, and with specialized stock ETFs.

In addition to standard forms of ETFs, you will learn the various forms of Bond ETFs, Real Estate Investment Trading ETFs, and Commodity ETFs for gold, silver, and other precious metals. Also, you will discover why you should include a mixture of non-ETF investments in your portfolio to remain diversified at all times. A special section detailing a sample ETF portfolio and how yours should be organized will help you understand the format and building structure for ETF investments. The keys to buying and holding successfully, a stark change from normal investment strategies, will help you learn what ETFs do differently, while the listing of rule exceptions make it easy to recognize when you will have even more options than you originally expected.

Through countless hours of interviews with financial professionals and newly independent traders like yourself, you will learn exactly how ETFs are being used today to revolutionize the world of personal finance, including retirement funding, education savings, and portfolio diversification. A list of commonly asked questions will ensure that every possible question you currently have is taken care of and the top ten mistakes that every new investor makes when starting with ETFs will help keep you from increasing your risk. You will be shown the entire corral of trading options at your disposal, both online and offline, and how Internet trading can help to increase your returns even further. The vital task of risk management is touched on repeatedly within each chapter, while trading profiles help you understand which investments have been most successful in recent years. For anyone getting ready to start trading in the highly lucrative ETF market, this book is a must have tool.

Atlantic Publishing is a small, independent publishing company based in Ocala, Florida. Founded over twenty years ago in the company president’s garage, Atlantic Publishing has grown to become a renowned resource for non-fiction books. Today, over 450 titles are in print covering subjects such as small business, healthy living, management, finance, careers, and real estate. Atlantic Publishing prides itself on producing award winning, high-quality manuals that give readers up-to-date, pertinent information, real-world examples, and case studies with expert advice.  Every book has resources, contact information, and web sites of the products or companies discussed.

This Atlantic Publishing eBook was professionally written, edited, fact checked, proofed and designed. The print version of this book is 288 pages and you receive exactly the same content. Over the years our books have won dozens of book awards for content, cover design and interior design including the prestigious Benjamin Franklin award for excellence in publishing. We are proud of the high quality of our books and hope you will enjoy this eBook version.

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Product Details

  • ISBN-13: 9781601382900
  • Publisher: Atlantic Publishing Group Inc.
  • Publication date: 3/5/2009
  • Pages: 332
  • Product dimensions: 5.90 (w) x 8.90 (h) x 3.00 (d)

Table of Contents

Foreword 9

Introduction 15

Section 1 Understanding ETFs 16

Chapter 1 What Is an Exchange Traded Fund? 17

Chapter 2 History of ETFs 19

Mutual Funds 19

Investment Act of 1940 20

Black Monday, October 19, 1987 21

First U.S. ETF 21

Chapter 3 Creation of an ETF 25

Defining Objectives and Licensing an Index 25

Authorized Participants 26

Fund Management 27

Regulating the Price: Arbitrage 29

Chapter 4 Anatomy of an ETF 31

UITs: SPDRs S&P 500 Trust 31

Regulated Investment Companies: RICs 32

Vanguard ETFs (VIPERs) 33

Exchange Traded Notes (ETNs) 34

HOLDRs: Exchange Traded Grantor Trusts 35

Investment Trusts: Street TRACKS Gold Trust 36

Chapter 5 What Are the Advantages of ETFs? 39

Diversification 39

Transparency 40

Lower Fees and Commissions 41

Tax Efficiency 42

Ease of Purchase 42

Investor Strategies 43

Chapter 6 ETFs and Mutual Funds 45

Management 45

ETFs Trade on the Stock Exchanges 46

Tax Liability 46

Calculation of Net Asset Value (NAV) 46

Settlement Period 47

Trading Symbols 47

Disadvantages of Investing in Mutual Funds 48

Are ETFs for Me? 48

Chapter 7 The Indexes 53

Difference Between an Index and a Fund 53

Two Different Animals: Market Indexes and Custom Indexes 54

Weighting 56

What Makes a Good Index? 59

The Index Providers 61

Chapter 8 The ETF Providers 69

Chapter 9 The ETFs 73

Broad U.S. Equity and Style ETFs 74

Industry-Sector ETFs 76

Industry-Sector ETFs 79

Nature and Risk of Bonds 82

Fixed-Income Indexes 83

Bond ETFs 88

Adding Bonds to Your Portfolio with ETFs 88

Treasury Bond ETFs 89

Municipal Bond ETFs 90

Corporate Bonds 90

Composite Fixed-Income ETFs91

Preferred Stock ETFs 92

TIPS ETFs 92

Themed ETFs 93

Actively Managed ETFs 97

Commodity and Currency ETFs 103

Real Estate Investment Trusts (REITs) 114

REIT ETFs 115

Chapter 10 International Investing Global Equity ETFs 117

Why Should You Include International ETFs in Your Portfolio? 118

Disadvantages of International ETFs 119

What You Should Know About International ETFs 121

Adding International ETFs to Your Portfolio 125

Chapter 11 Doing the Research 131

Where to Look for Information 132

Understanding the Data 133

Section 2 Investing with ETFs 138

Chapter 12 Choosing Your Investment Strategy 139

What Type of Investor Are You? 139

Buy and Hold: The Most Successful Investment Strategy 141

Chapter 13 Building Your Buy-and-Hold Portfolio 145

Modern Portfolio Theory 146

Managing Risk 147

Determining Your Asset Allocations 153

Protecting Your Portfolio 163

Chapter 14 Getting Started: Choosing a Brokerage 165

Adding ETFs to an Existing Portfolio 168

Chapter 15 Rebalancing Your Portfolio 171

Chapter 16 Investing for Retirement 175

Taking Responsibility 175

Tax-Free and Tax-Deferred Retirement Savings Accounts 176

Taxable and Tax-Advantaged Accounts 179

After Retirement 180

Life-cycle Portfolios 183

Chapter 17 Investing for Education with ETFs 189

How Much Will an Education Cost? 189

What Are Your Options? 192

Taxable Accounts 198

Chapter 18 Active Investing with ETFs 201

Buy and Sell Orders 202

Selling Short 205

Position Management 207

Capital Leverage 208

ETF Futures Contracts 209

Forecasting the Markets 214

Sector Rotation 225

Options 226

Pairs Trading and Market-Neutral Strategies 233

Chapter 19 Special Uses of ETFs 235

Fleshing Out a Portfolio 235

Hedging Against Possible Losses 235

Currency Hedging 237

Tax-Loss Harvesting 237

Chapter 20 What Does the Future Hold for ETFs? 239

Frequently Asked Questions 241

Top Ten Mistakes Made by Beginners 245

Sample Portfolios 249

Appendix A Exchange Traded Funds 253

Appendix B Where to Find Information 313

Appendix C Glossary 319

Bibliography 331

Dedication 333

Author Biography 334

Index 335

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Sort by: Showing all of 7 Customer Reviews
  • Posted January 8, 2010

    Understanding IRA Investments

    For those who understand little about investment portfolios, the numerous options available can be daunting. This book seeks to simplify and explain the differences between standard Individual Retirement Accounts and the more flexible Roth IRA's.

    The Individual Retirement Account has become more of a focus here in the United States as the average worker often changes jobs and companies several times throughout their working career. Gone is the day of working 45 years for one company and resting on a pension plan throughout retirement. Explaining everything from the frequent changes to the laws governing privately funded IRAs to the definitions and terminology used, this book sorts through the details so that an educated decision can be made regarding these issues.

    Most helpful are appendixes at the back that include a glossary of terms and an explanation of acronyms used in the financial industry. IRAs are formed on the belief that long term investments offer the greatest stability whether the stock market rises or falls. After reading this book, the reader will have the awareness to make the best choices with the greatest financial reward for his or her family.

    Was this review helpful? Yes  No   Report this review
  • Posted August 3, 2009

    more from this reviewer

    an Exchange Traded Fund bible

    Exchange Traded Funds or ETFs can be an extremely complicated subject to just dive into. Similar to splashing within an unmarked pool, you never know when you'll hit the bottom. will act as your water wings until you're ready to become that Olympic diver, remember this is the same pool that Donald Trump swims in(ugh).

    Your ultimate goal within the stock market is to invest the lowest while getting this highest return, but with the unpredictability and diversity of the global market, this is becoming increasingly harder. There are literally thousands of guides in this universe that are geared towards this enormous branch that hangs off the tree of investment, but I find this particular guide to be the most efficient. 338 pages of pure information in its most complete form that covers everything from how managing ETFs to the creation of ETFs. Martha Maeda is a well spoken economist that can be your ticket to a wealthier you. 5 stars.

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  • Posted July 9, 2009

    more from this reviewer

    I Also Recommend:

    A Great Introduction to ETFs and Why They Belong in Your Portfolio

    Exchange traded funds ("ETFs") now enjoy increasing popularity in investment circles. If you are not a sophisticated investor, however, you may be intimidated by the notion of investing in an ETF. If so, Martha Maeda's "The Complete Guide to Investing in Exchange Traded Funds: How to Enjoy High Rates of Return - Safely" is an excellent resource for anyone who wants to fully understand how and why ETFs should fit into a personal investment strategy.

    "Investing in Exchange Traded Funds" considers the history of ETFs, from their origin in Amsterdam in the late 18th century to the present, and offers a comprehensive examination of the recent laws and events that have thrust ETFs into public consciousness in the past decade. Ms. Maeda does an excellent job of abstracting the very complex history of the ETF and the even more complex economic theories underlying ETFs to present a cohesive and relatively understandable guide for investors who want to pursue the security and growth that ETFs offer.

    Although Ms. Maeda's book makes ETFs much more accessible to casual investors, "Investing in Exchange Traded Funds" is not ideal for novice market participants who do not have a basic understanding of fundamental investment concepts. Accordingly, Investors who are taking their first steps into the stock market should consider a more basic examination of investment markets, such as "The Complete Guide to Online Investing: Everything You Need to Know Explained Simply" by Michelle Hooper before they jump into "Investing Exchange Traded Funds."

    Anyone who is dissatisfied with their investment portfolio, or who wants to experience better returns on their current investments, should be aware of ETFs and how they might contribute to the growth of their portfolio. Martha Maeda's "The Complete Guide to Investing in Exchange Traded Funds: How to Enjoy High Rates of Return - Safely" offers an excellent guide for those investors who are ready to consider ETFs. After reading "Investing in Exchange Traded Funds," even investors who are new to the concept of ETFs will be well prepared to discuss ETFs with their investment advisors, and to make better informed decisions about their investments.

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  • Posted June 16, 2009

    more from this reviewer

    Invest with Confidence!

    Have you ever wished you were brave enough to start investing your money in something that could earn you real returns? If you're looking for a safer alternative to playing risky stock market games with your life savings, pick up a copy of "The Complete Guide to Investing in Exchange Traded Funds." Exchange traded funds (ETFs) are investment vehicles that make it possible for one person to own a share of a range of stocks, instead of investing in just a few individual companies. Since these modifications of the mutual fund are cheap to buy and own, have instant liquidity, and delay taxes, ETFs can be good vehicles for investing for retirement, investing for education, fleshing out a portfolio, or tax loss harvesting. According to the author, ETFs have grown more than 20 percent per year for over 15 years.

    In simple and easy-to-understand language, "The Complete Guide to Investing in Exchange Traded Funds" explains what you need to know to begin investing with confidence. Some of the historical analysis at the beginning is a bit dry, but the vast majority of the information in this book will be helpful for those who are new to the world of investing. Pay close attention in particular to Chapter 20, with its list of frequently asked questions, common beginner investment mistakes, and sample portfolios.

    In case you're thinking the book this book is nothing but an advertisement for ETFs, the author does spend a fair amount of time describing situations in which this investment vehicle is not the best choice. And, while it includes a list of ETF providers, the book does not appear to endorse one particular fund over the other. So, while this shouldn't be your sole source of financial information, it appears to be a fairly objective analysis of the advantages and disadvantages of investing in ETFs.

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  • Anonymous

    Posted May 14, 2009

    Interesting Introduction to Different Investment Types

    Maeda's guide to exchange traded funds presents a compelling argument for ETFs as an alternative to other corporate investment strategies like mutual funds. The work reads like a chapter to chapter reference manual detailing the history of ETFs, their advantages, composition, and how individual funds line up with the market indexes they track. Though the author is a strong proponent of exchange traded funds, she maintains a level of thoroughness and impartiality that makes her work a valuable resource for evaluating ETFs as an investment strategy.
    The book contains a wealth of information relevant to investors already familiar with corporate investment strategies. The opening chapters detail exactly what an ETF is and how they can often provide a more attractive investment than mutual funds due to lower costs and less room for human error. In fact, much of the first few chapters is dedicated to how ETFs provide a a more satisfying investment because they follow market norms more accurately than other types of mutual funds. Maeda goes to great lengths to point out the major advantages that would attract the interest of seasoned investors, namely lower tax liabilities, lower costs for trading shares, and much higher transparency than more traditional mutual funds can offer. Her analysis is both thorough and compelling enough to assuage the reservations of many discerning readers who will likely find ETFs a beneficial addition to their portfolios.
    With the level of detail provided by Maeda's work, it would be understandable to assume that it would be too inaccessible for beginning investors simply looking to explore their options. Thankfully, this is not the case. Each chapter is laid out simply and easily so that a reader can review what information is relevant to them and move on. The author also provides comprehensive charts of the most critical information for easy reference. In fact it was often these charts that helped solidify the more extensive explanations contained earlier in the chapters, and would likely provide an excellent quick reference for novices and advanced investors alike. These provisions make The Complete Guide to Exchange Traded Funds a wonderful book to pick up and grow with as your investment strategy becomes more complex.

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  • Posted April 11, 2009

    Great for All Investors

    The Complete Guide to Investing in Exchange Trade Funds: How to Earn High Rates of Return- Safely by Martha Maeda is a comprehensive guide for anyone looking to use Exchange Traded Funds (ETFs) for investing.
    The book covers a wide range of topics on the subject. It first delves into the history of Exchange Traded Funds with a review of the Investment act of 1940, Black Monday, the first U.S. ETF and the creation of ETFs through defining objectives and licensing an index, authorizing participants, fund management and regulating price.
    As soon as Maeda has you on a firm foundation of knowledge, she then introduces how to use all of this knowledge in real-life investing, such as how to choose a brokerage, build a buy-and-hold portfolio and how to choose a wise investment strategy for present and retirement savings. The Complete Guide to Investing in Exchange Trade Funds also covers why you should include international ETFs in a portfolio as well as its advantages and disadvantages.
    The Top Ten Mistakes Made by Beginners is a particularly helpful part of the book because those new to Exchange Traded Funds can learn to avoid common mistakes by others. Its like having a good friend guide you through the process.
    No matter if you are just beginning to use EFTS, or you just need some good tips for the investing you are already doing, The Complete Guide to Investing in Exchange Trade Funds: How to Earn High Rates of Return- Safely is a must read.

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  • Posted April 10, 2009

    more from this reviewer

    Investing made easy

    When I started reading this book, I knew nothing about investing at all. I'm not very good with economics and money issues, so I was a bit leery. But right off the bat, I knew that this was a book that even I could understand. Using plain language and a straight forward manner, Maeda explains the basics without making the reader feel dumb.

    Investing in Exchange Funds explains what an exchanged invested fund (ETF) is and why it should be an important part of anyone's investment portfolio. The author doesn't just explain what ETFs are, she goes into their history to give the reader an idea of where they started in comparison to where they are now.

    Once she explains what ETFS are, Maeda then has sections meant to help the reader decide what type of investor they are in order to decide what and how they should invest. A through book, I never once felt overwhelmed with information.

    After reading the book, I feel that I have a stronger knowledge base when it comes to exchange invested funds.

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