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Investments

Presented by MidAmerica Financial Resources. You can reach them at 618.548.4777 or greg.malan@lpl.com or on the web at www.mid-america.us

 

Mutual Funds vs. ETFs

Mutual Funds vs. ETFs
Similarities and differences.

Provided by MidAmerica Financial Resources

 

The growth of exchange-traded funds (ETFs) has been explosive. In 1998, there were only 29; at the end of 2018, there were over 1,900 investing in a wide range of stocks, bonds, and other securities and instruments.1

 

At first glance, ETFs have a lot in common with mutual funds. Both offer shares in a pool of investments designed to pursue a specific investment goal. And both manage costs and may offer some degree of diversification, depending on their investment objective. Diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.

 

Structural Differences. Mutual funds accumulate a pool of money that is then invested to pursue the objectives stated in the fund’s prospectus. The resulting collection of stocks, bonds, and other securities is professionally managed by an investment company.

 

For EFTs, an investment company creates a new company, into which it moves a block of shares to pursue a specific investment objective. For example, an investment company may move a block of shares to track performance of the Standard & Poor’s 500. The investment company then sells shares in this new company.

 

ETFs trade like stocks and are listed on stock exchanges and sold by broker-dealers.

 

Mutual funds, on the other hand, are not listed on stock exchanges and can be bought and sold through a variety of other channels — including financial advisors, brokerage firms, and directly from fund companies.

 

The price of an ETF is determined continuously throughout the day. It fluctuates based on investor interest in the security, and may trade at a “premium” or a “discount” to the underlying assets that comprise the ETF. Most mutual funds are priced at the end of the trading day. So, no matter when you buy a share during the trading day, its price will be determined when most U.S. stock exchanges typically close.

 

Tax Differences. There are tax differences as well. Since most mutual funds are allowed to trade securities, the fund may incur a capital gain or loss and generate dividend or interest income for its shareholders. With an ETF, you may only owe taxes on any capital gains when you sell the security. (An ETF also may distribute a capital gain if the makeup of the underlying assets is adjusted.)

 

Determining whether an ETF or a mutual fund is appropriate for your portfolio may require an in-depth knowledge of how both investments operate. In fact, you may benefit from including both investment tools in your portfolio.

 

Amounts in mutual funds and ETFs are subject to fluctuation in value and market risk. Shares, when redeemed, may be worth more or less than their original cost.

 

At a glance. Mutual funds and exchange-traded funds have similarities — and many differences. The lists below give a quick rundown.

 

Mutual funds:

* Bought and sold through many channels

* Not listed on stock exchanges.

* Priced to the end of the trading day.

* Capital gains within the funds distributed to shareholders.

* Dividends may be automatically reinvested.

 

Exchange-traded funds:

* Bought and sold through broker-dealers.

* Listed on stock exchanges.

* Price continuously determined during the trading day.

* Capital gains within the ETF reinvested, and the ETF may distribute a capital gain if the make-up of the underlying assets is adjusted.

* Dividends generally distributed to brokerage account.

MidAmerica Financial Resources may be reached at 618.548.4777 or greg.malan@lpl.com www.mid-america.us

 

Mutual funds and exchange-traded funds are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

The payment of dividends is not guaranteed.  Companies may reduce or eliminate the payment of dividends at any given time.

The Standard & Poor’s 500 Composite Index is an unmanaged index that is generally considered representative of the U.S. stock market. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index.

Securities and advisory services offered through LPL Financial, a Registered Investment Adviser, Member FINRA/SIPC.
MidAmerica Financial Resources and Malan Financial Group are separate and unrelated companies to LPL.

Citations.

1 – ici.org/pdf/2018_factbook.pdf [2018]

Saving Your Elderly Parents from Financial Fraud

Saving Your Elderly Parents from Financial Fraud
Talk about precautions with the seniors in your family.

Provided by MidAmerica Financial Resources

 

Elders are financially defrauded in this country on a daily basis. Only a few of these crimes are made public. In fact, the National Adult Protective Services Association (NAPSA) estimates that only 1 in 44 cases of elder financial abuse are reported. NAPSA also reports that one in nine seniors had been financially “abused, neglected or exploited” within the past year.1

  

Friends, family, & caregivers perpetrate much of this financial abuse. They commit 90% of it, according to NAPSA. Major fraud damage might even result in a decline in an elder’s physical and mental health: victims of elder financial exploitation are four times more likely to go into a nursing home than their peers, and nearly 10% of the victims end up relying on Medicaid.1

 

Frauds range from big scams to little schemes. You may already know about the common ones: the grandparent scam (“Grandpa, I’m in jail in _____ and I need $___ to make bail”), the utility company scam (one criminal keeps the elder busy in the yard as the other burglarizes their home), the lottery scam (a huge prize awaits, and the elder need only pay a few thousand upfront to take care of associated taxes). Others are subtler: home health aides severely overcharging an elder for their services; relatives or caregivers using a financial power of attorney to draw down an elder’s bank or investment accounts.

  

Talking about all this may help to prevent it. Sometimes, a good way to introduce the topic is by referring to what happened to someone else – a story coming up on the news or in the paper, or an article online, or maybe even a friend’s experience. Part of this conversation will be about the elder in your life taking you on as a sort of second line of defense, someone to help them watch over things. They may be resistant, at first, but advise them that this is a precaution not necessarily for today, but for a time when they may not be able to make decisions. From there, have a conversation about setting up powers of attorney and other legacy paperwork (will, living will, health care directives) in coordination with legal and financial professionals.2

 

Make it clear that you are there to back up the elders in your life and look after their wellbeing. Maintain good communication with these professionals – not just the aforementioned legal and financial professionals, but caregivers, health care professionals, and anyone else who works with them on a regular basis. Maintaining these conversations with seniors and the people who work with them, asking questions, and being present can go a long way to deterring financial fraud.2

 

Have the conversation; have a look at Mom or Dad’s financial situation. It’s a good idea to protect your family members from such a growing problem. The Senate Special Committee on Aging says that American elders lose $2.9 billion in fraud per year. That’s spread among 78 million Americans over the age of 65. One in five of that population has some sort of cognitive issue, a number that rises to more than half when narrowed to people 85 and older. Taking steps now might mean curtailing or avoiding bigger problems down the road for the seniors in your life, so it’s definitely worth having those conversations today.3

MidAmerica Financial Resources may be reached at 618.548.4777 or greg.malan@lpl.com www.mid-america.us

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities and advisory services offered through LPL Financial, a Registered Investment Adviser, Member FINRA/SIPC.
MidAmerica Financial Resources and Malan Financial Group are separate and unrelated companies to LPL.

Citations.

1 – napsa-now.org/policy-advocacy/exploitation/ [3/20/19]

2 – forbes.com/sites/teresaghilarducci/2018/09/13/how-to-protect-yourself-as-much-as-possible-from-financial-abuse [9/13/18]

3 – cnbc.com/2019/02/24/advisors-take-extra-steps-to-protect-elder-clients-from-fraud-or-abuse.html [2/24/19]

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