How To Keep & Grow Your Money #12

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In this letter, we analyze the Utilities Select Sector SPDR Fund (XLU).

Ticker: XLU | Price: $81.44 | Market Cap: $18.99B | Average 10-Year Annual Return: 9.4% (as of October 2024).

What is it (short):

The Utilities Select Sector SPDR Fund (XLU) is an ETF that gives investors exposure to companies in the utilities sector, such as electricity, natural gas, and water services. It includes large, stable firms like NextEra Energy and Duke Energy.

What is it (long):

This ETF tracks the performance of the Utilities Select Sector Index, which includes a collection of utility companies from the S&P 500. Utilities are generally known for providing essential services, making this ETF a popular option for investors seeking steady, long-term returns with low volatility. XLU tends to perform well during periods of economic uncertainty due to the essential nature of the services provided by the companies it holds.

Our thoughts:

The Utilities Select Sector SPDR Fund is a solid choice for conservative investors looking for stability and income through dividends. While its growth potential may be lower compared to riskier sectors, it provides diversification and can serve as a defensive asset, especially during market downturns. Given the reliable nature of utility companies, it can be a good complement to a broader investment portfolio.

Do your own research and if you would like to take our free course to learn how to invest into ETFs and Index Funds at Index Institution™ go here.

Some of the best destinations in Europe to retire for taxes?

Here I want to highlight four European countries offering tax advantages for expat retirees, making them attractive options for those looking to stretch their retirement savings while enjoying a nice lifestyle:

1. Portugal offers the Non-Habitual Resident (NHR) regime, which provides significant tax breaks, including a flat 10% tax on foreign pension income. This country is a favorite for its sunny weather, beautiful beaches, and affordable living costs in regions like the Algarve​

2. Italy has introduced a 7% flat tax on foreign income for retirees who move to certain southern regions, providing an opportunity to enjoy Italy’s rich culture and relaxed lifestyle at a lower tax burden​

3. Greece offers a 7% flat tax for foreign retirees moving to the country. Greece's stunning landscapes, Mediterranean climate, and low living costs make it an appealing destination​

4. Malta: provides favorable tax rates for foreign retirees under its Residency Program. The cost of living in Malta is generally higher than in other southern European countries, but the tax benefits and the island's charm make it worth considering​

These countries have structured their tax policies to attract foreign retirees, making it easier to live comfortably on retirement income without the burden of high local taxes.

For those considering retiring abroad, these nations give both financial and lifestyle advantages.

If you would like to explore legally paying less taxes and maximizing your freedom check out Global Optimizer™ or click here.

Financial concept to learn in this edition: Volatility

What Is Volatility?

Volatility refers to how much the price of a security (like a stock) fluctuates over time. If an asset's price moves up and down a lot in a short period, it is considered more volatile. Conversely, if the price stays relatively stable, the asset has low volatility. Volatility is commonly used as a measure of risk in the investing world.

Key Points:

• Higher volatility means more unpredictable and larger price swings, which indicates higher risk.

• Lower volatility suggests steadier prices, making the asset more predictable and usually less risky.

• Investors often watch volatility because it can signal potential gains or losses in an investment.

Measuring Volatility:

• Historical volatility looks at past price changes to show how much the price of an asset has varied over time.

• Implied volatility predicts how much the market thinks the price will fluctuate in the future.

Application in Investing: Volatility plays a big role in the pricing of options contracts (financial products that give the buyer the right to buy or sell an asset at a set price in the future). When volatility is high, options become more expensive because there's a greater chance for price movements, leading to potentially higher profits or losses.

In summary, understanding volatility helps investors gauge the risk level of an investment, with higher volatility indicating more risk and potential reward, while lower volatility suggests a more stable investment.

To learn more about Volatility read more on Investopedia here or learn more on how to invest here.