How To Keep & Grow Your Money #24

AI-ighty Potential

Dubbed the "the rocket fuel of AI" by Wired, this groundbreaking innovation has sparked fervent excitement across Wall Street. And with projections soaring to a potential market cap of $80 trillion – equivalent to 41 Amazons – the magnitude of its impact cannot be overstated.

But here's the real deal: nestled within this tech revolution lies an opportunity for sharp investors to invest in a remarkable company poised to dominate its corner of this burgeoning market.

And thanks to The Motley Fool, the full narrative of this extraordinary tech trend has been compiled into an exclusive report, designed to arm you with the insights needed to make informed investment decisions.

Access the report and unlock the secrets of tomorrow's tech revolution – before the rest of the world catches on.

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In this letter, we analyze the Technology Select Sector SPDR Fund (XLK).

Ticker: XLK | Price: $237.37 | Market Cap: $74.2B | Average 10-Year Annual Return: ~20.11% (as of December 2024)

What is it (short)?

The Technology Select Sector SPDR Fund (XLK) is an exchange-traded fund (ETF) that seeks to provide investment results corresponding to the performance of the technology sector of the S&P 500 Index.

What is it (long)?

XLK aims to mirror the performance of the Technology Select Sector Index, which includes companies from industries such as technology hardware, software, communications equipment, semiconductors, and IT services. By investing in XLK, investors gain exposure to a diversified portfolio of leading technology firms, including major players like Apple, Microsoft, and Nvidia. The fund is passively managed, offering a cost-effective way to invest in the technology sector.

Our thoughts:

XLK is a suitable option for investors seeking targeted exposure to the technology sector, which has been a significant driver of market growth in recent years. Its diversified holdings across various tech industries provide a balanced approach to investing in this dynamic sector. However, potential investors should be aware of the inherent volatility associated with technology stocks and consider their individual risk tolerance and investment goals before investing.

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.

Yerevan: A Rising Opportunity for Investors

Why Yerevan?
The capital of Armenia, Yerevan, is gaining attention as an underrated hub for investment and lifestyle opportunities. Its growing economy, untapped markets, and appealing cost structures make it a hidden gem for entrepreneurs and investors.

Key Highlights:

1. Real Estate Growth:
   Yerevan’s property market offers high returns. Properties purchased for $167,000, with $45,000 renovations, are now valued at over $400,000—showcasing the potential for appreciation in this emerging market.

2. Banking Benefits:
   Armenian banks provide attractive deposit interest rates of 8-10%, making it easy to diversify savings with minimal starting capital.

3. Ease of Residency:
   Gaining residency in Armenia is straightforward. Investing in real estate or establishing a small business can lead to 5-10 years of residency, opening doors to long-term opportunities in the region.

Why Consider Yerevan?
Yerevan combines luxury living with conservative culture, offering a unique balance for those seeking wealth growth in an underexplored market. It’s still off the radar of mainstream investors, making now the perfect time to explore this hidden opportunity.

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: Preference Shares

What Are Preference Shares and Why Are They Relevant for Investing?

Definition: Preference shares, also known as preferred stock, are a class of ownership in a corporation that has a higher claim on assets and earnings than common stock. They typically provide dividends that are paid out before dividends to common shareholders and usually have a fixed dividend rate.

Key Characteristics of Preference Shares:

• Priority in Dividends: Preference shareholders receive dividends before common shareholders. This means if a company distributes profits, preferred dividends are paid out first.

• Fixed Dividend Payments: Most preference shares come with a predetermined dividend rate, providing investors with regular income.

• No Voting Rights: Generally, preference shareholders do not have voting rights in corporate decisions, unlike common shareholders.

• Higher Claim on Assets: In the event of company liquidation, preference shareholders have a higher claim on assets than common shareholders, though they rank below debt holders.

Types of Preference Shares:

• Cumulative Preference Shares: If a company skips dividend payments, these accumulate and must be paid out before any dividends to common shareholders.

• Non-Cumulative Preference Shares: Missed dividend payments are not accumulated. If the company doesn't declare a dividend in a given year, shareholders cannot claim missed payments in the future.

• Convertible Preference Shares: These can be converted into a predetermined number of common shares after a specified period.

• Participating Preference Shares: Shareholders may receive additional dividends based on certain conditions, such as achieving specific profit targets, in addition to the fixed dividend.

Why Investors Care:

Preference shares offer a blend of equity and fixed-income characteristics, making them appealing to investors seeking steady income with lower risk compared to common shares. The fixed dividends provide predictable returns, and the priority in asset claims offers added security. However, the lack of voting rights means less influence over corporate decisions, and the fixed dividend may limit potential upside if the company's profits soar.

Key Considerations for Investors:

• Dividend Reliability: Assess the company's financial health to ensure it can meet its dividend obligations.

• Interest Rate Sensitivity: Like bonds, the value of preference shares can be affected by changes in interest rates.

• Conversion Features: For convertible preference shares, understand the terms of conversion and potential benefits.

• Company's Capital Structure: Consider where preference shares stand in the hierarchy of claims, especially in scenarios of financial distress.

In summary, preference shares can be a valuable addition to an investment portfolio for those seeking a balance between income and risk. Understanding their features and the issuing company's financial standing is crucial for making informed investment decisions.

To learn more about Preference Shares read more on Investopedia here or learn more from our full FREE investing course & community here.