How To Keep & Grow Your Money #26

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In this letter, we analyze the iShares Core MSCI Emerging Markets ETF (IEMG).

Ticker: IEMG | Price: $53.30 | Market Cap: $79.4B | Average 10-Year Annual Return: ~3.82% (as of Dec 31, 2024)

What is it (short)?

The iShares Core MSCI Emerging Markets ETF (IEMG) offers exposure to a broad range of companies in emerging market economies like China, India, and Brazil. It's designed for investors seeking diversification and growth potential beyond established markets.

What is it (long)?

IEMG tracks the MSCI Emerging Markets Investable Market Index, providing access to large-, mid-, and small-cap companies across 27 emerging markets. This broad diversification helps reduce risk while capturing the growth potential of these dynamic economies. IEMG is passively managed, aiming to replicate the index's performance with low fees, making it a cost-effective way to invest in emerging markets.

Our thoughts:

IEMG is a solid option for investors looking to add emerging market exposure to their portfolio. While these markets can be volatile, they offer significant growth opportunities over the long term. IEMG's diversification and low cost make it a suitable core holding for investors with a higher risk tolerance and a long-term investment horizon.

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.

Spain's Proposed 100% Property Tax: Key Takeaways

Spain's Prime Minister recently announced a plan to impose a 100% tax on property purchases by non-EU residents. This means that, if implemented, non-EU buyers would have to pay double the property's value in taxes.

The Rationale:

The government aims to curb rising housing costs and prioritize housing for Spanish citizens. They argue that a significant number of properties are being purchased by non-EU residents as investments, driving up prices and making it difficult for locals to afford homes.

Key Points:

• Targets Non-EU Buyers: This tax specifically applies to buyers who are not citizens of an EU country.

• Doubles the Cost: The tax would effectively double the cost of purchasing a property.

• Controversial Measure: This proposal has sparked debate, with some arguing it could negatively impact foreign investment and the Spanish property market.

• Not Yet Law: It's important to note that this is still a proposal and has not yet been passed into law. Details about implementation and potential exemptions remain unclear.

What This Means for You:

If you're a non-EU citizen considering buying property in Spain, it's crucial to stay informed about this proposal and its potential implications. Exploring alternative investment locations might be a prudent step while the situation develops.

Need More Information?

We can help you navigate these changes and explore alternative investment options. Feel free to reach out to us with any questions.

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: Futures Contracts

What are Futures Contracts and Why are They Relevant for Investing?

Definition: A futures contract is a legally binding agreement to buy or sell a specific underlying asset (like a commodity, currency, or index) at a predetermined price and date in the future. These contracts are standardized and traded on exchanges.

Key Characteristics of Futures Contracts:

• Standardized Terms: Each futures contract for a particular asset has standardized terms, including the quantity, quality, and delivery date of the underlying asset.

• Obligation to Buy or Sell: Unlike options, futures contracts obligate the buyer to purchase the asset and the seller to sell it at the agreed-upon price and date.

• Margin Requirements: Traders must deposit a margin, a percentage of the contract value, to cover potential losses.

• Leverage: Futures trading allows investors to control a large amount of the underlying asset with a relatively small amount of capital (margin). This magnifies both profits and losses.

• Hedging and Speculation: Futures contracts can be used to hedge against price fluctuations or to speculate on the future direction of an asset's price.

Types of Futures Contracts:

• Commodity Futures: Contracts for physical commodities like oil, gold, wheat, etc.

• Financial Futures: Contracts on financial instruments like currencies, stock indices, and interest rates.

• Index Futures: Contracts based on the value of a stock market index, such as the S&P 500.

Why Investors Care:

• Hedging: Businesses use futures to manage price risk. For example, an airline might use oil futures to lock in fuel prices.

• Speculation: Traders can profit from price movements in the underlying asset.

• Diversification: Futures can provide diversification to an investment portfolio.

Key Considerations for Investors:

• High Risk: Futures trading involves substantial risk due to leverage and volatility.

• Margin Calls: If the market moves against your position, you may need to deposit additional margin to maintain your position.

• Expiration Dates: Futures contracts have expiration dates, and you need to be aware of them.

In summary, futures contracts are powerful financial instruments that can be used for hedging, speculation, and diversification. However, they are complex and involve significant risk. It's essential to understand the mechanics and risks of futures trading before participating in this market.

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