How To Keep & Grow Your Money #10

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In this letter we analyze the iShares Core S&P Mid-Cap ETF.

Ticker: IJH | Price: $269.34 | Market Cap: $71.6B | Average 10-Year Annual Return: 9.8%

What is it (short): The iShares Core S&P Mid-Cap ETF offers investors exposure to the U.S. mid-cap market segment.

What is it (long): This ETF seeks to replicate the performance of the S&P MidCap 400 Index, which includes a diversified range of 400 mid-sized companies across various sectors of the U.S. economy. These companies are often seen as growth-oriented, offering potential for higher returns compared to large-cap stocks while being less volatile than small-cap stocks.

Our thoughts: This ETF is an excellent choice for investors who want to diversify their portfolios with mid-cap stocks, which can offer a balance between growth potential and risk. It’s a low-cost, efficient way to gain broad exposure to a dynamic segment of the U.S. market.

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.

7 Tax-Friendly Countries for High-Net-Worths

If you're a high-net-worth individual seeking a tax-friendly environment, several countries offer excellent opportunities to reduce your tax burden while enjoying a luxurious lifestyle.

Here’s a summary of seven countries that are particularly attractive:

1. Monaco: Known as the "Elite Tax Haven," Monaco offers zero personal income taxes, making it an attractive option for the ultra-wealthy. While living in Monaco can be expensive, the absence of annual taxes is a significant draw. However, you need to establish actual residency to benefit from these tax advantages.

2. Jersey: Located near the UK, Jersey provides a low-tax environment with a 20% tax on the first £1,250,000 of income and only 1% on foreign-sourced income. This makes it an appealing location for those who want proximity to London without the high UK tax rates.

3. United Arab Emirates (UAE): The UAE offers a tax-free lifestyle with no personal income tax and a relatively easy residency process. Dubai and Abu Dhabi are popular choices, offering different lifestyles but equally high standards of living.

4. Singapore: This city-state combines a territorial tax system with political stability and world-class infrastructure. Singapore attracts millionaires with its low tax rates and thriving economy, making it a top choice for those looking to invest in Asia.

5. Bahamas: A classic tropical tax haven, the Bahamas has no income, corporate, or wealth taxes. It's a convenient and accessible location, especially for those with connections to the U.S., as it offers easy access via quick flights to Miami.

6. Cayman Islands: Known for its tax-free status, the Cayman Islands imposes no income or property taxes. While living here can be expensive, the benefits for high-net-worth individuals, including privacy and a luxurious lifestyle, are unmatched.

7. Antigua and Barbuda: This Caribbean nation offers a favorable tax environment, especially through its Citizenship by Investment program. It’s a family-friendly option with a straightforward tax regime, including a $20,000 lump-sum tax for certain residents.

These countries provide a combination of low or no taxes, luxury living, and opportunities for investment, making them ideal for those looking to maximize their wealth while enjoying a high quality of life.

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: Hedge in Investing

A hedge is an investment strategy used to reduce or offset the risk of potential losses in another investment.

Think of it as a kind of insurance policy for your investments. The idea is that if one investment loses value, the hedge (another investment) might gain value or lose less, thereby minimizing the overall loss.

Key Points:

• Risk Management: Hedging aims to limit the potential downside of an investment or a portfolio. It doesn’t eliminate risk entirely but reduces it.

• Hedging Techniques: Common methods include buying derivatives like options or futures, which can move in the opposite direction of the underlying asset.

• Diversification: One simple form of hedging is diversifying a portfolio—holding a mix of investments that may react differently to the same market events.

How a Hedge Works:

Imagine you own a house in a flood-prone area. You can't stop the flood, but you can buy flood insurance to cover potential damage.

Similarly, in investing, if you own a risky stock, you might also invest in a more stable asset to balance the risk.

For instance, if you invest in a volatile tech stock, you might also invest in a stable consumer goods company to hedge against potential losses.

Downsides of Hedging:

While hedging reduces risk, it also limits potential gains. Just like paying for insurance, hedging isn't free—you might spend money on a hedge that ultimately isn't needed, reducing overall profitability.

In professional investing, hedging is a common practice to manage risk using various financial tools, though achieving a "perfect hedge" (one that completely eliminates risk) is rare and often expensive.

In summary, a hedge is a strategy to protect investments from potential losses by using other investments that move in opposite directions, similar to an insurance policy.

While it reduces risk, it also comes with costs and may limit potential gains.

To learn more about Hedge in Investing read more on Investopedia here.