How To Keep & Grow Your Money #2

In this letter we analyse the iShares MSCI Emerging Markets ETF

Ticker: EEM | Price: $43.63 | Market Cap: $19.5B | Average 10-Year Annual Return: 2.06%

What is it (short): One of the biggest ETF trackers of the top 24 emerging countries of the world.

What is it (long): The iShares MSCI Emerging Markets ETF (EEM) is a type of investment fund that aims to track the performance of the MSCI Emerging Markets Index. This index includes large and mid-sized companies from 24 emerging market countries such as China, India, Brazil, and South Africa. The ETF allows investors to gain exposure to these developing markets, which can offer higher growth potential compared to more developed markets.

Our thoughts: A great option for investing long-term into the emerging markets of the world which will develop faster than developed countries like Europe or the US. However, suffers more political risk and volatility. Average performance over the last years has been therefore quite low versus other markets.

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.

UK Non-Doms Flee to Dubai Amid Labour's Tax Crackdown

A huge political shift has happened in the UK after the Labour party has won in a landslide election kicking out Rishi Sunak’s conservative party. Causing massive concern and an outflow of people currently under the famous Non-Dom special tax regime in the UK.

Key Changes:

• Proposed Changes: Labour plans to abolish the non-domiciled (non-dom) tax status, which currently allows UK residents with foreign domiciles to avoid UK tax on overseas income. This aims to increase tax revenue by £3.2 billion annually​ (The Independent)​​.

• Response: Many non-doms are considering relocating to tax-friendly countries like Dubai due to its zero income tax policy or countries like Switzerland for its lump-sum taxation​ (The Independent)​.

• Impact: The exodus of wealthy individuals could reduce the UK's attractiveness as an international financial hub and impact tax revenues from non-doms​ (Burges Salmon – independent UK law firm)​.

Read more on this here and 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: Bonds

What Is a Bond?

A bond is a type of investment where you lend money to a government or company for a specific period at a fixed interest rate. In return, you receive regular interest payments and, at the end of the bond's term (maturity date), you get back the original amount you lent (the principal).

Key Points:

1. Fixed-Income Instrument: Bonds are called fixed-income instruments because they provide regular interest payments at a fixed rate, known as the coupon rate.

2. Inverse Relationship with Interest Rates: When general interest rates go up, bond prices usually go down, and vice versa.

3. Maturity Date: This is the date when the bond's principal amount is due to be repaid in full. If the issuer cannot pay back the principal, it risks default.

How Bonds Work:

• Issuance: Governments and corporations issue bonds to raise money for projects like building infrastructure or expanding businesses.

• Investment: As an investor, you buy a bond at its face value, typically $1,000. You earn interest (the coupon rate) periodically until the bond matures.

• Repayment: At maturity, the issuer repays the bond's face value to you.

Example:

• If you buy a bond with a $1,000 face value at a 5% coupon rate, you'll receive $50 annually in interest. After the bond matures, you'll get back the $1,000 you initially invested.

Bonds are considered safer investments compared to stocks (equities) because they provide steady income and return the principal amount at maturity, making them a popular choice for conservative investors.

To learn more about Bonds read more on Investopedia here.