Define the following terms:1 - Individual retirement account (IRA) 2 - 401 K 3 - S&P 500 4 - Dow Jones 5 - Mutual fund 6 - Exchange-traded fund (ETF)7 - Using an Internet website financial section, find and identify three index mutual funds or Exchange Traded Funds in the following broad classifications.A. S&P 500Please pick one ETF or Mutual Fund that tracks the Standard and Poor 500 Index. What is the name of the fund? Describe its profile List its top 10 holdingsWhat is its 10-year historical return? How diversified is it by sectors of the economy? Meaning, describe or give the percentage of how much of the fund is invested in each of the sectors of our economy.)B. Sector FundPick a fund that tracks a single sector of our economy. Generally, these funds for example have most (over 90%) of their investments in one of the following sectors, energy, real estate, healthcare, energy, or technology.What is the name of the fund?Describe its profile List its top 10 holdingsWhat is its 10-year historical return?In what sector it is focused? Meaning what percentage of its holdings are in its major sector of the economy? C. Balanced FundPick a fund that is balanced between stock and bonds. Typically, these blended funds have 30 - 60% in stocks and 30-60% in bonds.What is the name of the fund?Describe its profile What is its 10-year historical return?What is its investment breakdown in terms of stocks and bonds?8 - Works Cited:Create reference citations for the three funds you have selected
Mutual Funds and Exchange Traded Funds: Mutual funds and Exchange Traded Funds are investment options for individuals both in retirement accounts, such as 401k or personal IRA. Each of us will have the opportunity to invest both in plans at work and for ourselves. Mutual Funds are typically offered via company retirement options. ETFs are typically used more often in personal accounts. Both are ways for individuals to pool money and invest in widely diverse areas of our economy. Fees: One thing to consider is the fees of the fund. Some funds have really low fees, under less than 1/10 of one percent. Other funds that are very similar in their investments, may charge over 0.70 to 1 percent. Make sure you understand any fees or loads that a fund may charge, as this can affect your returns. Diversity Investment diversity comes in many ways. For example, the number of companies in which the fund invests. It is easy to see that buying a single company has far more risk than investing in many companies. Also, the economy is made up of many sectors including Basic Materials, Consumer Discretionary, Financial Services, Real Estate, Consumer Staples, Healthcare, Utilities, Communications Services, Industrials Technology, Industrials, and Technology. Again, by diversifying across sectors you can spread the risk of the investment. And then there is the opportunity to invest in stocks, which purchase the equity of the company, meaning partial ownership. Or the fund investment may be in bonds which are debt instruments, which is an agreement to provide funds to the company or governmental unit, for a promise of repayment in the future with interest. Again, diversity may be gained by buying equities and bonds across a broad spectrum of organizations. Fund Pattern or Focus of Investments: When funds are established, they typically follow a pattern in which they will invest. Index funds with purchase investments based on a specic index of companies. Commonly this plan may follow the Standard and Poor's 500, or the largest 500 publicly traded companies in America. Sector-specic funds may be weighted heavily in one sector, energy, healthcare, real estate, and technology are common examples of these types of funds. And then there are balanced funds which typically have 30 to 60 percent of the fund in equities (stocks) and the rest of the fund in bonds. This mitigates to some degree the swings in the markets as stock and bonds often react differently in our economy