Some of the best performers in the history of India’s stock markets have been the blue chip kind. The best Indian blue chip stocks are highly coveted among Indian stock market investors. Find out more.
Blue Chip stocks tend to be among the most valuable stocks in the market. The term is derived from the game of poker where the blue chip is the most valuable chip. Blue Chip stocks usually gain their status by virtue of their consistent performance for many years in the market. In this post, we will take a look at some of the best Indian blue chip stocks. These stocks have performed at a consistently high level and have given great returns to their investors. Let’s check them out.
Here are the Best Blue Chip Stocks in India
Reliance Industries (RELIANCE)
Kicking off our list of the best blue chip stocks in India, is Reliance Industries Ltd. It is India`s largest private sector enterprise, with businesses in the energy and materials value chain. The company works under different business segments: Exploration and Production, Petroleum Refining and Marketing, Petrochemicals, Textiles, and Retail. Products and brands offered by the company includes Crude oil and natural gas, LPG, Propylene, Naphtha, Gasoline, Jet/Aviation Turbine Fuel, Superior Kerosene Oil, High-Speed Diesel, Sulphur, Petroleum Coke, Polypropylene, High-Density Polyethylene, Low-Density Polyethylene, Linear Low Density Polyethylene, Polyvinyl Chloride, Poly Olefin, Suitings, Shirtings, Readymade Garments, Furnishing fabrics, Day curtains, Automotive upholstery, Suitings, Ready-to-stitch, Take away fabric, Fleet management services, Highway hospitality services, Vehicle care services, Linear Alkyl Benzene, Paraxylene, Purified Terephthalic Acid, Mono Ethylene Glycol, Staple Fibre, Filament Yarn, Texturised yarn, Twisted yarn, Moisture management yarn, Quality certified sleep products & Polyethylene terephthalate.
Hindustan Unilever (HINDUNILVR)
Next on the list of the best blue chip stocks in India, is Hindustan Unilever Ltd. It was incorporated in the year 1933, is a Large Cap company (having a market cap of Rs 506141.41 Crore) operating in the FMCG sector.
Hindustan Unilever Ltd. key Products/Revenue Segments include Personal Care which contributed Rs 38273.00 Crore to Sales Value (98.67 % of Total Sales) and Other Operating Revenue which contributed Rs 512.00 Crore to Sales Value (1.32 % of Total Sales)for the year ending 31-Mar-2020.
For the quarter ended 30-09-2020, the company has reported a Consolidated sales of Rs 11520.00 Crore, up 8.97 % from last quarter Sales of Rs 10572.00 Crore and up 15.70 % from last year same quarter Sales of Rs 9957.00 Crore Company has reported net profit after tax of Rs 1974.00 Crore in latest quarter.
HDFC BANK (HDFCBANK)
Next on the list of the best blue chip stocks in India, is HDFC Bank Limited. It is a holding company. The Bank offers a range of banking services covering commercial and investment banking on the wholesale side and transactional/branch banking on the retail side. It also offers financial services. The Bank’s segments include Treasury, Retail banking, Wholesale banking and Other banking business. The Treasury segment primarily consists of net interest earnings from the Bank’s investment portfolio, money market borrowing and lending, gains or losses on investment operations and on account of trading in foreign exchange and derivative contracts. The Retail Banking segment serves retail customers through a branch network and other delivery channels, as well as through alternative delivery channels. The Bank provides its corporate and institutional clients a range of commercial and transactional banking products. The Other banking business segment includes income from para banking activities.
Asian Paints (ASIANPAINT)
Next on the list of the best blue chip stocks in India, is Asian Paints Ltd. It manufactures paints in the category of Decorative, Automotive and Industrial segment. Apart from these the company also manufactures various accessories like Wall Primer, Wood Primer, Putty and Stainers etc. The company has a state-of-the-art supply chain system which uses cutting edge technology to integrate all its plants, regional distribution centres, outside processing centres, and branches in India. They also have a big and experienced R&D team that has successfully managed to develop High-end exterior finishes and wood finishes in-house, which was earlier imported into the country. These products are currently marketed under Asian Paints Elastomeric Hi-Stretch Exterior paint and Asian Paints PU wood finish respectively. Their product range includes Automotive Paints, Decorative Paints, Industrial Paints & Ancillaries – A range of ancillaries like primers, fillers stainers, and a lot more. The company is also in the business activities of Paints and Home Improvement.
Tata Consultancy Services (TCS)
Next on the list of the best blue chip stocks in India, is Tata Consultancy Services Ltd. This IT giant was incorporated in the year 1995. It is a Large Cap company (with a market cap of Rs 1020873.78 Crore) operating in IT Software sector.
Tata Consultancy Services Ltd. key Products/Revenue Segments include Information Technology & Consultancy Services which contributed Rs 97356.00 Crore to Sales Value (100.00 % of Total Sales)for the year ending 31-Mar-2018.
For the quarter ended 30-09-2020, the company has reported a Consolidated sales of Rs 40135.00 Crore, up 4.73 % from last quarter Sales of Rs 38322.00 Crore and up 2.97 % from last year same quarter Sales of Rs 38977.00 Crore Company has reported net profit after tax of Rs 7504.00 Crore in latest quarter. TCS generates over 70% of the dividend of its parent company, Tata Sons.
Next on the list of the best blue chip stocks in India, is Infosys Limited. Perhaps India’s most popular It company, Infosys is engaged in consulting, technology, outsourcing and next-generation services. The Company, along with its subsidiaries, provides business information technology services comprising application development and maintenance, independent validation, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management; consulting and systems integration services comprising consulting, enterprise solutions, systems integration and advanced technologies; products, business platforms and solutions to accelerate intellectual property-led innovation, including Finacle, its banking solution, and offerings in the areas of Analytics, Cloud and Digital Transformation. Its segments are Financial Services and Insurance (FSI), Manufacturing and Hi-tech (MFG & Hi-TECH), Energy & utilities, Communication and Services (ECS), Retail, Consumer packaged goods and Logistics (RCL), and Life Sciences and Healthcare (LSH).
Next on the list of the best blue chip stocks in India, is ITC Limited. It is a holding company, which is engaged in the marketing of fast moving consumer goods (FMGC). The Company operates through four segments: FMCG; Hotels; Paperboards, Paper and Packaging, and Agri Business. The FMCG segment includes Cigarettes, such as cigarettes and cigars, and Others, such as branded packaged foods businesses (Staples, Snacks and Meals; Dairy and Beverages, and Confections); Apparel; Education and Stationery Products; Personal Care Products; Safety Matches, and Agarbattis. Its Hotels segment includes Hoteliering. Its Paperboards, Paper and Packaging segment includes paperboards; paper, including specialty paper, and packaging, including flexibles. Its Agri Business segment includes Agri commodities, such as soya, spices, coffee and leaf tobacco. Its brands include Aashirvaad, Sunfeast Dark Fantasy, Bingo!, Yumitos, YiPPee!, Candyman, GumOn, Classmate, Fiama Di Wills, Vivel, Superia, Engage, Wills Lifestyle, John Players, Mangaldeep and Aim, among others.
Eicher Motors (EICHERMOT)
Next on the list of the best blue chip stocks in India, is Eicher Motors Ltd. This firm engages in the development, design, manufacture, assembly and sale of two-wheelers as well as related parts and accessories. It operates through Domestic and Overseas geographical segments. The Domestic segment includes sales and services to customers located in India. The Overseas segment includes sales and services rendered to customers located outside India. The company was founded on March 14, 1982 and is headquartered in Gurugram, India.
Bajaj Auto (BAJAJ-AUTO)
Next on the list of the best blue chip stocks in India, is Bajaj Auto Ltd. The company was established in the year 2007. It is a Large Cap company (having a market cap of Rs 90548.73 Crore) operating in the Auto sector.
Bajaj Auto Ltd. key Products/Revenue Segments include Automobile – 2 & 3 Wheelers which contributed Rs 29111.54 Crore to Sales Value (97.30 % of Total Sales), Export Incentives which contributed Rs 458.59 Crore to Sales Value (1.53 % of Total Sales), Other Operating Revenue which contributed Rs 330.38 Crore to Sales Value (1.10 % of Total Sales), Scrap which contributed Rs 18.14 Crore to Sales Value (0.06 % of Total Sales)for the year ending 31-Mar-2020.
Nestle India (NESTLEIND)
Rounding up our list of the best blue chip stocks in India, is Nestlé India Ltd. This global giant engages in the manufacture and sale of various food products. It offers milk products, nutrition, beverages, prepared dishes and cooking aids, and confectionery. It operates through the EveryDay, Nestea, Nescafe, Maggi, Kitkat, and Milkybar brands. The company was founded on March 28, 1959 and is headquartered in Gurgaon, India.
Blue Chip stocks are some of the strongest and most consistent performers in the stock market. Most investors love investing in blue chip stocks. A lot of time, blue chip stocks can be quite expensive but they are usually worth the price in the long run. Find out more.
Blue Chip stocks are stocks of companies that are financially very strong and have performed remarkably well over a long period of time. Companies whose stocks are considered to be blue chip stocks consistently perform great in the stock market. These companies also have a strong financial platform, pay good dividends to their investors and are profitable in general. Investing in a Blue Chip Stock is a great way to reach your economic development goals and realise your investment targets. In this post, we will take a quick look at blue chip stocks and give you the basic information about them. Let’s get started.
Blue Chip Stocks: Important Things to Consider
What is a Blue Chip Stock?
While blue chip is a common term in the stock market, it has actually been borrowed from the world of poker. The most valuable chip in every poker game is always the blue chip. Blue Chip stocks are usually some of the most valuable stocks available in the market. They achieve that status through consistent performance over a long period of time. The term “blue chip” is also used to refer to top recruits in the American college sports scene. Just like blue chip stocks, these players are known as blue chip players because they have consistently performed at a high level in their career.
Blue Chip stocks are almost always stocks which belong to well known brands that offer widely acclaimed goods and/or services, and their output reflects their sales, profitability, and dividend outcomes. These reasons make blue chip stocks very safe to invest in. These stocks also tend to be far less volatile than lower market players and if stability and security in your investments are very important for you, you should definitely consider investing in blue chip stocks,
What are the Advantages of Blue Chip stocks?
High capital growth
Every single investor wants to create wealth with his/her investment. When investors accumulate an enormous corpus, they usually channel that money into different investment avenues to create wealth. The returns earned from those investments enhance their standard of living and provide a luxurious way to live. Blue Chip stocks help achieve such goals. By accumulating returns gained on investments, Blue Chip stocks play a crucial role in wealth creation.
Great level of financial stability
In order to live your life comfortably, you must have some financial stability. Investing in Blue Chip stocks provides recurrent revenue and consequently guarantees consistency. Investing your hard earned cash in Blue Chip stocks helps create a great source of revenue.
Helps meet your investment goals
Investment objectives such as retirement planning, the future of the child, etc. can be met by investing in Blue Chip stocks. Historically speaking, Blue Chip stocks have delivered the yields that have helped many investors earn significant revenue over time. Investors can achieve their investment objectives effectively by accumulating an enormous corpus in the future.
Easy to withdraw
Blue Chip stocks are open-ended that can be redeemed or withdrawn whenever required by the investor. Whenever investors have some urgent need for liquid cash, they can withdraw money from their Blue Chip stocks and utilize it. The returns are consistent enough that even in the case of an unplanned redemption, the investor does not suffer losses.
Usually very secure
Investing money in a Blue Chip stock is reassuring and safe as all Blue Chip stocks have a historically great performance record.
Are blue chip stocks always safe to invest in?
Companies with blue chip stocks usually perform very well and tend to overcome market volatility and come out unharmed regardless of financial challenges and changing market cycles. This has led to them being perceived as very safe kinds of investments. However, that’s not always the case. You only need to look back to the 2008 recession and the bankruptcy of General Motors and Lehman Brothers to know that even blue chip stocks aren’t completely immune to market vicissitudes. The struggle of the blue chip stocks during the housing market collapse and the recession of 2008 wasn’t just an American phenomenon, blue chip stocks all over the world suffered during that time.
How to incorporate blue chip stocks in your portfolio?
Blue chip stocks are definitely a great choice for using as your portfolio’s core holding but you should never make the mistake of building your entire portfolio using nothing but blue chip stocks. While the allure of consistent performance and great name recognition is tempting, the best way to go is always to have a diversified portfolio with some bonds and cash allocation. Aside from cash and bonds, investors should also allocate some of their portfolio for mid-cap and small caps as well. Younger investors with higher risk tolerance should definitely have a higher percentage of their portfolio dedicated to stocks, including blue chip stocks. As investors grow older, they should reduce the risk factor in their investments and increase the allocation in cash and bonds.
Sovereign Gold Bonds (SGBs) is a term used to signify government securities that are denominated in gold. Sovereign Gold Bonds are great substitutes for buying physical gold. Find out more about them.
Gold is one of the highly demanded precious metals and the market demand tends to be relatively high irrespective of the market variations and global economic scenarios. Hence, unsystematic risks are minimal, allowing investment corpus to grow manifold over time.
RBI mandated sovereign gold bonds are certified and given against grams of gold, allowing users to invest in gold minus the strain of safekeeping their physical assets. These bonds act as a tool for secure investment among individuals, as gold prices are less susceptible to market fluctuations. The popularity and widespread demand for gold mean that prices of such assets tend to rise significantly over time.
As Sovereign Gold Bonds are given by the RBI under Government of India stocks, a particular time slot is pre-set for a subscription. During this time, a sovereign gold bond scheme is issued in the name of investors in tranches.
Generally, the RBI publicly states the issuance of the latest sovereign bonds in a press release every 2-3 months, with a one week window during which individuals can subscribe to this scheme.
Sovereign Gold Bond: Features, Pros and Cons
Key Features of Sovereign Gold Bonds
- Updated price – The cost is calculated through a simple average of the closing prices of 999 purity gold for the last 3 days set by the Indian Bullion and Jewellers Association Limited (IBJA).
- Periodic interest pay-outs – A coupon rate of 2.5% per annum is tagged for this scheme, which is disbursed half-yearly to investors.
- Fixed tenor – Gold bonds are given for a period of 8 years, with premature withdrawal permissible from the 5th year onwards. Also, individuals can put up their respective securities in the secondary market for sale at the market rate of gold.
- Premature withdrawal – Individuals who want to cash-in their investment can after a mandatory holding period of 5 years. This payout benefit is applicable for the 5th, 6th, and 7th year of bond tenor, and will be processed on the interest disbursement days.
- Resale – The Sovereign gold bond scheme 2020 can be traded in the secondary market after 2 weeks since an initial subscription date, subject to a notice published by the RBI. Prices at which these bonds are transacted varies on the prevailing gold prices on the stipulated date, in addition to its corresponding demand and supply in the market.
With the maturity of a sovereign bond, payouts are made in accordance with the prevailing price of gold, estimated through considering a simple average of the price of gold for the last 3 days, and is published by the IBJA. As the price of gold usually seems to appreciate considerably over time, individuals can enjoy substantial wealth accumulation with minimal risk exposure.
Advantages of Investing in Sovereign Gold Bonds
A sovereign gold bond is given in accordance with the Government Security Act of 2006 by the RBI, making it one of the safest forms of investments, as chances of defaults on repayment is zero. Any risk calculated for such investments can be attributed to market fluctuations, causing volatility in gold prices.
Sovereign gold bonds were opened to the public under the gold monetisation scheme by the central government in November 2015. The main goal of such treasury bonds was to reduce the hassles involved with gold investments, as bullions and other physical forms of investments required proper and secure storage.
Individuals can also select to digitise such holding certificates to gain benefits from it in their Demat accounts, thus enhancing the security of their investment even further.
Sovereign gold bond returns are substantial as the long term price of this precious metal tends to rise. During market turmoil, investors tend to shift towards gold, as it has the potential to hold its value even during under performance of major functional companies.
Sovereign gold bonds are an acceptable product of collateral to avail loans. Up to 75% of the market value of such bonds can be availed as a loan from any scheduled financial institution, as stipulated by the RBI’s LTV regulations.
Limitations of Gold Bonds
Inversely Related to the Stock Market
Gold prices have an inverse correlation, wherein any upturn in stock market returns is generally followed by reduced gold prices. During an economic boom, investors expect the companies to perform well in response to surging aggregate demand level. As a result, demand for gold bonds decreases causing a downtrend in the market prices.
Hence, during the upswing of the business cycle, gold prices tend to be relatively lower.
Susceptible to Currency Fluctuations
Any fluctuation in currency values tends to have an impact on the price at which gold is traded. Appreciation of the US dollar, causes gold prices to falter due to higher inflation rates. As the import expenses of a country rise significantly, the total investment level of a country falls, thereby affecting the demand for gold and its prices.
The returns from sovereign gold bonds can be classified into two categories – capital gains earned on the maturity of a bond and interest earnings disbursed semi-annually. Investors who have a bond for the entirety of the term are not required to pay long-term capital gains tax. However, periodical interest income is taxed under ‘Income from other sources,’ and increases tax rates as per the respective income tax slabs dictated by the central government.
Individuals opting for resale of a bond in the secondary market will shell out tax on any capital gains realised. Reselling of sovereign gold bonds before completion of 3 years attracts short term capital gains on total profits, at rates as per the annual income of investors. Long term capital gains, on the other hand, attract tax at 20% of the total earnings, after adjusting the same for indexation.
Bitcoin is a modern investment phenomenon. But Is Bitcoin a good investment? Find out more.
Cryptocurrency, more specifically Bitcoin has become the rage these days. While it’s tough to predict if Bitcoin is going to prove to be a great investment in the future, it’s hard to totally ignore its appeal. A lot of investors are willing to take the chance for profits from a bitcoin investment.
Is bitcoin a good investment? Start with our guide to learn more and make your own judgment. Like any kind of investment, buying Bitcoin comes with inherent risks. The price could nosedive because of market volatility and a single online hacking or crashed hard drive incident can completely erase your Bitcoins without any way of getting them back. Over the course of years,
Bitcoin has seen a dramatic peak in price followed by some painful crashes. However, it has managed to keep a significant portion of its previous gains every time it plummets. Since its launch. Bitcoin has grown a dedicated underground following of investors who see it as a future replacement of the standard physical currency system. Let’s find out more about the qualities of Bitcoin as a type of investment.
Is Bitcoin A Good Investment: Advantages and Disadvantages
Bitcoin’s consistent performance over the years has attracted a lot of investors towards itself. As an investment tool, Bitcoin gives you these advantages over traditional investments.
- Liquidity – Bitcoin is definitely one of the most liquid investment assets available for people. It’s caused by the global establishment of trading platforms, exchanges and online brokerages. It’s very easy to trade bitcoin for cash or assets with incredibly low fees. The high liquidity associated with bitcoin is also great for investors looking to make some short term profits.
- Lower inflation risk – Bitcoin isn’t like other currencies which are regulated by national governments. Hence, it is free from inflation. The blockchain system is infinite and it is most likely never going to lose value.
- New opportunities – Bitcoin and cryptocurrency is a very new and recent thing. So there are always new and exciting things coming up with it. This unpredictability allows for great ways to book some profits.
- Minimalistic trading – Trading in traditional stocks needs you to hold a certificate or license. You will also need a broker to trade a company’s shares. But bitcoin trading is minimalistic: all you need to do is buy or sell bitcoin from exchanges and store them in your e wallet. Bitcoin transactions are also settled instantaneously. Vastly different from stock trading orders, which could take days or weeks for settlement.
While Bitcoin seems to have a bright future and investing in it might seem very tempting, one must also be mindful of the possible pitfalls and disadvantages of Bitcoin. Some of them are:
- Volatility – Bitcoin’s prices always change wildly. In case you happened to buy bitcoin on December 17, 2017, the price was $20,000. Weeks later, you couldn’t sell your investment for more than $7,051. The bitcoin market is in a state of constant flux. With such an unpredictable market, you can hardly get a good return on your investment. To avoid huge loss, keep a close eye on the market.
- Threat of online hacking – Since Bitcoin is virtual currency, the threat of hacking always looms large. Bitcoin exchanges allow you to buy and sell your cryptos using a mobile app or website. This leaves Bitcoin susceptible to hacking and that can lead to the theft of all your investment. Bitcoin investments aren’t insured by the FDIC either.
- Lack of regulation – The bitcoin market as of today has very few regulations. Transactions aren’t taxed and governments don’t seem to have any clear stance on it. As a result of that, you might end up losing a lot of money to fraud and institutionalized malpractice.
- Limited usage – Bitcoin doesn’t have universal acceptance. Very few online retailers accept Bitcoin as a mode of payment. Many companies also refuse to recognize bitcoin as a legitimate exchange, making it an unfeasible investment vessel. Bitcoin is also limited in supply, there are only 21 million.
- E Wallets are susceptible – In case your wallet file is corrupted by a virus or you lose it because of a hard drive crash, all your Bitcoins will be gone instantaneously. You can go from super rich to bankrupt in seconds. What’s worse, unless your other files with cloud back ups, there is no way to recover Bitcoin.
So that was a brief look at some Bitcoin basics. Hopefully, you have a better idea of this novel form of investment now and if your friend asks you “Is Bitcoin a good investment”, you will be able to answer them with more ease.
Penny Stocks are market traded securities which come with very low prices. While that might seem attractive on the surface, these penny stocks come with many hidden dangers as well. Find out more.
Penny stocks is a term used to describe shares of tiny public companies that usually trade for a price lower than one dollar per share. Penny stocks are also sometimes referred to as micro-cap stocks, nano-cap stocks, small cap stocks, or Over the Counter (OTC) stocks. In this post, we will take a brief look at some of the important things associated with penny stocks and answer some key questions associated with them. Let’s get started.
Penny Stocks: Important Questions Answered
What is a penny stock?
The U.S. Securities and Exchange Commission (SEC) uses the term “penny stock” to refer to a security, a financial instrument that represents a given financial value, issued by small public companies that trade at less than $5 per share.
How are penny stocks priced?
Penny stocks are priced over-the-counter, rather than on the trading floor, hence the use of the name “OTC stocks.” The term “penny stock” refers to shares that, prior to the SEC’s reclassification, traded for “pennies on the dollar.”
Why was the Securities Exchange Act passed?
In 1934, when the United States government passed the “Securities Exchange Act” to regulate any and all transactions of securities between parties which are “not the original issuer”, the SEC at the time disclosed that equity securities which trade for less than $5 per share could not be listed on any national stock exchange or index.
Which OTC Exchanges have penny stocks?
Over-the-counter exchanges that list penny stocks include the OTC Bulletin Board (which is a facility of FINRA) or OTC Link LLC (which is owned by OTC Markets Group, Inc., formerly known as Pink OTC Markets Inc.). Penny stocks can also trade on securities exchanges, including foreign securities exchanges. Penny stocks can include the securities of certain private companies with no active trading market.
Which are some popular penny stock operators?
One of the biggest penny stock operators in the 1950s was Tellier & Co. In the 1980s, major penny stock brokerages included Blinder Robinson, First Jersey Securities, Rooney Pace, and Stuart-James. Major penny stock brokerages operating in the 1990s included Stratton Oakmont, Sterling Foster, A.S. Goldmen, and Hanover Sterling.
What are some important things to consider before investing in penny stocks?
When considering penny stocks, investors and experts in the field recognize the low market price of shares and its correlation to low market capitalization. Market capitalization or “market cap” is the total dollar market value of all of a company’s outstanding securities.
Since penny stocks are inexpensive, investors often buy large quantities of shares without spending much money. This tendency makes the penny stock market volatile.
What is volatility?
Volatility measures the dispersion of returns associated with a particular security or market index. High volatility results in a high amount of risks and vice versa. Volatility can also be described as the shift that a security’s value encounters in either direction. This is directly correlated to the price action of a security which, when talking about penny stocks, can change more rapidly than that of a large-cap stock.
How does volatility affect penny stocks?
The volatile nature of penny stocks also leaves these companies open to potential “manipulation” by stock promoters and pump and dump schemes. Oftentimes, investors are led to believe that the ability to purchase large quantities of shares at low prices will result in greater returns, which makes them more susceptible.
Is the penny stock market wrought with fraud?
Prosecutors and the Federal Bureau of Investigation say that fraud is widespread in the penny stock market. Even though the penny stock companies are small, the scams that involve them can be for tens of millions of dollars.
The penny stock market has little liquidity, so holders of shares in penny stock companies often find it difficult to cash out of positions.
In the United States, the SEC and the Financial Industry Regulatory Authority (FINRA) have specific rules to define and regulate the sale of penny stocks.
What is the biggest problem faced by penny stock investors?
The primary concern that most investors have while dealing with penny stocks is the lack of information that often exists surrounding the companies offering said stocks. The lack of public reporting mixed with a thin market is often the perfect recipe for stock manipulation via stock promoters.
What is a “pump and dump” scheme?
A common practice is for these individuals to purchase large quantities of stock and then utilize promoters to artificially inflate the sub-penny stock’s share price, through false and misleading information. When the liquidity and price increase the manipulator will sell their stock, this is called a “pump and dump” scheme which is a form of microcap stock fraud. The “pump and dump” tactic is also known as a supernova and, unlike regular stocks, penny stocks usually move on the momentum of the price action.
How did Zirk de Maison defraud his customers with penny stocks?
On April 3, 2017, the Federal Bureau of Investigation (FBI) reported on a story in which penny stock fraud was the focal point of the piece. According to the article, California resident Zirk de Maison was found guilty of conducting a “pump and dump” scheme. During the time of the scandal, de Maison and his firm tricked a large number of investors to buy shares of firms that were actually shell companies that he had set up himself.
From 2008 to 2013, de Maison created five small public companies which, unbeknownst to the investing public, did no actual business and had no legitimate assets. Once he set these companies up, he offered public shares of the company’s penny stocks for investors to purchase.
The FBI investigation exposed that de Maison utilized fictitious names in order to fool investors to purchase shares of his shell companies. This artificially inflated the price of the share and gave the investors an illusion that they were making profit. Once these prices went up, de Maison and his original conspirators would then liquidate their shares at the stock’s highest level, and this mass selling caused the shares to drop dramatically, leaving investors with near-worthless shares.
Are all penny stock frauds similar?
What de Maison did, was a more direct and simplistic version of fraud involving penny stocks. It’s also carried out in a very complex and sophisticated way as well. Rich investors can buy millions of shares, then use newsletter websites, chat rooms, stock message boards, fake press releases, or e-mail blasts to exponentially increase the interest in the stock. Very often, the perpetrator will claim to have “inside” information about impending news to persuade the unwitting investor to quickly buy the shares. When buying pressure pushes the share price up, the rise in price entices more people to believe the hype and to buy shares as well. Eventually, the manipulators doing the “pumping” end up “dumping,” when they sell their holdings. The increasingly penetrative reach of the internet and personal communication tools has resulted in penny stock scams becoming even easier to carry out today.
When was the Penny Stock Reform Act passed?
The Mafia had infiltrated Wall Street by the 1970s. In the 1980s Lorenzo Formato conducted penny-stock manipulations. Formato testified in Congressional hearings that during the years he promoted and sold penny stocks, he was involved in organized crime, and testified to rampant penny stock manipulation by organized crime. By 1989, American investors were being cheated out of at least $2 billion a year by schemes involving penny stocks. The Congressional hearings led to the passage of the Penny Stock Reform Act of 1990.
Is the American Mafia involved in penny stock fraud?
Mob activity on Wall Street reportedly increased in the 1990s. On February 10, 1997, The New York Times reported that “Mafia crime families are switching increasingly to white collar crimes” with a focus on “small Wall Street brokerage houses.”
In May 1997, an FBI sting operation led to charges against Louis Malpeso, Jr., a reported Colombo crime family associate, for conspiring to commit securities fraud with stockbroker Joseph DiBella and Robert Cattogio to inflate the price of a penny stock, First Colonial Ventures. All three defendants pled guilty.
Another example of an activity that skirts the borderline between legitimate promotion and hype is the case of LEXG. Lithium Exploration Group’s market capitalization soared to over $350 million after an extensive direct mail campaign. The promotion drew upon the legitimate growth in production and use of lithium, while touting Lithium Exploration Group’s position within that sector. According to the company’s December 31, 2010 form 10-Q (filed within months of the direct mail promotion), LEXG was a lithium company without assets. Its revenues and assets at that time were zero. Subsequently, the company did acquire lithium production/exploration properties, and addressed concerns raised in the press.
Are all low priced securities classified as penny stocks?
In the United States, regulators have defined a penny stock as a security that meets a number of specific standards. The criteria include price, market capitalization, and minimum shareholder equity. Securities traded on a national stock exchange, regardless of price, are exempt from regulatory designation as a penny stock, since it is thought that exchange-traded securities are less vulnerable to manipulation. Therefore, Citigroup (NYSE:C) and other NYSE-listed securities which traded below $1.00 during the market downturn of 2008–09, while properly regarded as “low-priced” securities, were not technically “penny stocks”.
Which was the first American state to pass a proper penny securities law?
Penny stock trading in the United States is now primarily controlled through rules and regulations enforced by the SEC and FINRA, the origins of this control are found in State securities law. The State of Georgia was the first state to codify a comprehensive penny stock securities law. Secretary of State Max Cleland, whose office enforced State securities laws, was a principal proponent of the legislation. Representative Chesley V. Morton, the only stockbroker in the Georgia General Assembly at the time, was the principal sponsor of the bill in the House of Representatives. Georgia’s penny stock law was subsequently challenged in court. However, the law was eventually upheld in U.S. District Court, 29 and the statute became the template for laws enacted in other states. Shortly thereafter, both FINRA and the SEC enacted comprehensive revisions of their penny stock regulations. These regulations proved effective in closing or greatly restricting broker/dealers, such as Blinder, Robinson & Company, which specialized in the penny stocks sector. Meyer Blinder was jailed for securities fraud in 1992, after the collapse of his firm.
So those were some of the key questions about penny stocks whose answers are critical for any potential penny stock investor to know. Hopefully, you will be able to make better and more well-informed decisions about investing in penny stocks now
Investing in long term stocks is a tried and tested way of earning some good returns from the stock market. Let’s check out the best long term stocks for you.
A lot of investors like investing over a long period of time so that their investments grow with time and ultimately create wealth. However, selecting the right long term stocks to buy isn’t as simple and straightforward as one might imagine. Another question that might pop in your head is, what kind of investment actually constitutes “long term” investment. This duration can vary with people but in general, any investment with a time period of five years or more is considered to be long term. In this post, we will take a look at some of the best long term stocks for you to invest your money in. These stocks have historically performed well in the long term. However, the stock market can be volatile and nothing is guaranteed. A little bit of caution and you should be good to go. Let’s get started.
This list of Best Long Term Stocks was published on 18 Sep 2020. This portfolio is currently trading in more than 16.98% profit. Check “Stocks to Buy Today” to get latest list.
Which are the Best Long Term Stocks?
1. Triton International Limited (TRTN)
Kicking off our list of the best long term stocks to buy, is Triton International Limited. This firm engages in the acquisition, leasing, re-leasing, and sale of various types of intermodal containers and chassis to shipping lines, and freight forwarding companies and manufacturers. It operates in two segments, Equipment Leasing and Equipment Trading. The company primarily leases dry, refrigerated, special, and tank containers; and chassis used for the transportation of intermodal containers, as well as provides maritime container management services. As of December 31, 2019, its total fleet consisted of 3.6 million containers and chassis representing 6.1 million twenty-foot equivalent units or 6.9 million cost equivalent units. The company also purchases containers from shipping line customers and other sellers, and resells these containers to container retailers and users. It operates in Asia, Europe, the Americas, Bermuda, and internationally. The company was founded in 1980 and is based in Hamilton, Bermuda.
2. Amedisys Inc. (AMED)
Next on our list of the best long term stocks to buy, is Amedisys, Inc. Together with its subsidiaries, provides healthcare services in the United States. It operates through three segments: Home Health, Hospice, and Personal Care. The Home Health segment offers a range of services in the homes of individuals for the recovery of patients from surgery, chronic disability, or terminal illness, as well as prevents avoidable hospital readmissions through its skilled nurses; rehabilitation therapists specialized in physical, speech, and occupational therapy; and social workers and aides for assisting its patients. The Hospice segment offers services that are designed to provide comfort and support for those who are dealing with a terminal illness, including heart disease, pulmonary disease, Alzheimer’s, or cancer. The Personal Care segment provides assistance for patients with the activities of daily living. As of February 18, 2020, the company owned and operated 479 care centers in 38 states and the District of Columbia. Amedisys, Inc. was founded in 1982 and is headquartered in Baton Rouge, Louisiana.
3. Cirrus Logic Inc. (CRUS)
Next on our list of the best long term stocks to buy is Cirrus Logic, Inc. It develops high-precision, analog and mixed-signal integrated circuits for a range of customers. It builds an analog and signal-processing patent portfolio. The firm delivers optimized products for a variety of audio, industrial and energy-related applications. Its product lines include portable audio products and non-portable audio and other products. The company was founded by Suhas S. Patil and Michael L. Hackworth in 1984 and is headquartered in Austin, Texas.
4. Diodes Inc (DIOD)
Next on our list of the best long term stocks to buy, is Diodes, Inc. It manufactures and supplies semiconductor products. It offers diodes, rectifiers, transistors, MOSFETs, protection devices, functional specific arrays, single gate, dual gate and standard logic, amplifiers and comparators, Hall-effect and temperature sensors. The firm operates through the following geographical segments: Asia, North America, and Europe. It also provides power management devices, including LED drivers, AC-DC and DC-DC switching, linear voltage regulators, and voltage references along with special function devices, such as USB power switches, load switches, voltage supervisors, and motor controllers. The company was founded on June 15, 1959 and is headquartered in Plano, Texas
5. National beverage Company (FIZZ)
Next on our list of the best long term stocks to buy, is National Beverage Corp. It engages in the development, manufacture, market, and sale of flavored beverage products. Its brands include Big Shot, Clear Fruit, Crystal Bay, Everfresh, Everfresh Premier Varietals, Faygo, LaCroix, LaCroix Cúrate, Mr.Pure, Nicola, Ohana, Ritz, Rip It, Rip It 2oz Shot, Ritz and Shasta. The company was founded by Nick A. Caporella in 1985 and is headquartered in Fort Lauderdale, Florida.
6. WD-40 Company (WDFC)
Next on our list of the best long term stocks to buy, is WD-40. This company manufactures and markets multi-purpose lubricant products and heavy-duty hand cleaners. The Company’s product acts as a lubricant, rust preventative, penetrant, cleaner, and moisture displacer. oil drip oil lubricant that allows precise application. The Company also manufactures heavy-duty hand cleaner and other household cleaning products.
7. Nevro Corp (NVRO)
Next on our list of the best long term stocks to buy, is Nevro Corp. It’s a medical device company, provides products for the patients suffering from chronic pain in the United States and internationally. The company develops and commercializes the Senza spinal cord stimulation system, an evidence-based neuromodulation platform for the treatment of chronic pain. It also offers Senza II system and Senza Omnia system products for chronic pain. The company’s solution for chronic pain also includes HF10 Therapy, which delivers neuromodulation solutions for treating chronic pain based on available clinical evidence. Nevro Corp. sells its products through its direct sales force, and a network of sales agents and independent distributors. The company was founded in 2006 and is headquartered in Redwood City, California.
8. Acadia Pharmaceuticals (ACAD)
Next on our list of the best long term stocks to buy, is ACADIA Pharmaceuticals Inc. It’s a biopharmaceutical company, focused on the development and commercialization of small molecule drugs that address unmet medical needs in central nervous system disorders. The company offers NUPLAZID (pimavanserin) for the treatment of hallucinations and delusions associated with Parkinson’s disease psychosis. It is also developing pimavanserin as a treatment for dementia-related psychosis and as an adjunctive treatment for schizophrenia that are in Phase III clinical trials; and pimavanserin as an adjunctive treatment for major depressive disorder. ACADIA Pharmaceuticals Inc. was founded in 1993 and is headquartered in San Diego, California.
9. Synaptics Incorporated (SYNA)
Next on our list of the best long term stocks to buy is Synaptics, Inc. It engages in the development, marketing, and sale of human interface semiconductor solutions for electronic devices and products. It specializes in custom-designed human interfaces that enable people to interact with mobile computing, communications, entertainment, and other electronic devices. The company was founded by Federico Faggin and Carver A. Mead in March 1986 and is headquartered in San Jose, California.
10. Quidel Corporation (QDEL)
Next on our list of the best long term stocks to buy, is Quidel Corp. This firm engages in the development, manufacture and market of rapid diagnostic testing solutions. Its portfolio includes rapid immunoassays, cardiac immunoassays, specialized diagnostic solutions and molecular diagnostic solutions. The products are directly sold to end users and distributors and for professional use in physician offices, hospitals, clinical laboratories, reference laboratories, urgent care clinics, universities, retail clinics, pharmacies and wellness screening centers. The company was founded in 1979 and is headquartered in San Diego, California.
So those are the best long term stocks to buy. If you invest in these stocks, you are very likely to get some good returns in the long run. Nothing is guaranteed in the stock market though. So proceed with caution.
Uber is one of the most recognizable names in the tech industry. It launched its IPO in May 2019 and if you are wondering how to buy Uber stock, this post will help you find the answer.
Uber Technologies Limited, famously known as Uber, provides vehicles for hire, food delivery, couriers, freight transportation, package deliveries, and electric bikes rental. The San Francisco, California based company went public and made its initial public offering (IPO) in May 2019. With a valuation of $82 billion, it was one of the largest tech IPOs ever. Since the time Uber has begun public trading, it has brought its investors along on quite a ride. If you are wondering how to buy Uber Stock, this post has got you covered. Here’s what you need to do.
How to Buy Uber Stock: Important Things to Do
1. Do some research on the stock
Just like when you buy any other stock, when you buy an Uber stock, you need to do some research and find out important details. The research process involves reading up on the company and scrutinizing everything — including its management team, its competition (Lyft, Ola etc.), and its sources of revenue. It’s important to remember that Uber isn’t just a cab provider or a meal delivery service, the tech giant also has a freight division, rents scooters and bikes, and even has a self-driving car business. Another crucial thing to consider in the COVID-19 world is the state of the rideshare and transportation industry as a whole and how it has been impacted. Uber has been on the stock market for a little more than a year but you can find info on its stock history in the company’s annual report, and its quarterly earnings. All of this info can be found on Uber’s website. You can also check out some competitive research and read analyst opinions with the help of your brokerage account.
2. See how Uber fits within your portfolio
The question that you should ask, isn’t just “how to buy Uber Stock”, you should also ask “how does Uber stock fit with my current portfolio”. As a general rule of thumb, never allocate more than 10% of your portfolio to a single stock. Investing your entire portfolio in any single stock or single industry is extremely risky. One unfortunate event or a market crash and all of your money can be wiped away in an instant.
The key solution to that problem is diversification. If you spread your investments across many companies, industries and geographical locations, you can take away a lot of the risk associated with a market downturn. Investing advisors recommend that the vast majority of your portfolio, 90% or so, should be invested in low-cost index funds. These funds allow you to invest in several companies that make up a market index, so you can own stocks in public companies such as Uber alongside many others in a single investment.
3. Decide on a budget for buying Uber stock
Prior to buying your Uber stock, you must decide the upper limit of your potential investment into Uber. In general, don’t invest money that you might have an immediate requirement for. It’s always best to invest money that you won’t really need in the next five years. Money required to fulfil short term goals should be in an easily accessible and safe medium of investment, such as a high-yield savings account. Also remember to be mindful of the cash saved up in your emergency fund. Your emergency fund should have enough money to cover at least three months of living expenses. This is especially helpful when you suddenly lose your sources of income because of a layoff at your job or your business closing down. You also have the option to carry out regular investments over time with dollar-cost averaging. This strategy spreads out your stock purchases and helps ensure that you’re not utilizing all your money at a high point for prices.
So that is how you can buy Uber stock. The tech giant is one of the largest companies in its field and despite the COVID-19 setback, it is more likely to continue growing in the future. While it is too early to say if it’s a good long term investment or not, considering where the world is headed, Uber as a company should only grow in relevance and value.
Growth vs Value Stocks is a comparison which all investors will do at some point of time in their lives. Which one of these is better? We will find out.
Growth stocks is a term used to denote stocks that possess the potential to outperform the market over the course of time. These stocks are expected to outperform the market based on their future potential. Value stocks is a term used to classify stocks that are undervalued, or trading at a price lower than their actual worth. This ensures that their returns will be good. Growth vs Value stocks is a question which most investors have on their mind. In case you are wondering which category is better for you, this post will help clear it out for you. Let’s get started.
Growth vs Value Stocks: What’s better?
Growth Stocks vs. Value Stocks
As per analysts, growth stocks possess a great potential to outperform the entire market (or a specific segment of the market) over a period of time.
Growth stocks are usually found in small-, mid- and large-cap sectors. However, they can’t be growth stocks forever. Once the analysts feel that the stocks have achieved their growth potential, they aren’t called growth stocks anymore. Companies which have growth stocks are expected to expand considerably over the next few years. This expansion is usually brought about by a product or line of products that are expected to sell well. It can also be caused by the fact that these firms appear to run better than their competitors and that is expected to help them earn an edge in the market.
A value stock is generally traded at an equity price lower than the stock price of certain companies within the industry. The dividends, earnings, or sales are lowered to make it more appealing to value investors. Investors use this to calculate the value of the stock of a company:
Price-to-book ratio (P/B ratio) – It’s calculated by dividing the company’s stock price by its book value per share. Book value is the total assets minus any liabilities. Low P/B ratios can be indicative of undervalued stocks, and can be useful when finding a value stock.
Price-to-earnings ratio (P/E ratio) – Calculated by dividing the company’s stock price by its earnings per share. P/E ratio helps to determine the relationship between the stock price in the market and its actual earnings as per books. Low P/E ratios indicate that the stocks are undervalued and thus have a chance of future increment in share price.
Price-to-sales ratio (P/S ratio) – Calculated by dividing the market capitalization by the company’s total sales or revenue. Market capitalization means the total outstanding shares multiplied by the share price per share in the market. A low P/S ratio indicates a good buy as the stock is undervalued.
A value stock will have a bargain-price as investors see the company as unfavorable in the marketplace. Or VS can be within a sector that trades at a discount to the broader market. Negative publicity from low earnings reports or legal problems also indicates a value stock as the market will negatively view the company’s long-term value.
A value stock will most likely come from a mature company with a stable dividend issuance that is temporarily experiencing adverse events. But, companies that have recently issued equities have high-value potential as many investors may be unaware of the entity.
However, neither of these outlooks are perpetually correct. There are also some stocks which can easily be classified as a blend of both the categories. As a result, Morningstar Inc. classifies all of the equities and equity funds that it ranks into either a growth, value, or blended category.
Which Is Better?
When we try to compare the historical performances of growth and performance stocks, the results need to be evaluated in terms of time horizon and the amount of volatility, also accounting for the risk that was taken on the way of achieving them.
Value stocks theoretically possess a lower level of risk and volatility because they are usually found among larger, more established companies. Even in scenarios where they fail to return to the target price that analysts or the investor predict, they will still provide significant capital growth. These stocks also pay good dividends.
Despite all the pros, value stocks are usually expected to be riskier than growth stocks because of the skeptical attitude the market has toward them. Investing in value stocks or value investing depends on a premise that the market is eventually going to recognize the potential of undervalued stocks and the price will rise accordingly, helping the investors earn significant profits.
In order for value stocks to become profitable, the market needs to change the company perception which is definitely far riskier than a growth entity developing. The underlying risk leads to value stocks having a higher long-term return than a growth stock. One of the biggest risks associated with investing in a value stock is the probability that the potentially undervalued stock never realizes its projected value.
Growth stocks, meanwhile, will usually refrain from paying out dividends and will instead reinvest retained earnings back into the company to expand. Their loss probability can also end up being higher, especially if the company is unable to keep up with growth expectations.
Let’s take the example of a company whose new product actually ends up being a flop and that is bound to lead to a drop in the stock price. Growth stocks tend to be very high risk-high reward style of investment.
Growth vs Value Stocks: Historical Performance
Based on what we discussed above, we might draw the conclusion that growth stocks would post the best numbers over longer periods. However, the opposite has actually been true. This is based on a Seeking Alpha report published by research analyst John Dowdee in which he broke stocks down into categories that reflected both the risk and returns for growth and value stocks in the small-, mid- and large-cap sectors, respectively.
The study reveals that from July 2000 until 2013, when the study was conducted, value stocks outperformed growth stocks on a risk-adjusted basis for all three levels of capitalization, despite being much more volatile than their competition.
But this was not the case for shorter periods of time. Between 2007 to 2013, growth stocks yielded higher returns in each cap class. John Dowdee ultimately concluded that the study didn’t really come up with a concrete answer as to which type of stock was truly superior to the other on a risk-adjusted basis. He stated that the winner in each scenario came down to the time period during which they were held.
Constrastingly, is a study published in the Financial Planning magazine, Craig Israelsen demonstrated the performance of growth and value stocks in all three capsizes over a 25-year period from the beginning of 1990 to the end of 2014. The returns on this chart show that large-cap value stocks provided an average annual return that exceeded that of large-cap growth stocks by about three-quarters of a percent. The difference proved to be even larger for mid- and small-cap stocks This info was derived on the performance of their respective benchmark indices and the value stocks came out on top once again.
The study also went on to demonstrate that over every rolling five-year period during that time, large-cap growth and value stocks performed very similarly. Small-cap value beat its growth counterpart about three-quarters of the time over those periods, but when growth prevailed, the difference between the two was often much larger than when value won. Over rolling 10 periods, small-cap value stocks outperformed growth stocks almost 90% of the time. Mid-cap value stocks also outperformed their growth stocks counterpart during the same timeframe.
Growth vs Value Stocks: Conclusion
Regardless of all kinds of detailed analysis and data crunching, the ultimate choice between growth and value stock depends upon the investor’s preference. An investor’s personal risk tolerance, investment goals, and time horizon also matter. However, investors must remember that over shorter periods, the performance of either growth or value is also dependent largely upon the point in the cycle that the market happens to be in.
Value stocks usually outperform other stocks at the time of bearish markets or recessions. Growth stocks on the other hand, provide the best returns during bullish markets or phases of economic expansion and growth. So if you are a short term investor or an investor who is trying to time the market, ensure that you take these factors into account.
If you venture into the world of robo advisors, one of the most prominent battles is the Betterment vs Charles Schwab Intelligent Portfolios battle. As these titans lock horns, who will emerge victorious?
Betterment vs Charles Schwab Intelligent Portfolios is a raging debate in the world of robo advisors. They are both extremely popular among modern investors and they both offer a host of great features. In this post, we will compare the two and help you decide the victor of the Betterment vs Charles Schwab Intelligent Portfolios battle. Let’s get started.
Betterment vs Charles Schwab Intelligent Portfolios: Battle of the Robo Advisors
What is Betterment: Pros and Cons
As far as the field of robo-advisors is concerned, Betterment is one of the pioneers. Betterment is one of the first to use technology to recommend a portfolio and automate the investment process. Over the years since its founding in 2008, the firm has added additional asset classes, launching a savings product in July 2019. A checking account is rolling out in 2020.
There are several ways to use Betterment: you can sync all of your financial accounts to get an overall picture of your assets without investing, you can invest in one of their portfolios. You also have the option to create a Flexible Portfolio which is catered to your specifications. Taxable accounts are designed to maximize after-tax returns using tax-loss harvesting, and portfolios are rebalanced when necessary. Betterment should be considered as a goal-based platform. It also features a plethora of planning tools for users and comes with a lot of useful advice. Let’s take a look at the pros and cons of Betterment:
- Quick and easy account setup
- Portfolios are fully transparent prior to funding
- You can sync external accounts to individual goals
- Add a new goal at any time and track your progress with ease
- Easily change portfolio risk or switch to a different type of portfolio
- Users of the planning function are constantly nudged to fund a Betterment account
- The standard plan incurs a charge of $199–$299 to talk to a financial planner
- Socially Responsible portfolios are invested in exchange traded funds (ETFs)
- There is no margin lending, secured loans, or borrowing options against your portfolio
What is Charles Schwab’s Intelligent Portfolios: Pros and Cons
Charles Schwab’s Intelligent Portfolios offering was made available to the public in 2015. It immediately grabbed attention because of its zero-fee advisory service with a minimum investment of $5,000. Later on, the company also launched a premium service that allowed its customers unlimited access to one-on-one guidance from certified financial planners. The financial planners can generate a personalized action plan for an initial fee of $300 with monthly charges of $30. To avail the premium service, investors must have at least $25,000 in their investment corpus. This review and our rating focus on the standard offering, but we will cover some of the attributes of the premium product as well.
Schwab’s service sets up a portfolio chosen from 53 exchange traded funds (ETFs) across 20 asset classes, including commodities. Some other prominent robo advisors in the market offer access to a commodity ETF. Part of your portfolio, usually 8% to 10%, remains in cash, which is one of the ways Schwab earns money while charging no management fee. The company’s other sources of revenue are management fees earned on the Schwab ETFs held in the portfolio and the market centers executing ETF trade orders.
The standard account gives you access to investing professionals, although not a dedicated planner. Your portfolio is monitored and rebalanced daily if required. Let’s look at the pros and cons of Charles Schwab Intelligent Portfolios.
- No management fees
- The platform includes a very easy-to-use website and app
- A standard account holder can switch to the premium level once the account minimum has been attained
- Schwab’s education offerings and library of resources are available to Intelligent Portfolio clients
- The portfolio is not revealed until the account is funded, and it is not customizable
- The platform requires higher-than-average cash balances
- Portfolio contents focus on Schwab-managed ETFs, which do generate fees for Schwab
- Little goal-planning help available
Betterment vs Charles Schwab Intelligent Portfolios
Betterment vs Charles Schwab Intelligent Portfolios: Management
Accounts are evaluated once a month and rebalanced if they have shifted from their goal allocation. As your target date nears, your portfolio gets more conservative with the goal of locking in gains and avoiding major losses. Having this automated risk reallocation is one of the primary reasons robo-advisors have become so popular. These are standard portfolio management techniques that most investors do not have the time or dedication to actually implement.
Tax harvesting on taxable in house accounts is available for all of Betterment’s clients. The account balance doesn’t matter. This is another key point of differentiation in favor of Betterment. Betterment really shines in this category as competing robo-advisors usually require a minimum account balance of $25,000 to turn tax loss harvesting on. Tax-loss harvesting is an option set at the account level, so if you turn it on, it will be applied to all of your portfolios within your Betterment account.
Charles Schwab Intelligent Portfolios
Intelligent Portfolios are rebalanced by an algorithm that takes tax implications into account. A portfolio rebalance is triggered whenever the asset allocation drifts from its defined allocation. This could happen at any time depending on deposits, withdrawals and market activity. Accounts are monitored daily for drift.
Betterment vs Charles Schwab Intelligent Portfolios: Goal Setting
Betterment has very easy-to-follow steps for setting a goal, and each one can be monitored separately. The asset allocation is displayed in a ring, with equities in shades of green and fixed income in shades of blue. If you’re falling behind on meeting a goal you’ve set, Betterment will encourage you to put more aside. This can be a helpful prompt, particularly for young investors who may not yet feel the urgency to save for some of their longer-term goals.
Charles Schwab Intelligent Portfolios
Aside from a rudimentary college expenses lookup, this robo advisor platform doesn’t really have a lot of goal setting tools available. However, once you’ve defined your goal , the what-if analysis capabilities allow you to modify the plan by changing your retirement age or monthly savings. You’ll also check out the potential impact of changes in market returns. The dashboard built into the web site and mobile app gives you a swift update on your performance so far.
There are additional goal-setting capabilities for the premium product, including unlimited access to financial planners. it might be nice to ascertain a more robust set of options for all accounts that goes beyond the fundamentals. The analysis capabilities and tools suggest that the logic is already there to permit interested clients to supply more detail and obtain a better-targeted portfolio.
Betterment vs Charles Schwab Intelligent Portfolios: Research and Security
Betterment’s Resource Center includes dozens of informative and well-written articles about retirement planning and how to minimize your tax burden. There are also a few videos to help you figure out how to use the platform. A lot of Betterment’s articles are dedicated towards helping investors understand portfolio compositions and Betterment’s approach towards negative market events such as the COVID-19 epidemic.
Betterment’s security is sufficient. The website is encrypted, and mobile apps offer two-factor authentication. There is no excess Securities Investor Protection Corporation (SIPC) insurance carried by Betterment itself, but trades are cleared through Apex Clearing, which has risk management tools in place. Betterment clients are not placing risky trades and there is no margin lending offered, so it’s unlikely that there would be a need for additional SIPC coverage. Still, if your account has more than $500,000 in it or more than $250,000 in cash, you might consider moving the excess to a firm with additional insurance.
Charles Schwab Intelligent Portfolio
As you would expect from an established name in the field, Schwab has a large vault of resources and excellent security features. Intelligent Portfolio customers can choose from a wide variety of content available, which includes videos, online articles, podcasts (Choiceology and Financial Decoder), OnInvesting magazine, live webcasts and special events, market updates, and the Investing Insights blog. Mobile apps support fingerprint and face recognition while the website has advanced encryption security.
Betterment vs Charles Schwab Intelligent Portfolios: Account Services
You’re encouraged to set up automatic deposits, and once an account is linked during the initial account opening process, it’s easy to enable. There is no option to let you borrow against the assets held in your Betterment account. Betterment offers a “Smart Saver” account that is invested in high-yield bond ETFs, which is currently paying over 2% (as of Sept. 23, 2019).
Consolidating external accounts to provide a full picture of your assets is one of the strengths of this platform. Each outside account can have all of, or a portion of, its contents dedicated to one of your goals. This consolidated overview of assets can be quite valuable for investors, even if it comes at the price of being prompted to move more into the platform.
Charles Schwab Intelligent Portfolios
Charles Schwab Intelligent Portfolios has a nice array of account services on offer. Tax-loss harvesting is out there for clients with at least $50,000 in their Intelligent Portfolios account, and they need to enroll in the service to enable it. The tax-loss harvesting is completed by the algorithm in conjunction with the regular portfolio rebalancing. Basically the program identifies securities to sell at a loss and replace with similar securities that fit an equivalent portfolio requirement. The program is meant to evolve to the wash-sales rules.
Schwab clients can also avail a cash management account, which offers checking and debit cards. It’s worth noting that there’s no margin available, and you can’t borrow against your portfolio. The interest paid on cash is 0.7%. If you’d wish to trade individual stocks or ETFs, you’ll need to open a separate account.
Betterment vs Charles Schwab Intelligent Portfolios: Cost Comparison
Digital-only customers pay 0.25% per year in management fees, increasing to 0.40% per year for the premium plan. Betterment offers a discounted fee on assets over $2 million, dropping the digital fee to 0.15% per year on the portion of the balance that exceeds $2 million. In the premium plan, you will pay 0.30% on the balance above $2 million. The underlying ETFs incur management fees of 0.07%–0.15% per year.
You can use Betterment’s financial planning and account consolidation tools at no charge, but you will be frequently prodded to move some of your cash into an investing account.
- Monthly cost to manage a $5,000 portfolio: $1.04
- Monthly cost to manage a $25,000 portfolio: $5.21
- Monthly cost to manage a $100,000 portfolio: $20.83
Charles Schwab Intelligent Portfolios
One of the highlights of this robo advisor is the incredible fee structure.
- Monthly cost to manage a $5,000 portfolio: $0 (Premium not available)
- Monthly cost to manage a $25,000 portfolio: $0 (Premium $30/month plus $300 setup)
- Monthly cost to manage a $100,000 portfolio: $0 (Premium $30/month plus $300 setup)
Charles Schwab eliminates fees as there will be some in the ETFs they offer. However, like all ETF fees, these are relatively minor and Schwab’s ETFs hold up well to the rest of the industry. Some will argue that this is a less transparent way of charging fees, but it is definitely a clear differentiator for Schwab regardless.
So that was the Betterment vs Charles Schwab Intelligent Portfolios battle. If you are searching for the ideal robo advisor, hopefully, you will be able to decide between the two with more ease now.
Webull and Robinhood are two of the most popular brokerages which offer commission free trading and no minimum accounts. They are relatively new to the market but the tech savvy millennial population has readily embraced them both. If you are wondering which one is better for you, this post has got you covered. We will go through the different aspects of both Webull and Robinhood in this post and help you decide which one is best for you. Let’s get started with the Webull vs Robinhood matchup.
Webull vs Robinhood: The Comparison
Who is Webull best suited for?
Webull is best for the undercapitalized active trader. These are part-time traders with less than $100k to fund their account with. The zero commissions and advanced platform give new and intermediate traders a way to play small ball and learn how to trade actively.
Webull is a great tool for all swing traders. Swing traders are generally uninterested in a tool’s flawlessness execution as they are more concerned with capturing a large scale market move than a tiny intraday fluctuation.
Swing traders are also generally quite simplistic when it comes to their analysis. Rarely do they need more than a good charting platform and screener.
Who is Webull not suited for?
Most full-time day traders can’t switch to Webull and have to stick to their current brokers. The main reason behind it is the fact that active traders require direct access to the market for using their trading edge to their advantage. If they switch to a zero commission platform like Webull, they might end up saving some money in commissions, but they will end up losing more due to a slow execution speed. Webull also doesn’t have the option that allows traders to create sophisticated keyboard macros. That’s a feature which day traders can’t do without.
What is Robinhood?
Robinhood is one of the world’s most popular online trading and investment apps. It was launched in 2013 and its commission free model helps keep investor costs low and encourages them to invest more in the stocks. Investors can trade stocks, ETFs, options and even cryptocurrency without paying commissions. The app was originally developed for Apple (AAPL) – Get Report phones and tablets but has since launched an Android version as well.
Robinhood was born in the wake of the 2008 Recession. The product was created to fulfil a desire to “democratize America’s financial system”. The brains behind Robinhood also wanted to provide a more modern platform for young but jaded investors.
Why was Robinhood named so?
The app was named after the legendary outlaw Robinhood who stole from the rich and gave it to the poor”. The aim of the app was to involve the next generation into the act of investing at an earlier age. Because of its unique approach to investing, a lot of millennials have started using the low-to-no-fee app, especially the high-frequency traders.
What does Robinhood offer?
As of 2019, Robinhood offers a variety of investment vehicles including stocks, ETFs, cryptocurrency and options. The company has been valued at around $5.6 billion, following a recent Series-D investment round influx to the tune of $363 million, according to CNBC.
And, according to a recent report by JMP Securities in 2018, Robinhood is estimated to have around $1,000 to $5,000 in average assets per account – still way behind those of their competitors like Fidelity and TD Ameritrade (AMTD) – Get Report. Still, according to the company as of May 2018, Robinhood has allegedly saved customers over $1 billion in commission fees.
Webull vs. Robinhood: Which one should you choose?
As far as competitors go, Robinhood and Webull are each others’ biggest ones. Both these companies offer extremely lucrative prices which are perfect for millennial investors looking for the best bargain. Those bargain-seekers are by and large millennials, which is why both companies took a mobile-first approach, only developing desktop and web apps after establishing themselves in the industry.
Let’s go over some key differences between the brokers:
Pre-Market and After Hours Trading
If you are a Webull user, you can also trade during the pre-market/after hours with the standard account. However, Robinhood users will need a paid subscription to Robinhood Gold in order to do that. Webull allows you to trade between the hours of 4am to 8pm EST.
Because of its vast research and analysis background, Webull naturally offers more in terms of analytics and offerings. These are the research offerings offered on the web and mobile platforms of Webull:
- High quality charts (similar to TradingView) with technical indicators
- Stock screener with a surprising amount of features
- Top-down market analytics
- Stock and industry strength rankings
- Daily level of net cash inflows into indexes
- Active trader tools
Webull utilizes the leverage which is available for all of its margin accounts. Robinhood, on the other hand, requires you to subscribe to Robinhood Gold, which costs $5 per month plus interest on any margin above $1,000 that is used.
Products Available to Trade
This is a category where both Robinhood and Webull perform similarly well. Robinhood comes with zero commission options trading along with the facility to trade in cryptocurrencies. Webull, on the other hand, doesn’t offer options trading right now but allows short selling, something Robinhood doesn’t allow on their platform.
Pure stock traders will much prefer Webull, as it gives them the ability to short stocks. Hybrid traders who like to use a mix of options and stocks in their trading practice, generally swear by Robinhood and will continue to do so until Webull comes up with similar features.
Who’s Webull for?
Webull was launched in 2018 as a direct competitor to Robinhood in the commission-free mobile investing space. But unlike Robinhood, Webull appeals to veteran and novice traders, thanks to an abundance of technical tools and research. The most common users of Webull are:
- Active traders looking to reduce costs
- Beginner traders transitioning from saving to learn technical and fundamental analysis
- Mobile traders
Webull vs Robinhood: Which Platform is Better?
Trade execution is fast and simple on both platforms, but that’s where the comparisons stop. Webull simply has more to offer the intermediate and advanced trader when it comes to tools and analysis.
With Robinhood, you’ll need an outside source for your technical tools and market data. Webull provides plenty of data and research, plus the tools to separate signals from noise. The better features belong to Webull, hands down.
Webull vs. Robinhood: Which one offers better research?
Robinhood takes a beginner’s approach to trading. The charts are basic and lack indicators. You won’t find income statements or balance sheets anywhere and you’ll have to pay to get access to Morningstar research.
Listening to conference calls on the app is nice (if that’s your thing) but Webull has more to offer both technical and fundamental traders.
Webull vs. Robinhood: Cost Comparison
Webull gets the win here just for offering phone support. Robinhood only has bots and responds very slowly to customer service requests.
Webull vs. Robinhood: Tradable Asset Classes
Robinhood has more to offer from an asset standpoint thanks to options and cryptocurrencies. Webull does offer short-selling on some stocks which helps traders who want to bet against certain companies, plus a few advanced order types that Robinhood lacks. But no options and no cryptocurrencies means many traders may prefer Robinhood.
Webull vs. Robinhood: Ease of Use
Webull definitely takes longer to get used to than Robinhood, but that’s a good thing for traders who want to learn technical analysis. Robinhood will have you executing trades in a heartbeat after funding your account, while Webull will throw more analysis at you before getting to the execution screen.
So that was our Webull vs Robinhood comparison. Hopefully you will find it easier to choose between the two now.