Average investors are able to spread their investments among many different companies and industries without a lot of work.
Many beginning investors want to seek out and research the companies they are investing in. Others simply want to start investing. They are looking for a way to buy quality stock without the work. Blue Chip Baskets are a new way to invest in several stocks at once.
Blue Chips have many benefits. Although they are often considered the retiree’s choice, they have proven to be conservative investments that pay.
Morgan Stanley Dean Witter created Blue Chip Baskets in order to allow investors to buy into several blue chip companies at once. Your money basically purchases you tiny portions of different stocks. You could invest $50 and get 1/10 a share of Disney, 1/8 share of Coca-Cola and 1/20 share of Microsoft. You are able to spread out your investments over several different companies without having to pick them. You simply pick the basket and invest.
Diamonds are not just a girl’s best friend. When you purchase a share of a Diamond, you are buying a fraction of each of the 30 stocks on the Dow Jones Industrial Average. You are investing in them all. Some will go up and some will go down. The hope is that they go up more overall. Diamonds are traded on the American Stock Exchange.
Diamonds are often preferable over Blue Chip mutual funds, due to the lower expense ratio and tax efficiency.
A HOLDR will allow you to invest in a certain sector, instead of the individual companies. They are traded on the American Stock Exchange. If you expect bio-tech to go sky-high this year, you may want to invest in the entire sector instead of one or two companies. This spreads the individual stock risk out over the sector.
HOLDRs are more focused than most mutual funds. However, you must purchase them in lots comprised of 100 units. For example, if the current price is $125, you will need to purchase $12,500 worth. You will be eligible for all of the services and benefits of those that purchase the individual stocks — including dividends, annual reports and shareholder perks.
SPDRs, a.k.a. "spiders," are also traded on the American Stock Exchange. It stands for "Standard and Poor’s Depository Receipt." They trade at 1/10 of the value of the S&P 500. As the S&P goes up, they go up. As it goes down, they go down. Dividends are paid to SPDR owners every quarter.
There are many ways to diversify your investments. Diversification is a great way to mitigate your risk in the stock market. Many investors do not have time to sit and evaluate the individual companies. Blue Chip Baskets, diamonds, HOLDRs and SPDRs are the result of the demand by average investors for a simplified way to spread their investments through basket investing, instead of through mutual funds. New products are always on the rise in the financial arena. Shop around when looking at both stocks and other options for investment.
Martin Lukac http://www.MartinLukac.com , represents http://www.RateEmpire.com , an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com
