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<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>AP</span></p><p class="caption">Oracle co-CEO Safra Catz, left, and chairman Larry Ellison are two of the 12 board members rejecting the proposal for a gender pay gap audit at Oracle.</p></div><p></p></div></div>Et tu, Safra? </p><p>When Oracle meets for its annual shareholder meeting on November 17, the board of directors will vote to reject a shareholder proposal requesting that the company do a payroll audit to check for a gender pay gap. </p><p>In a filing <a href="https://www.sec.gov/Archives/edgar/data/1341439/000119312517297858/d382058ddef14a.htm#toc382058_46">with the Security and Exchange Commission</a> on Thursday, the board - made up of nine men and three women - indicated that it would reject the proposal unanimously. </p><p>Gender wage gap audits have been increasingly common as tech companies feel pressure from both their employees and the US government to prove that their pay structures don't discriminate against women. <a href="http://www.latimes.com/business/technology/la-fi-tn-0323-pay-gap-20160323-story.html">Several studies</a> have found that men in tech <a href="https://www.cnbc.com/2017/09/28/the-tech-sector-pay-high-salaries-but-its-workers-are-far-from-equal.html">continue to make more money</a> than women for doing the same work. </p><p>One of Oracle's largest competitors, Cisco, completed its own audit of US pay in August 2016. After looking for gaps along the lines of race and gender, the company ultimately made adjustments to <span>2% of its employees salaries, the total of which represented just 0.1% of the total US base payroll, the company said. </span></p><p><span>Similarly, Apple, Amazon, eBay, Intel, Expedia, Microsoft, and Adobe have <a href="http://www.businessinsider.com/arjuna-capital-slams-google-over-equal-pay-for-women-data-2017-9">all also released gender pay comparison metrics</a> at the request of their shareholders. </span></p><p>Oracle's shareholder request was filed by shareholders <span>Pax World Mutual Funds, which bills itself as a socially responsible mutual fund.</span></p><h2><span>Two CEOs</span></h2><p><span>The proposal requests that Oracle perform an audit for a gender wage gap by April 2018, and present steps to resolve the gap should one be found. The proposal notes </span><span>that w</span>omen make up 29% of Oracle's employees, but only hold 23% of its leadership positions.</p><p>However, in its statement rejecting the proposal, Oracle argued that it is already doing enough. </p><p>"<span>Diversity and inclusion in our workforce starts at the top," Oracle wrote in its statement, citing </span>one of its two CEOs, Safra Catz, as an example of strong female leadership at the company. It also highlights the board, which is 25% female, as an example of equality.</p><p>"<span>We make every effort to attract, invest in and develop the talents of employees who reflect the diversity of our customers and the communities in which we do business...We are also committed to pay equity for all of our employees and ensuring that we do not discriminate on the basis of gender or any protected category in the full range of our compensation decisions," the statement says. </span></p><p><span>"The board does not believe that this stockholder proposal would enhance Oracle's existing commitment to fostering a diverse and inclusive workplace," the statement says. </span></p><p>While shareholder proposals are almost always voted down by companies, Oracle's rejection comes at a time when tech companies face increasing external pressure to prove that their companies are friendly to women. </p><p>Google, for one, has been at the forefront of the conversation since the Department of Labor filed a lawsuit earlier this year demanding that the company turn over more information about how employees are compensated. Google claimed that its own internal audits showed no sign of a pay gap, and <a href="https://www.blog.google/topics/diversity/update-department-labor-lawsuit/">succeeded in convincing a judge</a> that the Department of Labor was asking for too much internal data. </p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/apple-iphone-6s-vs-iphone-8-x-upgrade-2017-9">I won't trade in my iPhone 6s for an iPhone 8 or iPhone X - here's why</a></h3>        <div>                    </div>    </div>

Oracle's board will unanimously reject a shareholder request for a gender pay gap audit

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div><p></p></div></div><em><strong>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.</strong></em></p><p><strong><a href="http://wealthmanagement.com/mutual-funds/vanguard-unseats-fidelity-target-date-king">Vanguard is now king of target-date funds</a> (Wealth Management)</strong></p><p>Vanguard has surpassed Fidelity as the largest target-date fund provider. The mutual fund giant now controls 27% percent of the space with $193 billion in assets under management.<strong> </strong>Fidelity fell from the top spot after seeing a net outflow of approximately $7.7 billion to in 2014. T. Rowe Price held the third spot. According to Morningstar, the top three hold 71% of market share.  </p><p><strong><a href="http://www.financial-planning.com/news/tax_planning/worst-states-for-irs-audits-2692476-1.html">The states with the most audits</a> (Financial Planning)</strong></p><p>The April 15 tax deadline is soon approaching, and that means audit notices will be coming. TaxAudit.com studied 1.4 million 2013 tax filings, and concluded filers living in California, Colorado and Nevada were the most likely to be audited by the Internal Res venue Service. As for state filings, citizens of New York and Massachusetts see the most audits from their states.  </p><p><strong><a href="http://www.investmentnews.com/article/20150408/FREE/150409940/fidelity-unveils-program-to-help-advisers-unload-unwanted-clients">Fidelity is helping advisors get rid of unwanted clients</a> (Investment News)</strong></p><p>Fidelity's Clearing and Custody division and registered advisory firm FirstPoint Financial are teaming up to help advisers clear their books of unwanted clients. FirstPoint Financial will pay advisers 35 basis points on all revenues earned for the year, giving advisers an option to part ways with those clients who they feel are no longer a good match for their services. One group in particular that is likely to get passed off is millennials, as they have yet to amass a large amount of savings. Investment News reports, "A 2014 Millionaire Outlook study by Fidelity found that 76% of financial advisers focus their business on clients who are 49 years or older, or those with $1 million or more in assets to invest."</p><p><strong><a href="http://www.fa-mag.com/news/many-investors-unaware-of-their-broker-fees--survey-says-21333.html">Many investors don't know how much they are paying in fees</a> (Financial Advisor)</strong></p><p>A survey conducted by the North American Securities Administrators Association (NASAA) showed approximately one-third of investors are unaware of the fees they are being charged by their brokers. Financial Advisor notes while most customers would like to see a breakdown of the fees, "less than 10 percent of customers said this easy-to-grasp display of expenses is available to them." The NASAA announced it will work with the Financial Industry Regulatory Authority, the Securities Industry and Financial Markets Association, the Financial Services Institute and representatives of broker-dealer firms to establish a framework to standardize the process. </p><p><strong><a href="http://www.thinkadvisor.com/2015/04/08/sec-charges-pacific-west-capital-with-life-settlem?t=legal-compliance">Pacific West Capital charged with life settlement fraud</a> (Think Advisor)</strong></p><p>The Securities and Exchange Commission has charged Pacific West Capital with fraud for its role in the sale of $100 million worth "life settlement" investments. According to the SEC, Pacific West Capital, and its owner, Andrew B. Calhoun IV, defrauded investors by using the proceeds from its sale of "life settlement" products to fund investments sold previously. Think Advisor says "Pacific West and Calhoun did not disclose this practice to investors and undertook it to make life settlement investments appear successful when, in fact, Pacific West had used up the primary reserves to pay premiums on those policies."  </p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/drunk-driving-checkpoint-regulation-hack-2015-2">A lawyer in Florida has come up with an ingenious way for drivers to evade drunken-driving checkpoints</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="EwZXE5czqobpJLXsPUCBDsxSm8XxaRw0" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Vanguard claims the throne of target-date funds

New Delhi, Jan 12 () Reliance Home Finance on Sunday said an independent forensic audit, mandated  by lenders, has found no fraud, embezzlement or diversion and siphoning of funds in the company that is seeking debt resolution.
<p>In a statement, the company said the audit made "no adverse findings" on the quantum and end-use of lending.
</p><p>As part of the debt resolution process, lenders of the company, which had defaulted on some debt repayment obligation following the crisis in shadow banking industry, appointed Grant Thornton in August 2019 for forensic audit, as required under the RBI guidelines on Prudential Framework for Resolution of Stressed Assets under change of control and management.
</p><p>The forensic auditors were specifically mandated by the lenders, as part of the Terms of Reference, to report on any diversion/ siphoning of funds, any embezzlement, malafide operations, falsification of accounts, fraudulent transactions and whether any frauds by promoter, company, employees or any associates had been observed, the statement said.
</p><p>"The forensic auditors have submitted their report, and there are no adverse findings recorded on 11 key parameters, including diversion and siphoning of funds; embezzlement, malafide operations, falsification of accounts, fraudulent transactions and frauds," it said.
</p><p>The forensic report has confirmed the potential group entities exposure through several intermediate unlisted entities at Rs 7,984 crore (including interest).
</p><p>This, the company said, had been voluntarily and publicly disclosed even before the commencement of forensic audit to its auditors, regulators, lenders, and also in the latest annual financial statements, which were duly approved by the shareholders.
</p><p>Reliance Commercial Finance also made an almost identical announcement.
</p><p>Reliance Home Finance said it had prior to the commencement of the forensic audit disclosed that the outstanding amount of Rs 7,984 crore has almost entirely been utilised by the potential group entities only for making principal repayment and interest to banks, financial institutions, NBFCs, NCD holders, etc.
</p><p>"There is no adverse finding in this regard either, in the forensic audit report," the company said.
</p><p>The other findings in the forensic audit report are limited to "alleged regulatory anomalies as regards to group exposure and limit for non-housing loan portfolio; and alleged deviation from certain policies and procedures.
</p><p>"The National Housing Bank (NHB), to whom all the facts have been provided before the commencement of the forensic audit, have already taken due note of the same, and has taken actions including imposition of requisite penalty," the statement said.
</p><p>NHB has also issued directions on the company as regard to the alleged regulatory anomalies which include periodic review of loans, concentration of credit, related party transactions and extension of maturity date of NCDs.
</p><p>It has directed the company to increase the housing loan disbursements and reduce corporate exposure, it added.
</p><p>"Based on completion of the forensic audit, the company has now requested its bankers to proceed on a fast-track basis with the debt resolution plan under 'change of management and control' in the overall interests of all lenders, including over 20,000 retail NCD holders, and over 8 lakh shareholders," the company statement said.
</p><p>Reliance Home Finance is part of the Anil Ambani Group that focused on affordable housing finance, high value home loans, loan against property, construction financing and property services. 
</p><p>It started raising money through debentures around eight years ago and defaulted on some payments post-IL&amp;FS crisis when entire NBFC sector came under pressure because of asset liability mismatches as many of them borrowed short-term money to fund long-term assets.
</p><p>Many investors to NBFCs such as banks, mutual funds, insurance companies and HNIs started withdrawing from the market. There was a total credit freeze in the market as rollover of money in the commercial paper market to NBFCs stopped. The new money was hard to come by or available at high interest rates. These developments impacted the Reliance Home Finance severely.
</p><p>On January 3, Reliance Capital had informed the stock exchanges that as directed by the lead bank to an inter-creditor agreement that was being worked on, the amounts due and payable by Reliance Home Finance in respect of unsecured NCDs were delayed.
</p>After the company defaulted on bond repayments, bondholders were considering legal action that might include seeking recovery proceedings through the National Company Law Tribunal (NCLT).  ANZ  BAL
BAL

Forensic audit finds no fraud, fund diversion at Reliance Home Finance

<ul class="summary-list"><li>Wyoming Republican Sen. <keyword id="12215589" type="UNKNOWN" weightage="60" keywordseo="cynthia-lummis" source="Orion">Cynthia Lummis</keyword> said Wednesday that <keyword id="11931190" type="UNKNOWN" weightage="60" keywordseo="stablecoins" source="Orion">stablecoins</keyword> should be fully backed by cash.</li><li>She said that any regulatory framework for stablecoins will require full cash-backing, similar to a money market mutual fund.</li><li>The <keyword id="11893902" type="UNKNOWN" weightage="60" keywordseo="bitcoin" source="Orion">bitcoin</keyword> holder and outspoken <keyword id="11893898" type="UNKNOWN" weightage="60" keywordseo="crypto" source="Orion">crypto</keyword> proponent added that stablecoins should follow anti-money laundering and sanctions laws.</li></ul><p>Wyoming Republican Sen. Cynthia Lummis, a vocal crypto supporter, said Wednesday that <a href="https://markets.businessinsider.com/news/currencies/tether-stablecoin-crypto-circle-gemini-usd-coin-2021-07">stablecoins</a> should be fully backed by cash.</p><p>Citing "novel risks" to the US economy, she said on the <a href="https://www.c-span.org/video/?515034-1/senate-session">Senate floor</a> that any regulatory framework for stablecoins will need to require full cash-backing, similar to a money market mutual fund.</p><p>"Stablecoins must be 100% backed by cash and cash equivalents, and this should be audited regularly," she said. "It may be the case that stablecoins should only be issued by depository institutions or through money market funds or similar vehicles."</p><p>Some stablecoins like <a href="https://markets.businessinsider.com/news/currencies/tether-stablecoin-crypto-circle-gemini-usd-coin-2021-07">tether and USD coin have generated controversy</a> over whether their cash reserves are safe enough for a cryptocurrency supposedly equivalent to a dollar.</p><p>Lummis, a <a href="https://markets.businessinsider.com/currencies/btc-usd">bitcoin</a> holder who has been one of the most outspoken crypto proponents in the Senate, added that stablecoins should follow all relevant anti-money laundering and sanctions laws.</p><p>But as long as these regulatory issues can be sorted out, Lummis expressed bullishness on the role of stablecoins in the US economy.</p><p>"Properly supervised, stablecoins are not tantamount to the so-called wildcat banks of the 19th century," she said. "Stablecoins have an important role to play moving forward."</p><p>Last month, Lummis delighted crypto watchers when she helped <a href="https://markets.businessinsider.com/news/currencies/crypto-tax-reporting-bill-infrastructure-lummis-wyden-toomey-senators-amendment-2021-8">propose a critical amendment to an infrastructure bill that fixed</a> what critics called an overly broad definition of crypto "brokers." Though the amendment was ultimately scuppered, she won plaudits from crypto insiders.</p><p>"Without [Lummis's] amendment, the US will spend hundreds of millions collecting information on transactions that could never generate actual tax revenue," Marco Santori, Kraken's chief legal officer, told Insider previously.</p>

Crypto-friendly senator Cynthia Lummis warns stablecoins must be fully cash-backed and regulated

<ul class="summary-list"><li><strong>America's surging pile of debt means investors should focus on tax-saving investment strategies, according to Bank of America.</strong></li><li><strong>The US government has two options to tackle its debt pile: either raise taxes or accept higher inflation.</strong></li></ul><p>America's fast-growing pile of debt suggests investors should start to focus on tax-efficient investment strategies, according to <a href="https://markets.businessinsider.com/stocks/bac-stock?miRedirects=1">Bank of America.</a></p><p>The bank noted that the $34 trillion in US debt is poised to exceed 100% of GDP by July, approaching its record 112% of GDP reached during World War II. </p><p>And <a href="https://markets.businessinsider.com/news/bonds/us-debt-levels-fed-print-money-debasement-bank-of-america-2024-3">there are no signs of the pile of debt getting smaller</a> anytime soon, as about 90% of the government's budget rises automatically, according to the bank.</p><p>Only 13% of government spending is non-defense discretionary, while the other 87% is "politically untouchable mandatory entitlement spending" like Social Security and Medicaid, defense spending, or net interest expense. </p><p>So, how does it all end?</p><p>"Not with drama or default, but with taxes or with the hushed acceptance of that universal tax: inflation," Bank of America's Research Investment Committee said in a note on Tuesday.</p><p>That means looking forward, investors should prepare for either higher taxes or higher inflation, and in either scenario it makes sense to own stocks as the most tax-efficient strategy, according to the bank.</p><p>Here are five ways to boost the tax efficiency of investment portfolios.</p><h3>1. Own ETFs over mutual funds</h3><p>"ETFs are more tax efficient than mutual funds thanks to the creation and redemption process for shares," Bank of America said. </p><p>"Mutual funds are sometimes forced to sell assets to meet redemption requests. Any realized capital gains from sales are distributed to shareholders, triggering a tax event. On average, mutual fund tax events cost investors 1.3% per year vs just 0.4% for ETFs."</p><h3>2. Stocks are more tax-efficient than bonds</h3><p>"The income paid by US government bonds is taxable at federal ordinary income rates, up to 37% for top earners. Interest from cash accounts, I-bonds, and other fixed income is also taxable as ordinary income. Most equity payouts, however, are classified as qualified dividend income, and taxed at a maximum rate of 20%," Bank of America said.</p><h3>3. When owning bonds, focus on municipals</h3><p>For investors' bond allocations, it makes sense to focus on high-yielding issues in the municipal space, as well as preferred ETFs, which act as quasi-bond funds. </p><p>These two types of fixed-income investments not only get taxed at lower rates than Treasury bonds, but they've outperformed both the US Aggregate Bond Index and Treasury bonds over the long-term.</p><h3>4. Stock buybacks are more tax-efficient than dividends</h3><p>"Investors looking for long-term wealth accumulation should favor buybacks over dividends," Bank of America said, arguing that buybacks offer "low-friction compounding."</p><p>"Share repurchases are more tax-efficient than dividends. Even if dividends are qualified, payouts are taxed at the end of every year where they're received. An investor who pays taxes on reinvested dividends has less money to compound every year. Holding companies that execute repurchase programs do not typically trigger a tax event until an investor sells their shares," Bank of America said.</p><h3>5. Take a second look at your portfolio</h3><p>Investors should take a fresh look at their portfolio and audit the holdings to better understand their tax liability.</p><p>Investment products that typically come with a lower tax bill include MLP ETFs, US sector ETFs, and international stock ETFs. In all three cases, taxes can be lowered thanks to tax-exempt return on capital distributions or qualified dividend income. </p>

5 ways to lower your portfolio's tax bill as government debt bites, BofA says

<ul class="summary-list"><li>You can invest in the <keyword id="123873" type="PERSON" weightage="60" keywordseo="SP-500">S&amp;P 500</keyword> via mutual funds or ETFs that contain all the S&amp;P index's listed stocks.</li><li>S&amp;P 500 index funds offer a low-cost, low-risk way to invest in a representative array of major US companies. </li><li>Though diversified, S&amp;P 500 funds omit growth and foreign stocks, which can impact their gains.</li></ul><p>In the investment and financial world, one of the most commonly cited and closely watched benchmarks is the Standard &amp; Poor's 500 Index or <a href="https://markets.businessinsider.com/index/s&amp;p_500_500" target="_blank" rel="noopener">S&amp;P 500</a> for short. Its moves are widely considered to be a proxy for the performance of the stock market overall. Individual stocks, stock funds, and other assets are all compared against it. </p><p>The S&amp;P 500 "is by far, the most widely used indicator of investment success or failure," says Cory Clark, chief marketing officer at<a href="https://www.dalbar.com/" target="_blank" rel="noopener"> DALBAR, Inc</a>., which evaluates and audits business practices. </p><p>If you subscribe to the belief - as many do - that investing in a representative sample of the entire market ultimately yields better returns than trying to pick individual winners, the S&amp;P 500 is one of the best samples available. </p><p>Unfortunately, you can't directly invest in the S&amp;P 500 - it's a <a href="https://www.businessinsider.com/what-is-a-stock-market-index" target="_blank" rel="noopener">stock market index</a>, or group of stocks, not an individual stock itself. But there are vehicles that you can invest in, called index funds, that act as a proxy for this proxy - duplicating its list in their portfolios, and mimicking its performance. </p><p>Here's how investing in the S&amp;P 500 works.</p><h2>Why invest in the S&amp;P 500?</h2><p>But first, a quick look at the S&amp;P 500 index itself. Founded in 1957, it includes 500 of the largest US-based public companies (it actually has 505 stocks because some companies issue more than one class of stock shares). It's what's known as a weighted index, meaning companies with a higher market capitalization, or valuation, carry more clout in the calculations, so the overall index correlates more closely to the broader market.</p><p>The S&amp;P 500's worth is cited in dollars, the collective value of the stock shares within it. In January 2021, it stood at $3,750. Over the past 10 years, the S&amp;P 500 has posted annualized returns of 11.18%.</p><p>Although it's limited to large-cap companies, the S&amp;P 500 is diverse enough "to reflect all major sectors of the economy," says Clark - from industrials to information tech to consumer goods to health care. The companies within it are collectively worth about <a href="https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview" target="_blank" rel="noopener">80% </a>of US stocks' total value. </p><p>So if you want to invest in the spectrum of the US stock market, and in effect the US economy, the S&amp;P 500 is a good entry point.</p><h2>How can I invest in the S&amp;P 500?</h2><p>You can't actually invest in the S&amp;P 500 - it'd be like trying to buy a list of groceries, instead of the groceries themselves. Instead, you invest in the S&amp;P 500 through index funds. They're like baskets that contain all the groceries on the S&amp;P list.</p><p>An <keyword id="160601" type="ORGANIZATION" weightage="60" keywordseo="Index-Fund">index fund</keyword> is a type of financial vehicle designed to mimic a particular market index. It pools investors' money to purchase a portfolio of stocks or other securities. In the case of S&amp;P 500 index funds, the stocks are those of the companies listed in the S&amp;P 500. </p><p>Most index funds are "<a href="https://www.businessinsider.com/passive-investing" target="_blank" rel="noopener">passively managed</a>," meaning the investment professionals overseeing them don't trade the holdings very much. Their goal is to duplicate the index's make-up and performance, instead of trying to beat it. Index funds appeal to long-term-oriented, buy-and-hold investors, who like to let their assets grow on auto-pilot.</p><h2>Types of S&amp;P 500 index funds</h2><p>S&amp;P 500 index funds come in two basic types: mutual funds and exchange-traded funds (ETFs).</p><p>Both contain portfolios that invest in the companies of the S&amp;P 500. "The main difference between a mutual fund and an ETF is that an ETF can be traded throughout the day, like a stock," says Jay R. Ritter, the Joseph B. Cordell Eminent Scholar Chair at the <a href="https://warrington.ufl.edu/" target="_blank" rel="noopener">University of Florida's Warrington College of Business</a>. In contrast, mutual fund shares are priced and traded at the end of the day. </p><p>Also, mutual funds often have a higher minimum investment than ETFs - sometimes, a few thousand dollars. ETFs shares are priced like individual stock shares; prices range, and you can buy as many or as few as you wish. The initial investment in an ETF is often lower</p><p>Overall, though, "ETFs and mutual index funds are more alike than different," according to Milo Benningfield, a certified financial planner and founding principal of <a href="https://www.benningfieldadvisors.com/" target="_blank" rel="noopener">Benningfield Financial Advisors</a>. "They're all pooled investment vehicles."</p><h2>Do some S&amp;P index funds perform better than others?</h2><p>S&amp;P 500 index funds may differ slightly in the exact makeup of their portfolios. The <a href="https://investor.vanguard.com/etf/profile/VOOG" target="_blank" rel="noopener">Vanguard S&amp;P 500 Growth ETF</a>, for example, emphasizes the <a href="https://www.businessinsider.com/what-is-a-growth-stock" target="_blank" rel="noopener">growth-oriented companies</a> in the S&amp;P 500 (ones expected to appreciate faster than average stocks). The <a href="https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&amp;ticker=SPHDSPHD" target="_blank" rel="noopener">Invesco S&amp;P 500 High Dividend Low Volatility ETF</a> specializes in stocks that offer especially strong dividends.</p><p>But they're all tracking the same basic index, so the results are pretty similar. Funds generally post an annual yield within a percentage point or so of each other.</p><p>What can impact performance - and of course, affect your returns - are the collective annual fees a fund charges, known as the <a href="https://www.businessinsider.com/what-is-expense-ratio" target="_blank" rel="noopener">expense ratio</a>. When comparing a fund's yields, it can help to dig a little to see if they're net of expense ratios, or research and other costs that can drag down an investor's return. </p><p>That kind of information is usually available in the fun's prospectus, or through online financial sites. "Index fund fees often range from a low of about .05% [of a client's invested assets] to 0.5%," according to Ritter. Mutual funds' fees tend to be higher than those of ETFs'.</p><p>Otherwise, "the decision of which fund to go with "sometimes comes down to a matter of convenience, notes Benningfield, "since providers like Vanguard offer access to a host of index and other funds in one location."</p><h2>How to invest in S&amp;P 500 index funds</h2><p>All the leading brokerages and financial services companies offer S&amp;P 500 index funds, both the traditional firms like Charles Schwab, Fidelity, and Vanguard and online trading platforms and apps, like Robinhood and Stash. S&amp;P 500 index funds are particularly popular with robo-advisors like Wealthfront and Betterment, which use computer algorithms to invest and periodically rebalance investors' portfolios. </p><p>Some of the leading S&amp;P 500 index funds include: </p><ul><li><a href="https://investor.vanguard.com/mutual-funds/profile/VFIAX?WT.srch=1&amp;cmpgn=PS:RE&amp;s_kwcid=AL!11156!3!405638737846!b!!g!!%2Bvanguard%20%2B50020%2B500" target="_blank" rel="noopener">Vanguard 500 Index Fund Admiral Shares</a> </li><li><a href="https://www.ssga.com/us/en/institutional/etfs/funds/spdr-sp-500-etf-trust-spy" target="_blank" rel="noopener">State Street Global Advisors' SPDR S&amp;P 500 ETF Trust</a> </li><li><a href="https://fundresearch.fidelity.com/mutual-funds/summary/315911750" target="_blank" rel="noopener">Fidelity 500 Index Fund</a> </li><li><a href="https://investor.vanguard.com/mutual-funds/profile/vtsax" target="_blank" rel="noopener">Vanguard Total Stock Market Index Fund Admiral Shares</a> </li><li><a href="https://www.ishares.com/us/products/239726/ishares-core-sp-500-etf" target="_blank" rel="noopener">iShares Core S&amp;P 500 ETF</a> </li></ul><p><strong>Historical note: </strong>Vanguard Group founder John C. Bogle created the concept of an index fund for individual investors in 1976, with Vanguard's First Index Investment Trust. Composed of S&amp;P 500 stocks, it was ridiculed as "un-American" and "a sure path to mediocrity," according to a Vanguard history <a href="https://about.vanguard.com/who-we-are/a-remarkable-history/founder-Jack-Bogle-tribute/" target="_blank" rel="noopener">site</a>. During its initial underwriting, the fund only collected $11 million; but today, the Vanguard 500 Index Fund (as it was renamed)  has grown to be one of the industry's largest funds - and one of its most successful. </p><h2>What are the upsides of S&amp;P 500 funds?</h2><ul><li><strong>They're a good proxy for stocks overall</strong>. An S&amp;P 500 Index fund tends to correlate "more closely to the broader market, so it's better than some other indexes, like the Dow Jones Industrial Average), which only tracks 30 stocks," says Ritter. In 2020, for example, the Dow climbed 7.2%, but the <a href="https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview">S&amp;P 500 gained nearly 16%</a>.</li><li><strong>They're low-risk</strong>. Any fund offers the safety of diversification. With 500+ stocks in their portfolio, S&amp;P 500 funds are especially diversified, their securities representing a range of industries. The companies within them tend to be safe, stable, blue-chip companies like Visa, Procter &amp; Gamble, Johnson &amp; Johnson, and Berkshire Hathaway.</li></ul><h2>What are the downsides of S&amp;P 500 funds?</h2><ul><li><strong>They have investment gaps.</strong> The S&amp;P 500 index "tends to be dominated by the largest companies, Benningfield says, "and it's also limited to companies with a US headquarters." So a major e-commerce business like Alibaba.com, which is based in China, wouldn't be included in an S&amp;P 500 index fund. Nor would a small but fast-rising domestic corporation. Tesla is a case of an up-and-comer that wasn't included for years (<a href="https://markets.businessinsider.com/news/stocks/tesla-stock-price-reaction-sp500-index-inclusion-5th-largest-tsla-2020-12-1029910902" target="_blank" rel="noopener">it did ascend to the index in December 2020</a>).</li><li><strong>They may not post the strongest returns.</strong> The diversified, passive approach of S&amp;P 500 funds - like most index funds - means an investor's downside is generally limited. But so is the upside: There's less of a chance to make a killing by betting on a winner. Even if a fund did, it might not benefit as much, since the returns would be mitigated by the other holdings in the portfolio. </li></ul><h2>The financial takeaway</h2><p>The S&amp;P 500 is a grouping of stocks, not the stocks themselves, so there's no way to directly invest in it. But S&amp;P 500 index mutual funds and ETFs buy securities that track or duplicate the index - and investors can buy shares in them.</p><p>An S&amp;P 500 index fund furnishes an excellent entry into the stock market, since it offers a broad - though not perfect - representation of many publicly traded securities. For the most part, the minimum initial investment and recurring fees are low, and the autopilot approach of an index fund frees an investor from doing their own research on multiple companies. </p><p>The diversified nature of S&amp;P index funds means that an investor probably won't score big from a fast-growth stock - but also won't have to stay up nights worrying about investing in a lemon of a company. If you want to own a broad slice of the US' biggest and best securities, says Benningfield, "an S&amp;P 500 index fund is a great place to start."</p><h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/etf-vs-mutual-fund" target="_blank" rel="noopener">ETFs and mutual funds can instantly diversify your portfolio, but they differ in how they're traded, managed and taxed</a></h3><h3><a href="https://www.businessinsider.com/what-is-diversification" target="_blank" rel="noopener">What is diversification? A portfolio strategy that uses a variety of investments to limit risk</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/warren-buffett-recommends-index-funds-for-most-investors" target="_blank" rel="noopener">Warren Buffett thinks index funds are the best way for everyday investors to grow their money</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/how-to-invest-in-index-funds-explained" target="_blank" rel="noopener">How to invest in index funds to build long-term wealth</a></h3><h3><a href="https://www.businessinsider.com/what-is-impact-investing" target="_blank" rel="noopener">Impact investing finances companies that aim to do good in the world - here's how it works and how to get involved</a></h3><h3><a href="https://www.businessinsider.com/what-is-a-large-cap-stock" target="_blank" rel="noopener">What is a large-cap stock? It represents a $10 billion-plus company - and often low-risk, stable returns for investors</a></h3>

How to invest in the S&P 500 - a guide to the funds that mimic the influential index's makeup and moves

Mumbai, Dec 15 () Citing regular board approvals for various inter-corporate loans, former CG Power Industrial Solutions' non-executive chairman Gautam Thapar has refuted allegations of fund misuse amid alleged governance lapses coming under the regulatory scanner, according to documents submitted by him to the government.
<p> In a 36-page submission to the corporate affairs ministry early November, Thapar, who was sacked in a boardroom coup in the wee hours of August 30, has provided documents on various issues, including inter-corporate loans, minutes of board meetings and loans from lenders like Standard Chartered Singapore and Yes Bank.
</p><p> CG Power board sacked Thapar after an audit report by Vaish Associates, which itself is based on as many as 23 disclaimers, claimed that Thapar swindled Rs 3,000 crore from CG Power.
</p><p> Markets regulator Sebi banned Thapar and entities associated with him for three years, following which he moved the Securities Appellate Tribunal, which has asked the company to provide relevant documents to him.
</p><p> The Serious Fraud Investigation Office (SFIO) has also started a probe against CG Power and 15 group entities. The ministry has moved NCLT Mumbai seeking to restate the books of accounts of CG Power from FY16. An order is expected on Monday.
</p><p> The documents, seen by , show how Standard Chartered Singapore extended a USD 44-million lifeline to CG Singapore in February 14, 2018. The entire money was then paid to CG International Netherlands through another group entity AIA and Avantha. The same amount was fully transferred back to CG International Netherlands on the very same day.
</p><p> Later, the company in turn paid back the entire amount to StanC Singapore, thus making the account standard, show the documents.
</p><p> While a major allegation revolves around funds moving in and out of CG Power and group entities, Thapar has claimed that such a route was taken following suggestions from lenders since CG Power was facing liquidity issues.
</p><p> Similarly, Aditya Birla Finance and Yes Bank allowed CG Power to get funds between 2016 and 2019 in a similar manner as StanC did in 2018, showed the documents.
</p><p> "All the above transactions were done according to the structure provided by StanC and other respective lenders and every time the entire money was paid back to the respective lender. That not a single penny of such funds remained in Avantha books clearly shows that there is no siphoning of funds," Thapar has claimed.
</p><p> Going by the documents, the company's risk and audit committee at its meeting held on May 26, 2017 gave an "omnibus approval for entering into transactions with related parties for throughout FY18".  Similar omnibus approvals were sought for and were granted for FY19 as well.
</p><p> Further, Thapar has submitted that the board approved a proposal from CG India on September 28, 2018 for a fixed deposit of Rs 229 crore as part of a credit line from IndusInd Bank. This deposit was a surety for part payments owed to Avantha towards brand royalty which the board approved, according to the documents.
</p><p> "This clearly shows that Rs 229 crore was not an additional advance to Avantha but a refund of a conditional deposit made by Avantha to CG which had to be refunded in the event of conditions not being met," the document said.
</p><p> On the allegations that CG Power made out-of-turn advances to group entity Mirabelle Trading since 2013 when CG Power was entering Southeast Asia, Thapar has said the board approved an advance payment of USD 20.15 million to Mirabelle towards service charges.
</p><p> Currently, Thapar owns just 8,574 shares in CG Power. Some of its large non-promoter shareholders are HDFC Mutual Fund and Aditya Birla Mutual Fund.
</p><p> Private equity giant KKR India led by Sanjay Nayar owns nearly 10 per cent, as does L&amp;T Finance. The family office of Sunil Bharati Mittal of Bharti Airtel has since September picked up 8.3 per cent in CG Power.
</p><p> The CG Power board began to feel the tremors this March, when an operations committee was formed under chairmanship Narayan Seshadri following the insistence of Nayar.
</p><p> Incidentally, the documents also showed that Seshadri was not even present at the board meeting that appointed him as chairman of operations committee. Seshadri is also an independent director of CG Power.
</p><p> Significantly, Seshadri's Tranzmute Capital is 50 per cent owned by Nayar but this was never disclosed to CG Power when he came onto the board, as per the the documents.
</p><p> They are also directors in Epimoney and EPI Venture Partners as investors. Also, a non-disclosure agreement was signed between Tranzmute Capital &amp; Management and CG Power in August 2018.
</p><p> Going by the documents, Seshadri had a business relationship with Nayar and CG Power before he became a non-executive director on CG Power board.
</p><p> It is also interesting to note that Anubhav -- son of  Akhil Gupta, who is the vice chairman of Bharti Enterprises and a close confidante of group Chairman Sunil Bharti Mittal -- recently married Sanjay Nayar's daughter Adwaita.
</p><p> In a detailed e-mail statement to queries from , KKR India denied any involvement in Seshadri being appointed a director on CG Power board. "We are a lender to Avantha Holdings and have no locus standi in any of its underlying group companies. KKR India has never been involved in the decision-making process of CG Power," it said.
</p><p> The statement said that KKR is aware that SeshadrI was invited directly by Thapar himself to join the board.
</p><p> "We confirm that Narayan's partnership with KKR India was fully disclosed (on March 31, 2018). Tranzmute has working relationships with other PE funds, promoters and companies, including KKR India - there has never been exclusivity between KKR and Tranzmute in this regard," it said.
</p> On relationship with Epimoney, the company said KKR has never been an investor in it but Nayar is one of its six investors.  BEN RAM  ABM
ABM

CG Power imbroglio: Gautam Thapar cites board approvals, rejects fund misuse allegations

<p><em><strong><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div><p></p></div></div>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors. </strong></em></p><p><strong><a href="http://www.investmentnews.com/article/20150624/FREE/150629961/jpmorgan-sues-2b-team-who-left-for-morgan-stanley">JP Morgan is suing brokers who left for Morgan Stanley</a> (Investment News)</strong></p><p>JP Morgan is suing a $2 billion brokerage team who left for Morgan Stanley. The team of Michael Pudlak, Michael Reynolds, Mead Briggs III, Jason Meyer, Lori Rabinowitz and Steven Christensen allegedly told clients if they kept their accounts at JP Morgan they could be serviced by a call center. JP Morgan alleges the brokers made "disparaging and defamatory statements about JPMorgan" and were "deliberately seeking to damage JPMorgan's reputation to JPMorgan's clients in order to convince such clients to move their accounts to defendants at Morgan Stanley." The brokers deny any wrong doing. </p><p><strong><a href="http://www.businessinsider.com/playmate-kennedy-summers-day-trading-2015-6">"Playmate of the Year" turned stock trader</a> (Business Insider)</strong></p><p>Kennedy Summers, Playboy's 2014 "Playmate of the Year," recently discovered she has a love for trading stocks. "I love trading. I can wake up and make sure I can make money and still pay my rent," Summers told Business Insider's Julia LaRoche. According to Summers, she has good days and bad days, seeing swings of up $600 to down $1300.</p><p><strong><a href="http://www.bloomberg.com/news/articles/2015-06-24/goldman-s-cohn-you-re-wrong-if-you-think-markets-ready-for-fed">The market's not ready for a Fed rate hike</a> (Bloomberg)</strong></p><p>Goldman Sachs' Gary Cohn believes some investors are going to be caught off guard by a Fed rate hike. Cohn told Bloomberg, "<span style="color: #3c3c3c; font-family: TiemposTextWeb-Regular, Georgia, serif;">"When it does happen, it's usually not the first-derivative event that people are caught off guard by." He continued, "They're caught off guard by the second-, third- and fourth-derivative events. It's 'Oh yeah, when interest rates go up, that happens.'"</span> Economists believe the Fed's first rate hike could come in September 2015. </p><p><strong><a href="http://www.reuters.com/article/2015/06/24/us-edward-jones-fee-probe-idUSKBN0P42JJ20150624">Edward Jones is reviewing client fees</a> (Reuters)</strong></p><p>Edward Jones is reviewing the fees it charged fund clients. The company is looking into whether or not it charged clients when their fees should have been waived. According to Reuters, "77 percent of its [Edward Jones] $6.3 billion of revenue last year from mutual fund and annuity sales." A spokesman told Reuters the company is looking into certain charitable and retirement accounts.<strong>   </strong></p><p><strong><a href="http://www.financial-planning.com/news/regulatory_compliance/is-your-firm-ready-for-a-regulatory-exam-2693291-1.html">Preparing for an audit or regulatory exam</a> (Financial Planning)</strong></p><p>No one likes taking exams, but its better to be prepared when you have to take one. Brian Hamburger, founder and president of MarketCounsel, shared his preparation tips with Financial Planning. Hamburger says make sure you don't wait until the last minute to prepare. Also, read the priority letters distributed by FINRA and the SEC as they do a good job of letting you know what to expect. Finally, make sure staff members are prepared to answer open-ended questions and know which information regulators can request.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/new-omega-globemaster-watch-unboxing-2015-5">Forget the Apple Watch - here's the new watch everyone on Wall Street wants</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="5iaDNwdDrYYMm2yipFb14ndbRkPnemqO" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

FINANCIAL ADVISOR INSIGHTS: JP Morgan is suing a team of brokers who left for Morgan Stanley

<ul class="summary-list"><li><strong>Tanya Taylor, 50, is a CPA and financial coach based in New York.</strong></li><li>She set a goal to save $1 million for <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword> and hit her goal two years early at age 48. </li></ul><p>I have spent more than 20 years of my career working at large banks and insurance companies. At age 48, I hit $1 million in my <keyword id="12137393" type="UNKNOWN" weightage="60" keywordseo="savings" source="Orion">savings</keyword> for retirement, almost three decades after I'd made it a goal. It wasn't an easy task, but being passionate about <keyword id="11994578" type="UNKNOWN" weightage="100" keywordseo="personal-finance" source="Orion">personal finance</keyword> and wealth building and following specific habits helped me make it happen. </p><p>When I was 16 and had just graduated high school, I left my entire family in Jamaica with big dreams and only $100 to my name. For a poor girl like me, moving to New York was a once-in-a-lifetime opportunity that I intended to use to break the cycle of poverty in my family.</p><p>I wasn't immediately able to go to college because I was undocumented, so I returned to high school to get my diploma from a US public school and also got a part-time job at a local restaurant making $75 per week. </p><p>I carefully budgeted every dollar I made and paid a weekly stipend for meals and accommodations to the family friends I lived with. I put the rest toward college savings, everyday necessities, and sending to my family in Jamaica.</p><p>When I was 24, I set a goal to have $1 million in my retirement account by age 50. To make that goal a reality, I mapped out a plan and set some guidelines for myself. Here are five things I did.</p><h2><strong>1. I lived below my means and budgeted carefully</strong></h2><p>At 32, I was making more than $100,000 and lived on just $50,000 per year after taxes while putting the rest into savings. Whenever my income increased or circumstances changed, like when I got married or had kids, I would revisit my budget, make adjustments, and continue to save toward my retirement goal.</p><p>Some of the ways we lived below our means included purchasing a two-family home to rent out half of it to a tenant to cover part of our mortgage, purchasing only used cars, shopping sales, happily accepting secondhand clothing for our children, and only giving gifts once per year.</p><h2><strong style="color: #000000;">2. I always made the maximum contribution to my employer-sponsored retirement plan</strong></h2><p>As I've progressed in my career and switched jobs, I've always contributed the maximum amount possible to my employer's retirement plan.</p><p>For example, when I worked as a word processor in my early 20s, I put about 5% of my $40,000 salary into my 401(k). After graduating college, I got a job as an auditor at Deloitte and contributed about $7,000 a year to my 401(k) plan.</p><p>Some years it was hard to contribute the maximum, especially when I got married and had two kids in a three-year span. But even as expenses changed, I continued to contribute the maximum amount I could no matter how difficult it was. </p><h2><strong style="color: #000000;">3. I contributed to a Roth IRA every year until I reached the income threshold</strong></h2><p>Around age 27, I opened a Roth IRA with a brokerage firm and set up automatic transfers from each paycheck into this account. Each month, the funds in this account were used to purchase the same <a href="https://www.businessinsider.com/personal-finance/mutual-funds">mutual fund</a>. I contributed approximately $8,000 over five years until I hit the income threshold at 32. Later, I converted this account from mutual funds to stocks that did pretty well, and this account now has approximately $40,000.</p><p>The IRS has rules in place that once your income exceeds a certain dollar amount, you <a href="https://www.businessinsider.com/personal-finance/roth-401k-vs-roth-ira">can't contribute to a Roth IRA</a>. For example, in 2022, if you're single and make more than $144,000, you can't contribute to a Roth IRA.</p><h2><strong style="color: #000000;">4. I<strong> built my stock market knowledge through books, <keyword id="11896289" type="UNKNOWN" weightage="60" keywordseo="investing" source="Orion">investing</keyword> events, and by being in an investing club</strong></strong></h2><p>One of the first books I read when I began my financial journey was <a href="https://www.amazon.com/Rich-Dad-Poor-Teach-Middle/dp/1612680194/ref=sr_1_1?crid=M8CQY830PYDU&amp;keywords=rich+dad+poor+dad&amp;qid=1652708450&amp;s=books&amp;sprefix=rich+dad%2Cstripbooks%2C88&amp;sr=1-1">"Rich Dad, Poor Dad,"</a> which helped shift my mindset toward wealth building. Two other books that were instrumental in my investing journey were<a href="https://www.amazon.com/One-Up-Wall-Street-Already/dp/0743200403"> "One Up On Wall Street"</a> by Peter Lynch, and "<a href="https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661/ref=sr_1_1?crid=2947HKGD19R0F&amp;keywords=The+Intelligent+Investor&amp;qid=1652708469&amp;s=books&amp;sprefix=the+intelligent+investor%2Cstripbooks%2C82&amp;sr=1-1">The Intelligent Investor</a>" by Benjamin Graham. </p><p>I slowly built my stock market and investing knowledge through auditing pension plans and mutual funds while employed at Deloitte and attending investing seminars and conferences. I also followed personal finance websites like <a href="https://www.kiplinger.com/">Kiplinger,</a> CNBC, <a href="https://www.forbes.com/?sh=2d3ddb452254">Forbes</a>, and <a href="https://money.com/">Money</a>.</p><p>After college, I also cofounded a stock market investment club with a few friends. As a group, using resources like <a href="https://www.bloomberg.com/">Bloomberg</a> and <a href="https://www.morningstar.com/">Morningstar</a>, we would research individual stocks and industries to make at least one "buy" recommendation at each monthly meeting. We also invited guest speakers to help build our knowledge of the stock market.</p><p>While the investments from this club went towards my children's college funds rather than my retirement, the knowledge that I gained helped me in growing my retirement portfolio.</p><h2><strong style="color: #000000;">5. <strong>I transferred my retirement plan to a brokerage firm and invested it in individual stocks</strong></strong></h2><p>As my investing knowledge grew, I decided that I wanted to have more control over how my retirement funds were being invested. I also wanted to avoid annual administration fees that my employer charged, so around age 30, I <a href="https://www.businessinsider.com/personal-finance/ira-rollover-retirement-funds-move-retirement-savings">rolled over</a> my 401(k) to a brokerage firm where I was able to invest in a wider variety of funds and individual stocks. <br /><br />Since I was still young enough to take more risks, I closely followed the stock market and purchased stocks that were underperforming but that I thought would eventually increase in the long term.</p><p>While I believe my job as a CPA and auditor did aid my investing decisions, most of what I learned was self-taught and came from sheer desire to learn more about personal finance and money management. It's information that can be learned by anyone who's ready and willing to learn.</p><p>One million dollars may seem like a daunting number, but regardless of your wealth or income it really is achievable if you have the right mindset. Map out a solid plan, adjust your budget as your income grows, and always prioritize savings.</p><p><em>Tanya Taylor is the founder of <a href="https://growyourwealth10x.com">Grow Your Wealth,</a> a financial coaching business where she helps clients ditch bad debt and create a six- and seven-figure retirement income. Learn more on her <a href="https://growyourwealth10x.com/about-us/">website</a>.</em></p>

I saved over $1 million for retirement by age 48. Here are 5 strategies I followed religiously to make it happen.

<ul class="summary-list"><li>A <keyword id="172042" type="PERSON" weightage="60" keywordseo="prospectus">prospectus</keyword> is a legal document that a company files with the SEC that details a potential investment offering for sale to the public.</li><li>The document is filed when the company issues a new security, like a stock, bond, or mutual fund.</li><li>While a prospectus offers important information to help you decide on the investment, you should still conduct your own research.</li></ul><p>We all know that a well-crafted resume is one important part in getting the attention of a hiring manager during the job-application process. It is, after all, a tool that outlines your relevant experiences and qualifications.  </p><p>In the finance world, a prospectus is a document that serves a similar purpose for investors as a resume does for employers. It provides details about a company, it's history, and what it's offering to spark interest and help facilitate more informed decision-making.</p><p>The Security and Exchange Commission (SEC) requires companies aiming to offer an investment to the public to file a prospectus. This formal document details an overview of the company's history and financials, what type of security is being offered and how many shares of it, among other things.</p><h2><keyword id="11137191" type="UNKNOWN" weightage="60" keywordseo="what-is-a-prospectus">What is a prospectus</keyword>?</h2><p>A prospectus is a formal statement that describes the details of a new security being offered to the public. These documents are filed with the SEC for stocks, <a href="https://www.businessinsider.com/what-is-a-bond" target="_blank" rel="noopener">bonds</a>, and mutual funds, and include key context and information that may help guide an investment decision. </p><p>Information on a prospectus may include:</p><ul><li>Company history and information about its management team</li><li>Financial information, including audited financial statements </li><li>The security's principal value and amount</li><li>Whether the offering is public or private</li><li>Number of shares offered</li><li>How investment proceeds will be used</li><li>Risk factors</li><li>Bank or financial institution doing the underwriting</li></ul><p>A prospectus provides a level of transparency to the public by outlining the company's background and goals for raising capital. One of the main purposes of a prospectus is to bring attention to a new company and initiate interest in a security with the hopes of raising capital once its securities are made available to buy.</p><p>It also details potential risks the company faces, including how long it's been around, management experience and involvement level, and the <a href="https://www.businessinsider.com/what-is-market-cap" target="_blank" rel="noopener">market capitalization</a> of the issuer. </p><p>Filing a prospectus protects the issuing company from claims that relevant information was not made clear or available. The consequences of including false information in a prospectus are severe: Those responsible for misleading information on a prospectus are subject to both civil and criminal penalties, including fines and potential imprisonment.</p><p>However, just because the information is there doesn't mean investors don't still have the responsibility to do thorough background research. Interested investors should still evaluate the issuing company's financial documents to understand exactly how much risk they're taking on and the likelihood that they'll eventually be paid back.</p><h2>Preliminary vs. final prospectus</h2><p>A prospectus typically comes in two forms: a <em>preliminary </em>prospectus and a <em>final</em> prospectus. It takes time for a complete prospectus to be finalized, and a company typically releases a preliminary prospectus before a final one to gauge investor interest.</p><p>A preliminary prospectus is the first iteration of the document, and includes most of the same information that's required on the final prospectus, except for the number of shares that will be issued and how much they'll be issued for. This is because a preliminary prospective aims to assess market interest in a certain security, meaning it precedes its official market debut.</p><p>The final prospectus is typically filed after a company has issued an <a href="https://www.businessinsider.com/what-is-ipo" target="_blank" rel="noopener">IPO</a>, or officially gone public in the market. It includes all of the details of the offering, updated background information on the company, and the number and price of that security's shares.</p><h2><strong>Example prospectus</strong></h2><p>Etsy officially went public in April 2015, releasing a <a href="https://www.sec.gov/Archives/edgar/data/1370637/000119312515132943/d806992d424b4.htm" target="_blank" rel="noopener">final prospectus</a> with important information about company and stock being offered. This document included:<br /><br /></p><ul><li><strong>Company overview and mission statement: </strong>"Our mission is to reimagine commerce in ways that build a more fulfilling and lasting world."</li><li><strong>IPO price:</strong> $16 per share</li><li><strong>Number of shares of common stock being offered:</strong> 13,333,333</li><li><strong>Business strengths:</strong> Including the marketplace's authenticity and credibility, loyal user community, innovative technology, and scaled, "global-local marketplace"</li><li><strong>Risk factors:</strong> Including history of operating losses, revenue fluctuations, and the warning that it may not achieve or maintain profitability in the future </li></ul><h2>How to find and analyze a company's prospectus </h2><p>The easiest way to find a company's prospectus is through <a href="https://www.sec.gov/edgar/searchedgar/companysearch.html" target="_blank" rel="noopener">EDGAR</a>, a free online database maintained by the SEC. All foreign and domestic companies must file all important corporate information with EDGAR, which is short for Electronic Data Gathering, Analysis, and Retrieval system.</p><p>EDGAR houses many different types of filings and documents, but <a href="https://www.sec.gov/oiea/Article/edgarguide.html" target="_blank" rel="noopener">the best way to search for a prospectus</a> is to type the company's name or ticker symbol in the search bar. </p><p>If you're overwhelmed by the idea of reading a prospectus in its entirety and sifting through the jargon, fear not. because you may not need to read the whole thing to understand what you're getting into. </p><p>However, going through this document can be beneficial, as a prospectus provides a portrait of the investment and a broader understanding of a company's business objectives and goals. Note that it's best to assess the document with a skeptical and inquisitive eye. </p><p>A <a href="https://www.businessinsider.com/personal-finance/do-i-need-a-financial-advisor" target="_blank" rel="noopener">financial advisor</a> is the best person to help you cull the information you need as it relates to your investing goals.</p><h2>The financial takeaway</h2><p>A prospectus is a formal document that a company files with the SEC to describe a potential investment offering in detail. It includes information about the company's background and financial position, as well as what investor money will go towards specifically. </p><p>A final prospectus is thorough and comprehensive, but should still be supplemented by your own research.</p><a data-type="5fac1720bf96b9125f748159">How to diversify your portfolio to limit losses and guard against risk</a><a data-type="5f5a55530afbe75a2409da00">ETFs and mutual funds can instantly diversify your portfolio, but they differ in how they're traded, managed and taxed</a><a data-type="5fe37c75bca41b4277771c27">A guide to stock market indexes: What they measure and how they can guide your investing</a><a data-type="603d0928507cd77b043e1cac">How many stocks should you own in your portfolio? Why there's no single 'right' answer</a>

What is a prospectus? How it can help you make informed decisions on whether to invest in a company

<p><div class="image-container float_right"><div class="image"><p class="source">REUTERS/Jim Young</p><p class="caption">University of Chicago professor <keyword id="1902751" type="UNKNOWN" weightage="60" keywordseo="Eugene-Fama">Eugene Fama</keyword></p></div></div>ValueWalk obtained <a href="http://www.valuewalk.com/2014/01/marty-whitman-eugene-fama/">a letter where Third Avenue Management's chairman/founder Martin Whitman</a> blasts <keyword id="52659" type="ORGANIZATION" weightage="60" keywordseo="nobel-prize">Nobel Prize</keyword> Laureate Eugene Fama. </p>
<p>"I am disappointed that a Nobel Prize was awarded to Eugene Fama, who studies only markets and prices; and whom, I daresay, does not focus on Form 10-Ks or the footnotes to a corporation's audited financial statements," Whitman said in the opening of the letter to shareholders. </p>
<p>Fama, a professor at Chicago Booth, won the Nobel Prize in Economic Science last year with Lars Peter Hansen and Robert Shiller. </p>
<p>In the letter, dated October 31, 2013, <span>Whitman proceeded to call Fama's work on Modern Capital Theory "utter nonsense", "sloppy science", "plain stupid" and "unscholarly." </span></p>
<p>From the letter (emphasis ours): </p>
<p style="padding-left: 30px;">Dear Fellow Shareholders:</p>
<p style="padding-left: 30px;">Academics involved with finance restrict their studies to analyzing markets and securities prices. As far as they are concerned, the study of companies and the securities they issue are someone else's business. <strong>I am disappointed that a Nobel Prize was awarded to Eugene Fama, who studies only markets and prices; and whom, I daresay, does not focus on Form 10-Ks or the footnotes to a corporation's audited financial statements.</strong> In fact there is no way of determining whether any market is efficient or not in measuring underlying values unless the analyst understands, and analyzes, the specific securities that are the components of that specific market.</p>
<p style="padding-left: 30px;">Market participants make two types of decisions-market decisions and investment decisions. Market decisions involve predicting security prices and are, virtually, always very short-run oriented. Investment decisions involve, inter alia, determining underlying value, resource conversion probabilities; terms of securities; credit analysis, and probable access to capital markets particularly for providing bailouts to public markets at high prices (versus cost) for promoters, insiders and private investors.</p>
<p style="padding-left: 30px;">Modern Capital Theory ("MCT") concentrates on market decisions and provides valuable lessons for specific markets consisting of Outside Passive Minority Investors ("OPMIs") who deal in "sudden death" securities, i.e., options, warrants, risk arbitrage, heavily margined portfolios, trading strategies and performing loans with short-fuse maturities. MCT is of little or no help to those involved primarily with making investment decisions-value investors, control investors, most distress investors, credit analysts, and first and second stage venture capital investors.</p>
<p style="padding-left: 30px;"><strong>The most basic problem for MCT, and all believers in efficient markets, is that they take a very narrow special case-OPMIs dealing in "sudden death" securities, and claim, as the Nobel Prize winner does, that their theories apply to all markets universally. What utter nonsense!</strong> Most of the activity-and money-on Wall Street is in the hands of people making investment decisions, not market decisions. For the activist, and value investor, the market is a place for a bail-out at high prices (versus cost), not a place where underlying values are determined. MCT, in looking at Wall Street, concentrates on mutual funds which trade marketable securities. MCT seems oblivious to activists, not studying what activists do, and why they do it.</p>
<p style="padding-left: 30px;"><strong>MCT, not only misdefines markets, but also seems to be sloppy science.</strong> The theory embodies the correct observation that almost no one outperforms relevant market indexes consistently. Consistently is a dirty word; it means all the time. In justifying and promoting Index Funds, MCT points to this failure of actively managed funds to outperform consistently. MCT acolytes, however, forget that many managed funds do tend to outperform relative benchmarks, over the long term, on average, and most of the time, notwithstanding their higher expense ratios. <strong>It's just plain stupid to state that the quality of money management is tested by looking at consistency.</strong> <strong>Insofar as MCT identifies what it describes as performance outliers, e.g., Berkshire Hathaway, no attempt is made to study what it is that outliers do that make them outliers, since this would entail the detailed analysis of portfolio companies and the securities they issue. How unscholarly!</strong></p>
<p style="padding-left: 30px;"><strong></strong>MCT cannot possibly be helpful almost all the time to those focusing primarily on investment decisions, i.e., understanding a company and the securities it issues. This is because in MCT four factors are overemphasized to such an extent that economic reality is blurred.</p>
<p style="padding-left: 60px;">1. A belief in the primacy of the income account with some emphasis on cash flow from operations rather than earnings. (Earnings are defined as creating wealth while consuming cash). If there is a primacy of anything in understanding a business, at least subsequent to the 2008 financial meltdown, it is creditworthiness, not periodic cash flows or periodic earnings.</p>
<p style="padding-left: 60px;">2. An emphasis on short-termism. I think it is impossible to be market conscious about publicly-traded securities without emphasizing the immediate outlook at the expense of a longer-term view.</p>
<p style="padding-left: 60px;">3. Overemphasis on top-down macro-factors such as forecasts for the economy, interest rates, the Dow Jones Industrial Average, with a consequent de-emphasis of bottom-up factors such as the financial strength of an enterprise, the relationship of a security's price to readily ascertainable net asset value ("NAV"), or the covenants in loan agreements. It is easy to appear wise and profound, for example, by forecasting outlooks for the general economy. Forecasting about the general economy almost all the time tends to be a lot less important for long-term buy-and-hold investors than are nitty-gritty details about an issuer. Indeed, it seems as if macro forecasts dominated in importance in the last 85 years only in 1929, 1974 and 2008-2009. Even in those years of dramatic down-drafts in the U.S., macro factors tended to be non-important (outside of immediate market prices) for adequately secured creditors seeking interest income or for well-financed companies with opportunistic managements seeking acquisitions.</p>
<p style="padding-left: 60px;">4. A belief in equilibrium pricing. An OPMI market price is believed to value correctly and OPMI market prices change as the market receives new information. Such a view, though widely held, is ludicrous. The fact that the common stocks of many well financed, growing, companies sell at 25% to 75% discounts from readily ascertainable NAV is mostly lost on finance academics who believe in efficient markets. They do not believe that such pricing can exist, though it does.</p>
<p><a href="http://ify.valuewalk.com/wp-content/uploads/2014/01/Annual-2013-Report-and-Letters.pdf">Read the rest of the letter via ValueWalk &gt;</a></p>

Hedge Fund Manager Blasts Nobel Prize Winner's Work Calling It 'Utter Nonsense' And 'Unscholarly' 

<p><span style="line-height: 1.5em;"><div class="KonaFilter image-container float_right"><div class="image"><p class="source"><span><a href="https://www.flickr.com/photos/rheinitz/12215449286">Flickr / Randy Heinitz</a></span></p></div><p></p></div>It's the rise of the machines.</span></p>
<p>Robo-advisors, which have made headlines in recent years, are online investment management sites like Wealthfront and Betterment that manage your investments for you through unique algorithms.</p>
<p>The nickname "robo-advisor" might be more sensationalist than it is accurate.</p>
<p>"I think this whole robo-advisor terminology is a misnomer," says Phil Fragasso, who evaluates the effectiveness of financial advisors through his company <a href="http://www.audityourfinancialadvisor.com/" target="_blank">Audit Your Financial Advisors</a>. "They're not advisors. They're really more like a fund of funds, like a mutual fund company."</p>
<p>Semantics aside, they're now a viable option for investors looking to grow their wealth.</p>
<p>Below, we pit humans (whom we'll refer to as <a href="http://www.businessinsider.com/fee-only-versus-fee-based-financial-advisors-2014-7" target="_blank">investment advisors</a>) and robots head to head to see who wins when it comes to managing your investments.</p>
<h3>PRICE</h3>
<p>This is where robo-advisors shine. There's no need to get into the weeds here, because both <a href="https://www.wealthfront.com/faq" target="_blank">Wealthfront</a> and <a href="http://support.betterment.com/customer/portal/topics/424113-fees" target="_blank">Betterment</a> devote considerable real estate to explaining their fairly straightforward and transparent pricing structures on their websites. Neither has a minimum amount you must invest.</p>
<p>Investment advisors, on the other hand, sometimes require a minimum portfolio value, and they can be unclear about how exactly they're charging you. Those are both case by case, but when it comes down to the numbers, Wealthfront points out that investment advisors traditionally charge a 1.31% average fee, while the robotic alternative charges 0.25%. Betterment charges 0.15%-0.35%. (Both companies also charge management fees for the ETFs - about 0.15% per year.) <a href="https://www.sigfig.com/site/#/asset-manager" target="_blank">SigFig</a>, another player in the field, charges a flat $10 a month.</p>
<p><strong>Winner: Robots.</strong></p>
<h3>CONVENIENCE</h3>
<p>Between email, Skype, and the trusty old cell phone, it's not like you have to trek to your investment advisor's office on the regular. In fact, working with an investment advisor doesn't even require that most people keep him or her on speed dial - it's more that they're there to check in with at regular intervals.</p>
<p>But once again, robo-advisors win the round. While he doesn't recommend robo-advisors, Fragasso admits that they're a viable choice for people who simply aren't going to take the time to learn about managing their money. It's a good fit, he says, "if you have a personality where you just don't want to deal with it - the type of person who starts a job at 24, set a 401(k) allocation, and never changes it. You set it and forget it."</p>
<p><strong>Winner: Robots.</strong></p>
<h3>ACCOUNTABILITY</h3>
<p>Money is never just money. It's your kid's <a href="http://www.businessinsider.com/how-to-use-a-529-college-savings-plan-2014-4" target="_blank">college fund</a>, your European vacation, your quiet house on a cul-de-sac. For that reason, setting and forgetting your investments may not be the most effective way to achieve your goals.</p>
<p>An investment advisor's strength lies in their ability to translate your dreams of an oceanfront beach house into a dollar figure, and to create a plan to get there. A robo-advisor takes only the information you give it and formulates a plan based on numbers - and your financial future is rarely focused on just the numbers. Plus, which is better able to motivate you to focus on your goals: an email statement, or a phone call from your advisor?</p>
<p><strong>Winner: Humans.</strong></p>
<h3>EFFECTIVENESS</h3>
<p>Now, things are getting thorny. Because they're meant to suit a wide range of people, portfolios managed by robo-advisors tend to be heavily invested in conservative products like ETFs. While not particularly volatile, ETFs aren't known for their staggering returns. It's like every skydiver ever posted on his Instagram: No risk, no reward.</p>
<p>Lance Roberts of "StreetTalkLive" wrote this year that the investments made by robo-advisors are sound, but based on a longer time frame than most investors actually experience. <a href="http://www.businessinsider.com/robo-advisors-warning-of-a-late-stage-bull-market-2014-6" target="_blank">His analysis</a> is worth reading. The simple fact is that money invested conservatively will yield higher returns than money not invested at all - so if it comes down to using a robo-advisor or not investing at all, robo is usually the wiser choice.</p>
<p>Investment advisors, on the other hand, certainly aren't guaranteed to outperform their robotic friends, but they have the perspective and context to adjust investments to your needs. An advisor's perspective is particularly useful if you have a large portfolio or a complicated financial situation. If you're investing over $100,000, Fragasso cautions, you shouldn't be doing it with a robo-advisor.</p>
<p><strong>Winner: Humans.</strong></p>
<h3>THE VERDICT</h3>
<p><strong>Use a robo-advisor if you …</strong></p>
<p>- Want to set and forget your investments<br />- Feel more comfortable working online than with a person<br />- Aren't investing a large amount of money</p>
<p><strong>Use an investment advisor if you …</strong></p>
<p>- Want to be involved in your investments<br />- Are interested in strategic risk-taking<br />- Are investing a large amount of money</p>
<p>Remember that you don't have to use one to the exclusion of the other. First of all, humans and robots usually don't directly compete for the same clients (there's that minimum investment requirement, again). And as your investment needs change, so might your strategy - as well as the help you enlist. </p>
<p>Plus, no one is stopping you from managing your portfolio yourself. Even <a href="https://www.wealthfront.com/faq" target="_blank">Wealthfront says</a> right off the bat, "You are welcome to copy anything we do if you would rather do it yourself."</p>

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