Investopedia

Fact checked by Suzanne Kvilhaug

Building a financial plan for your family is essential for long-term stability—even if the process can sometimes feel overwhelming. A strong plan will help you manage your day-to-day expenses, prepare for major life milestones, and safeguard against unexpected financial setbacks. However, every family’s financial situation is unique, so you’ll need to take a tailored approach.

Key Takeaways

• Every family’s financial plan should start with clear goals.
• A strong budget helps balance short-term needs with long-term goals, while an emergency fund provides a crucial safety net against unexpected expenses.
• Smart and tax-efficient investing strategies, along with proper insurance and estate planning, can help secure your family’s financial future.

“Each household has different priorities,” says Noah Damsky, the founder of Los Angeles-based Marina Wealth Advisors. For some, budgeting is going to be critical to success. For others, the main goal is saving money to send their kids to college. “The key is identifying priorities and your financial blind spots early so that you know where to start,” adds Damsky.

Whether you have a specific financial goal or are simply looking to create a budget, here’s how to build a comprehensive family financial plan that adapts to your evolving needs.

Identify Your Financial Priorities

The foundation of a good financial plan is setting clear objectives. Whether you’re saving for a home, planning for retirement, or prioritizing your child’s education, identifying these financial goals early helps create a structured roadmap for your finances.

Ask yourself questions like: How much do I need to save for retirement? Will I need to contribute to my child’s education expenses? Should I focus on paying off debt or investing for the future?

Clarifying these priorities early allows you to make informed financial choices. Damsky emphasizes that families must decide what matters most to them: “Some parents want to fully fund their kids’ college education, while others believe in having children contribute through scholarships or loans. Defining these decisions early on ensures your financial resources can be allocated effectively.”

Build a Budget

A budget tracks income and expenses, allowing families to balance immediate spending needs with long-term savings. Along with various budgeting tools and apps, you can also employ numerous strategies. For example, the 50/30/20 rule involves grouping expenses into three categories and allocating a set percentage of your income to each: 50% for needs, 30% for wants, and 20% for savings.

Another common budgeting tactic is the “pay yourself first” strategy, which prioritizes your savings. “Before spending on anything else, set aside a portion of your income for savings and investments,” explains Daniel Milks, the founder of South Carolina-based Woodmark Advisors. “That way, you’re securing your financial future rather than just covering monthly expenses and spending what’s left.”

While traditional budgeting methods like the 50/30/20 rule can provide structure, you can also take a more personalized approach to your spending. Damsky stresses that budgeting should be tailored to individual circumstances.

“Fixed expenses—rent, loan payments, utilities—should be prioritized first,” he says. “Once those are accounted for, families can decide how to allocate the remainder based on their financial goals.” Ultimately, what’s most important is keeping track of your income and expenses—while working toward your long-term financial goals.

Establish an Emergency Fund

Building an emergency fund should be one of your top priorities if you don’t have one already because a financial plan isn’t complete without a safety net. Emergency savings protect against unexpected costs like medical bills, car repairs, or job loss—and when the unexpected happens, it’s best to be prepared.

So how much should you save? Experts generally recommend that an emergency fund should be able to cover three to six months’ worth of essential expenses. However, Damsky notes that you should consider your income and job stability when deciding how much to save.

“A firefighter and a tenured professor—which both have good job security—may only need three months of expenses in their savings,” he explains. “But a freelancer or a business owner with fluctuating income may want to consider 12 months’ worth.”

Make Smart Investments

Investing is key to building long-term wealth, and having the right mix of investments can help families meet their financial objectives. Also, don’t forget to consider taxes when evaluating different types of investments. “Many people focus solely on growing their investments but fail to consider how taxes will impact their savings in retirement,” says Damsky. “Using Roth IRAs, tax-advantaged 529 plans, or defined benefit plans can lead to significant savings.”

Types of Investment Accounts to Consider

Retirement Accounts: 401(k)s and IRAs offer tax benefits essential for long-term savings. If your employer provides matching contributions, taking full advantage of them will help you maximize investment growth.

529 College Savings Plans: These accounts allow tax-free growth for qualified education expenses. State-sponsored plans may offer additional tax incentives.

Brokerage Accounts: For families who have maxed out tax-advantaged accounts, a taxable brokerage account provides flexibility by allowing you to invest in stocks, ETFs, mutual funds, and more.

Plan for the Unexpected: Insurance and Estate Planning

Your financial plan should also safeguard against risks to protect your family from any hardships caused by unexpected events. “Many families put off buying insurance because they don’t see the immediate benefit,” says Damsky. “But if something happens, it can mean the difference between financial security and devastation.”

Different types of insurance to consider include term life insurance, which can provide a cost-effective way to protect dependants, as well as disability insurance and, of course, health insurance.

Estate planning is another critical component. Damsky stresses the importance of having a trust to help ensure your assets are distributed according to your wishes while avoiding the delays and expenses of probate—especially in states like California, where probate can be costly and time-consuming.

“If something happens to you, having a trust makes life so much easier to navigate for your loved ones,” says Damsky.

Manage Debt Wisely

Balancing debt repayment with savings can be challenging in financial planning. However, some strategies can help make the process easier, such as tackling high-interest liabilities first. It’s also important to remember that not all debt is harmful.

For example, debt with low interest rates can help preserve your liquidity—or shore up cash to invest in higher-yield opportunities. In that sense, a low-interest mortgage, for example, “can actually be a financial asset,” Damsky says. “But high-interest student loans or credit card debt should be prioritized for early repayment.”

Debt repayment strategies include the avalanche method, which involves paying off your highest-interest debt first to minimize interest costs, and the snowball method, which focuses on paying off the smallest balances first to build momentum as you work toward larger debts.

Common Mistakes to Avoid

Even with a smart strategy, any financial plan can fail if you fall victim to certain common pitfalls. For one, you’ll want to remember that the “decisions you make today can have an exponential impact in the future—especially while you’re young,” says Milks, cautioning against “bad purchases” such as taking on a large loan to finance a pricey new vehicle. “A dollar today might be worth $10 when you’re 50.”

Other common mistakes include underestimating expenses by not accounting for all your discretionary spending and failing to invest or save in a tax-efficient way. Lastly, failing to review—and adjust—your plan regularly can get you off track, so be diligent about checking in periodically and making changes as necessary.

The Bottom Line

A well-structured financial plan can help provide you and your family with stability, security, and long-term financial health. By setting clear priorities, maintaining a solid budget, building an emergency fund, and making smart investment decisions, you can create a financial future that aligns with your family’s goals.

“The most important step is getting started,” says Milks. “You can always adjust as circumstances change, but having a plan in place ensures you’re moving in the right direction.”

KEY TAKEAWAYS

• Commerce Secretary Howard Lutnick hinted at a compromise and a scaling back of the 25% tariffs imposed by Washington on Canada and Mexico on Tuesday.
• Lutnick told reporters after President Donald Trump stuck with his pro-tariff stance in his address to a joint session of Congress Tuesday night that the administration would “probably” announce a deal to cut the tariffs Wednesday, The Wall Street Journal reported.
• In an earlier interview with Fox Business before Trump’s address, Lutnick said Trump would “come in the middle” with Mexico and Canada.

Commerce Secretary Howard Lutnick hinted at a compromise and a scaling back of the 25% tariffs imposed by Washington on Canada and Mexico on Tuesday.

Lutnick told reporters after President Donald Trump stuck with his pro-tariff stance in his address to a joint session of Congress Tuesday night that the administration would “probably” announce a deal to cut the tariffs Wednesday, according to The Wall Street Journal.

In an interview with Fox Business before Trump’s address, Lutnick said Trump would “come in the middle” with Mexico and Canada.

“He’s really looking carefully at that trying to figure out if there is a way in there that he can come in the middle, where he can give the Canadians and Mexicans something, but they have to got do more,” Lutnick said.

“It’s not gonna be a pause. None of that pause stuff. But I think he’s going to figure out, you do more, and I’ll meet you in the middle someway,” Lutnick added. “We’re going to probably be announcing that tomorrow. So somewhere in the middle will likely be the outcome—the president moving with the Canadians and Mexicans but not all the way.”

U.S. stock futures are rising after indexes closed sharply lower Tuesday as investors worried that the imposition of the tariffs, including a doubling of levies on goods from China, would hurt the U.S. economy and reignite inflation.

In his address to Congress Tuesday night, Trump acknowledged the possibility for disruption but said the tariffs are necessary. “Tariffs are not just about protecting American jobs, they’re about protecting the soul of our country,” Trump said. 

Fact checked by Yarilet Perez

Bitcoin’s price surged to an all-time high in January 2025 and surpassed $100,000 for the first time ever in December 2024, following former President Donald Trump’s reelection and triggering FOMO (fear of missing out) among many investors. While the rally has captured widespread attention, experts told Investopedia that the cryptocurrency’s notorious volatility demands caution.

Instead of chasing short-term gains, financial advisors say it’s important for investors to maintain a disciplined strategy that carefully weighs prospects and risks.

Key Takeaways

• Bitcoin surged to a record high in January 2025 following former President Donald Trump’s reelection and crypto-friendly policy promises.
• Despite the growing investor enthusiasm, experts caution that Bitcoin’s history of massive price drops—like its 70% crash after a 2021 high—underscores the importance of managing risk.
• Financial advisors suggest limiting crypto exposure to 5% of your portfolio and maintaining a long-term perspective to weather volatility.

Bitcoin’s New All-Time High

Bitcoin reached an all-time high of $108,099 on Jan. 20, 2025. The milestone capped a year of significant developments for the cryptocurrency, including the January 2024 approval of spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC), which allowed mainstream investors easier access to the asset through traditional brokerage accounts.

The roughly 48% surge from prices of about $70,000 before the election came amid investor exuberance over Trump’s crypto-friendly campaign promises, including a pledge to fire then-current SEC Chair Gary Gensler, who had often been critical of cryptocurrencies. Gensler resigned on Jan. 20, 2025, the same day Trump returned to office.

Trump tapped Paul Atkins, CEO of the consulting firm Patomak Global Partners and a former SEC commissioner, to chair the SEC in his administration. In the years since leaving the SEC, Atkins has argued against too much SEC regulation and has been seen as a crypto advocate.

Note

In addition to Atkins, Trump has added other crypto-friendly personnel to his administration, including venture investor and podcaster David Sacks, whom he named the new “White House A.I. & Crypto Czar.”

Should You Invest in Bitcoin Now?

Despite optimism about a crypto-friendly regulatory shift, wealth advisor Peter Hughes, founder of Evolve Investing, said investors need to stay mindful of Bitcoin’s historical volatility.

“When you see a run-up in Bitcoin like we’ve seen post-election, I get a lot more interest from clients, so what I’ll typically do is show them the drawdown risk,” Hughes said. He pointed to the cryptocurrency’s dramatic decline following its previous peak in November 2021, when prices fell more than 70% over the following year.

If investors are comfortable with the risk, Hughes suggests allocating no more than 5% of their portfolio to cryptocurrencies, citing studies that indicate a Bitcoin or crypto allocation above 5% increases the volatility of an overall investment portfolio dramatically.

“When Bitcoin as a percentage of the overall portfolio starts to exceed that 5% threshold, it’s at that point that the portfolio becomes more risky than holding, say, a nearly 100% equity portfolio,” he said.

For newer investors, Aditi Kapadia, founder of Wealth IQ, suggested starting with small allocations to spot ETFs or regulated platforms as a “prudent” first step. “Regardless of how you invest, maintaining a long-term perspective and keeping emotions in check during volatile periods will be critical to success,” she said.

What Is Cryptocurrency?

Cryptocurrency is a digital or virtual currency secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Most cryptocurrencies exist on decentralized networks using blockchain technology—a distributed ledger enforced by a disparate network of computers.

What Is Bitcoin?

Bitcoin is the world’s largest and most well-known cryptocurrency. It is designed to act as money and a form of payment outside the control of any one person, group, or entity, thus removing the need for trusted third-party involvement (e.g., a mint or bank) in financial transactions.

What’s the Difference Between BTC and BTCUSD?

BTC is the currency code for the bitcoin, the unit of account of the Bitcoin system.

BTCUSD is the ticker symbol for Bitcoin and the U.S. dollar exchange rate. BTCUSD is a crypto contract for differences (CFD) because of the presence of Bitcoin as the base currency.

How Can I Invest in Bitcoin?

Investing in Bitcoin can seem complicated, but it isn’t. It only requires an account at a service provider or a cryptocurrency exchange and a way to store your purchases safely. Payment methods include bank accounts, debit cards, credit cards, and PayPal. You can also buy Bitcoin at specialized ATMs, peer-to-peer (P2P) exchanges, and brokerages such as Fidelity and Robinhood.

You can also invest in Bitcoin through exchange-traded funds such as spot Bitcoin ETFs and Bitcoin futures ETFs.

The Bottom Line

Investing in Bitcoin following its post-election surge may be tempting, but investors should stay grounded and remember the cryptocurrency’s volatility. Focus on balancing risk and reward, keeping a long-term perspective, and avoiding impulsive decisions driven by market hype.

Hughes offered a sobering reality check for investors caught up in the current enthusiasm. “If you’re feeling bullish on bitcoin after this incredible run, how would you react if the price dropped by half?” he said. “Your answer reveals whether you’re truly prepared for cryptocurrency’s inherent volatility.”

Fact checked by Suzanne Kvilhaug
Reviewed by JeFreda R. Brown

Hong Kong exchange-traded funds (ETFs) track the performance of Hong Kong equities and other assets, usually through indexes tied to the market. These indexes can range from the broader market to specific sectors within the Hong Kong economy. Like other ETFs, Hong Kong ETFs are traded on stock exchanges, offering exposure to the Hong Kong market without the need to buy individual securities.

Key Takeaways

• Hong Kong ETFs grant investors access to the Hong Kong market, offering broad and international diversification advantages.
• When selecting a Hong Kong ETF, consider expense ratios, performance, holdings, liquidity, and assets under management.
• Investing in Hong Kong ETFs carries unique risks, including currency risk and market volatility, as well as political and economic factors that can impact their performance.
• Knowing the tax implications and regulations that come with investing in Hong Kong ETFs is also critical.

How Hong Kong ETFs Work

Hong Kong exchange-traded funds (ETFs) work by tracking a particular index that represents a segment of the Hong Kong stock market. This is done by buying all or a representative group of the securities in the underlying index. The ETF’s price fluctuates throughout the trading day, like individual stocks, and most ETFs are highly liquid.

Some of the key characteristics of Hong Kong ETFs include their:

• Performance, which reflects the underlying index’s return
• Expense ratio, which is the annual fee charged to investors
• Specific holdings, which are the individual securities it owns
• Sector allocations or how its assets are distributed across different sectors

Other important factors include trading volume (how frequently shares are bought and sold) and tracking errors (how closely the ETF follows its index). These collectively determine the suitability of a particular Hong Kong ETF for you.

What to Consider When Choosing a Hong Kong ETF

When choosing a Hong Kong ETF, several factors should be considered:

• The fund’s objective is crucial since it should align with your investment goals
• Holdings are another critical aspect, as they represent the ETF’s assets
• Liquidity determines how easily an investor can trade shares of the ETF
• The provider’s size, scale, expertise, and commitment can also impact your investment, so these should also be considered
• Evaluating an ETF’s performance and track record is an essential step. This includes understanding the performance of the ETF, the underlying index it tracks, and how it does so
• Review the ETF’s costs

Remember that past performance is not a guarantee of future results, and your choice should fit your risk tolerance and investment goals.

How to Invest in Hong Kong ETFs

Investing in Hong Kong ETFs can be done simply through a brokerage account. You need to open an account with a broker that provides access to international markets, including Hong Kong. Ensure that the broker you choose is regulated and has a good reputation. Research the available Hong Kong ETFs, assessing fund objectives, holdings, liquidity, performance track record, and fees.

To buy shares in a Hong Kong ETF, follow these steps:

1. Log into your brokerage account
2. Search for the ticker symbol of the ETF you’re interested in
3. Specify the number of ETF units you want to buy
4. Submit your order

Remember to conduct due diligence beforehand, review your transactions, and check your investments regularly.

Benefits of Investing in Hong Kong ETFs

A primary advantage is diversification. By investing in a Hong Kong ETF, you get direct exposure to a broad range of companies within the Hong Kong market, spreading your risk across many stocks rather than relying on the performance of a single company or a smaller number of shares. This can be worthwhile for those seeking broad international diversification in their portfolios.

It’s also a chance to benefit from the attractive potential of the Hong Kong market. Hong Kong is a leading financial center with a dynamic and robust economy. Investing in a Hong Kong ETF allows investors to participate in this growth.

In addition, ETFs offer advantages such as liquidity (generally, easy trading throughout the trading day), transparency (holdings are disclosed daily), and lower costs than mutual funds.

Risks of Investing in Hong Kong ETFs

Investing in Hong Kong ETFs offers the chance to tap into a dynamic financial market. Before doing so, however, understanding the specific risks and market dynamics of Hong Kong is essential.

Hong Kong is a global financial powerhouse, renowned for its internationalization and role as a gateway for investments in and out of China. Its gross domestic product (GDP) in 2002 was $166.35 billion, climbing to $358.68 billion by 2022, in 2022 U.S. dollars.

Hong Kong operates under a distinct system from mainland China, yet Chinese economic policies and developments profoundly impact its economy. This complex interdependence underscores the importance for investors to watch political and economic changes in China, given their significant influence on Hong Kong’s market. Its role as a critical gateway to Chinese and other Asian markets extends its economic influence far beyond what is reflected in its GDP alone.

Note

Hong Kong’s services sector made up almost 94% of its GDP in 2023. It is the third-largest global financial center and was the 10th largest exporter of merchandise trade in 2023.

The real estate sector, a significant part of Hong Kong’s economy, is characterized by high property prices and a market that can significantly drive economic growth, offering attractive prospects in related ETFs. As a pivotal trading hub, Hong Kong’s reliance on trade, especially with mainland China and other Asian countries, underscores the importance of global trade for its market performance.

Investors must also navigate currency risks with the Hong Kong dollar’s peg to the U.S. dollar. This peg affects monetary policy and can influence inflation and interest rates, impacting investment returns.

Hong Kong’s traditional appeal has been its free-market policies, low taxation, and minimal government intervention. However, the evolving political landscape and recent changes in security laws pose potential risks that could alter this environment.

The focus on technology in Hong Kong, fueled by government initiatives aimed at economic diversification, presents new avenues for ETF investment. This shift toward a more innovation-driven economy could redefine traditional investment strategies.

Fueled by local and global events, market volatility remains a crucial consideration. Political shifts, policy changes, and global economic trends can all significantly influence the value of Hong Kong ETFs. China’s global financial influence, particularly the role of Hong Kong as an international financial center, is crucial. The dynamics of the yuan exchange rate and China’s economic growth rate are also important to assess.

In light of these risks and prospects, a well-diversified portfolio is key. Regular monitoring, staying informed about global and local developments, and strategic use of stop-loss orders can help mitigate potential losses.

Pros and Cons of Investing in Hong Kong ETFs

Pros

• Transparency in ETF holdings and performance

• Broad diversification of different stocks

• Convenient trading during market hours

Cons

• Political risks may increase volatility and potential loss of value

• Potential liquidity risk affecting buy/sell prices

• Currency risk because of different currency denomination

Top Hong Kong ETFs

The two top Hong Kong ETFs available in U.S. markets are the iShares MSCI Hong Kong ETF (EWH) and the Franklin FTSE Hong Kong ETF (FLHK).

EWH had over $631.35 million in net assets and is the oldest and largest Hong Kong ETF. It aims to replicate the performance of the MSCI Hong Kong Index, providing exposure to large and midsized Hong Kong companies. EWH comes with an expense ratio of 0.50%.

FLHK tracks the FTSE Hong Kong Capped Index, and its inception was in 2017. Its assets under management (AUM) are significantly lower than EWH at about $12.19 million. The fund had an expense ratio of 0.09%.

Is the Hong Kong Stock Exchange Part of China?

Yes, the Hong Kong Stock Exchange is part of China, but it operates under a separate regulatory regime because of the “one country, two systems” principle.

What Are Other Ways to Invest in the Hong Kong Market?

Apart from ETFs, investors can also directly buy individual securities of enterprises listed on the Hong Kong Stock Exchange or mutual funds focused on Hong Kong exposure. 

What Is the Largest Sector Represented in the iShares MSCI Hong Kong ETF (EWH)?

The insurance sector is the largest sector represented in the EWH fund, followed by financial services, real estate management and development, and capital goods.

The Bottom Line

Hong Kong ETFs offer advantages like diversification, transparency, and the opportunity for international market exposure. They provide investors access to Hong Kong’s economy and can be traded on stock exchanges. Before investing, interested investors should conduct due diligence and consider expense ratio, performance, size, liquidity, and Hong Kong-specific risks.

Robo-advisors manage an investor’s portfolio, while brokerage accounts are self-directed

Fact checked by Vikki Velasquez
Reviewed by Katie Miller

A robo-advisor is a digital platform that provides investment recommendations based on an individual’s goals and preferences, automating the portfolio management services they might otherwise receive from a human advisor.

A brokerage account requires investors to choose and self-direct their portfolio activity. Brokerage accounts offer freedom and flexibility to investors who want more active control over their portfolios.

Key Takeaways

• Robo-advisors provide customized advice to help investors optimize their investments.
• Self-directed brokerage accounts give investors full control over their portfolios.
• Investors looking for low-cost professional advice or low-involvement investing may benefit from a robo-advisor.
• Investors who engage in complex strategies or want a more active role in managing their assets will prefer the flexibility of self-directed brokerage accounts.

What Is a Robo-Advisor?

A robo-advisor is a digital platform that starts with an online questionnaire gauging an investor’s preferences, time horizon, and risk tolerance. Since robo-advisors offer the added benefit of helping build and manage a portfolio, they generally come with higher fees than investors pay to access an online brokerage platform. Firms include Wealthfront, Betterment, and Empower. Fidelity offers Fidelity Go, while Merrill Lynch has its Merrill Guided Investing program.

An investor portfolio is created based on the individual’s answers and the robo-advisor’s algorithms. The robo-advisor manages the investment, rebalancing the portfolio to ensure it maintains the optimal weightings of different assets to keep investors on track toward their goals. However, robo-advisors may only offer limited investment vehicles.

Robo-advisors stand out from standard brokerage accounts because of the additional portfolio management services they provide. When investors use a robo-advisor, they receive personalized recommendations from the firm’s proprietary algorithm to build a portfolio optimized to help reach their investment goals.

Important

Robo-advisors usually have reasonable minimum deposit requirements, making it easy for beginner investors.

Robo-Advisor: Advantages and Disadvantages

Pros

• Lower cost

• Reasonable minimum deposit requirements

• Hands-off investing

• Ideal for beginner investors

Cons

• Lack of human touch

• Inability to adjust to specific or new situations

• Relies on algorithms not on personal interaction

• Unable to discern an investor’s tax situation

• Limited investment offerings

What Is a Brokerage Account?

A brokerage account allows investors to choose financial assets like stocks, bonds, mutual funds, and ETFs. The assets in the account belong to the investor, and if not in a tax-advantaged account, the investor will have to pay taxes on any profits. An online brokerage account does not offer advice, and the investment decisions are entirely up to the investors.

Discount brokerage firms like Fidelity and Charles Schwab charge no platform fees for their accounts and even offer zero-commission trading on stocks and exchange-traded funds (ETFs). However, even at these low-cost brokerages, there are higher fees to trade more complex instruments like futures and options. Financial giants like JPMorgan and Wells Fargo offer versions of self-directed online accounts alongside their more traditional investment advisory services.

Various brokerage accounts offer investors personal advice and investment management, including full-service brokerage that offers a wide array of services at higher costs. Those who want to keep fees low and willing and able to research and manage their investments typically turn to online brokerages.

See Investopedia’s choices for Best Online Brokers and Trading Platforms.

Brokerage Account: Advantages and Disadvantages

Pros

• Flexibility

• May offer commission-free trading

• Can trade in individual stocks and bonds and incorporate more complex strategies

Cons

• Investors choose individual stocks, bonds, ETFs, etc.

• Requires a more hands-on approach to investing

• Adding a personal advisor will increase costs and fees

What Is the Main Disadvantage of Using a Robo-Advisor?

Robo-advisors may not be as effective as human advisors at understanding their clients’ financial situation, including tax planning and estate planning issues. Also, algorithms are based on data from the past and may not respond to new or unexpected market developments. Although a robo-advisor aims to personalize a portfolio, it typically offers a limited set of investments, excluding things like derivatives, and they don’t allow margin trading or other sophisticated strategies.

What Are the Benefits of Using an Online Brokerage?

Many online brokerages offer commission-free trading of stocks, bonds, and ETFs. Some of these accounts may also allow you to trade on margin or use futures- and options-investing strategies.

How Risky Are Robo-Advisors?

Any investment involves taking on risk, and robo-advisors are no different. Questions arise at how robo-advisors fulfill fiduciary duties—the responsibility of investment advisors to act in the best interest of a client. It is unclear how robo-advisor algorithms handle potential conflicts of interest between their firms and investors’ portfolios.

The Bottom Line

Robo-advisors provide personalized recommendations to help investors build a portfolio, while self-directed brokerage accounts leave investment decisions to the individual. A robo-advisor offers investing management services without the steeper cost of a full-service advisor, without the flexibility to pursue unique or complex strategies. A self-directed account gives investors the autonomy and the responsibility of managing their portfolio.

Fact checked by Pete Rathburn
Reviewed by Amy Soricelli

A lucrative salary, hefty bonuses, and the opportunity to flex your problem-solving skills might make quantitative trading seem like an attractive career option. Quantitative traders, or quants for short, use mathematical models to identify trading opportunities and buy and sell securities. In this article, we’ll look at what quants do and the skills, education, and experience you need to become one.

Key Takeaways

• Quant traders use strategies based on quantitative analysis—mathematical computations and number crunching—to find trading possibilities that can involve hundreds of thousands of securities.
• An aspiring quant trader needs to be exceptionally skilled and interested in all things mathematical—if you don’t live, breathe, and sleep numbers, then this is not the field for you.
• A bachelor’s degree in math and a master’s degree in financial engineering or quantitative financial modeling or an MBA are all helpful for scoring a job. Some analysts will also have a Ph.D. in these or similar fields.
• A candidate who lacks an advanced degree should have experience as a data analyst and have data mining, research, and automated trading systems skills.
• Traders also need soft skills, such as the ability to thrive under pressure, maintain focus despite long hours, withstand an intense, aggressive environment, and stomach setbacks and failures.

What Do Quant Traders Do?

The word “quant” is derived from quantitative, which essentially means working with numbers. The advancement of computer-aided algorithmic trading and high-frequency trading means there is a huge amount of data to be analyzed. Quants mine and research the available price and quote data, identify profitable trading opportunities, develop relevant trading strategies, and capitalize on opportunities with lightning-fast speed using self-developed computer programs.

Quant traders must have exceptionally strong math and quantitative analysis skills. For example, if terms like conditional probability, skewness, kurtosis, and VaR don’t sound familiar, then you’re probably not ready to be a quant. In-depth knowledge of math is a must for researching data, testing the results, and implementing strategies. Identified trade strategies, implemented algorithms, and trade execution methods should be as fool-proof as possible. In the present day, lightning-fast trading world, complex number-crunching trading algorithms occupy a majority of the market share. Even a small mistake in the underlying concept on the part of the quant trader can result in a huge trading loss.

In essence, a quant trader needs a balanced mix of in-depth mathematics knowledge, practical trading exposure, and computer skills. Below are the steps to landing a job as a quant trader.

Important

Quant traders can work for investment firms, hedge funds, and banks, or they can be proprietary traders, using their own money for investment. 

Step 1. Get the Right Education

A strong place to start is to graduate with a bachelor’s in math and a master’s in financial engineering, quantitative financial modeling, or a similar field. Taking electives in quantitative streams during a master of business administration (MBA) is another option. Some candidates will have a Ph.D.

It’s usually difficult for new college graduates to score a job as a quant trader. A more typical career path is starting out as a data research analyst and becoming a quant after a few years.

Step 2. Develop Your Technical Skills

An aspiring quant should have, at minimum, a background in finance, mathematics, and computer programming. In addition, quants should have the following skills and background. 

• Trading concepts: Quants are expected to discover and design their own unique trading strategies and models from scratch as well as customize established models. A quant trading candidate should have a detailed knowledge of popular trading strategies as well as each one’s respective advantages and disadvantages.
• Programming skills: Quant traders must be familiar with data mining, research, analysis, and automated trading systems. They are often involved in high-frequency trading or algorithmic trading. A good understanding of at least one programming language is a must. C++, Java, Python, and Perl are a few commonly-used programming languages. Familiarity with tools like MATLAB is a plus. 
• Computer usage: Quants implement their own algorithms on real-time data containing prices and quotes. They need to be familiar with any associated systems, like a Bloomberg terminal, which provides data feeds and content. They should also be comfortable with charting and analysis software applications and spreadsheets and be able to use broker trading platforms to place orders. 
• Artificial intelligence (AI): According to a 2023 Invesco survey of systematic investors with $22.5 trillion under management, quants are not using AI extensively because of the technology’s challenges—the complexity and interpretability of the models and the quality of available data. But familiarity with AI and its potential uses will be important going forward.

Step 3. Work on Your Soft Skills

Quant traders should have the following soft skills.

• Communication skills: Though quants don’t typically interact with clients, those who are employed at investment banks or hedge funds may occasionally need to present their concepts to fund managers and higher-ups for approval.
• A trader’s temperament: Not everyone can think and act like a trader. Successful traders are always looking for innovative trading ideas and are able to adapt to changing market conditions, thrive under stress, and accept long working hours. Employers thoroughly assess candidates for these traits. Some even give psychometric tests.
• Risk-taking abilities: The present-day trading world is not for the faint-hearted. Thanks to margin and leveraged trading, losses can exceed a trader’s available capital. Aspiring quants must understand risk management and risk mitigation techniques.
• Comfortable with failure: A quant keeps looking for innovative trading ideas. Even if an idea seems foolproof, dynamic market conditions may render it a bust. Many aspiring quant traders fail because they get stuck on an idea and keep trying to make it work despite hostile market conditions. They may find it difficult to accept failure and thus be unwilling to let go of their concept. In contrast, successful quants follow a dynamic detachment approach and quickly move on to other models and concepts when they find challenges in existing ones.
• Innovative mindset: The trading world is highly dynamic, and no concept can make money for long. A quant needs to keep looking for new innovative trading ideas to seize profitable opportunities that may vanish quickly.

Step 4. Get Professional Experience

Not all employers have hard and fast rules about academic credentials, but most will be looking for relevant experience and skills that are transferable.

Landing a finance internship with an investment bank is a good start. Follow it up with an entry-level position as, say, a research analyst for a hedge fund or other financial institution. This will give you the opportunity to acquire skills using machine learning software and large data sets. It will also afford you the chance to gain industry knowledge and connect with professionals in the field who can help you move to the next level.

What Is a Quant Trader?

Quantitative traders, or quants, work with large data sets and mathematical models to evaluate financial products and/or markets in order to discover trading opportunities.

How Much Do Quants Make?

According to Indeed, $195,386 is the average salary for quant traders as of February 2025, with a low of $137,371 and a high of $277,903. According to ZipRecruiter, a quant trader’s salary will fall somewhere between a low of $98,000 to a high of $259,500, with an average salary of $169,729 a year.

What Degrees Do Quants Get?

Typically, to be a quantitative trader you need at least a bachelor’s degree in a field like mathematics, statistics, finance, or computer science. Employers often prefer candidates who have a graduate degree, such as a master’s in mathematical finance or a Ph.D. in a quantitative field like mathematics, statistics, physics, or computer science.

The Bottom Line

Quant trading requires advanced-level skills in finance, mathematics, and computer programming. Big salaries and high bonuses attract many candidates, so getting that first job can be a challenge. Beyond that, continued success requires constant innovation, comfort with risk, and long working hours.

From Trading to Staking: Ways to Make Money with Crypto

Cryptocurrency has evolved from an obscure digital experiment into a major asset class with a combined market capitalization of nearly $3 trillion. As these digital currencies have entered the mainstream, more investors are exploring ways to generate income through this asset class.

From casual investors looking to diversify their portfolios to dedicated traders seeking new prospects, this guide provides the knowledge needed to navigate the cryptocurrency market’s income potential and pitfalls.

Key Takeaways

• Cryptocurrency offers multiple ways to earn money, including trading, dividends, and running master nodes.
• The market’s volatility presents both opportunities and significant risks.
• Thorough research and strategic planning are essential to avoid common investment pitfalls.
• Understanding the tax implications is crucial for anyone earning through cryptocurrency.

Understanding Cryptocurrency

Cryptocurrencies are digital or virtual tokens that use cryptography for security. They operate on decentralized networks based on blockchain technology. Their decentralized, peer-to-peer nature means that cryptocurrencies function without intermediaries like banks or government institutions.

Since Bitcoin’s launch in 2009, the space has evolved dramatically, from Ethereum’s introduction of smart contracts to the emergence of thousands of specialized tokens serving unique and varied purposes. This expansion has created a rich landscape of digital assets with different value propositions and use cases.

The investment landscape has also grown. Beyond price appreciation, today’s token holders can earn passive income through staking, generate yields through decentralized finance (DeFi) protocols, and even earn transaction fees by providing liquidity to exchanges.

Popular Cryptocurrencies

• Bitcoin (BTC): The first and most well-known cryptocurrency, Bitcoin is often considered “digital gold. Its dominance and network security make it the benchmark for the entire cryptocurrency market.
• Ethereum (ETH): The second-largest cryptocurrency by market capitalization, known for its smart contract capabilities. Ethereum hosts thousands of decentralized applications (dApps).
• Tether (USDT): The largest and most active stablecoin, USDT is pegged to the U.S. dollar at a one-to-one ratio. USDT serves as a crucial bridge between traditional finance and crypto markets.
• Solana (SOL): Known for its high-speed transactions and low fees, Solana has emerged as a favored platform for meme coins and NFTs.
• Ripple (XRP): Developed by Ripple Labs, XRP is designed for efficient international money transfers and cross-border settlements.
• Dogecoin (DOGE): What began as a satirical commentary of the early crypto space, DOGE has gained a wide following among speculators, though its infinite supply and meme-like nature raises questions about its long-term value.
• Other notable cryptocurrencies: Binance Coin (BNB), Cardano (ADA), and Stellar/Lumen (XLM).

Ways To Earn Money with Cryptocurrency

Buying and Holding

The simplest approach is a basic buy-and-hold strategy, also known as “HODLing” in crypto parlance.

HODLing often involves buying market dips and holding firm through volatility.

Cryptocurrency Trading

Active trading requires more skill, strategy, and time. Traders can pursue various strategies, from day trading based on technical analysis to longer-term position trading focused on more fundamental factors.

Established exchanges like Binance and Coinbase offer easy buying and selling and advanced tools and are regulated (requiring AML/KYC verification), while decentralized exchanges (DEX) such as Uniswap provide greater privacy and access to newer tokens but fewer user protections.

Arbitrageurs try to capitalize on price discrepancies across exchanges, though success requires split-second execution and sophisticated tools to spot prospects. Transfer delays and fees can quickly erode profits.

Since 2024, traders have had access to spot Bitcoin ETFs and spot Ether ETFs, which trade via regular brokerage accounts.

Lending and Borrowing

Lenders earn yields that often exceed traditional savings rates, while borrowers gain access to capital for leveraged trading without triggering taxable events or giving up their long-term crypto positions.

Centralized services like BlockFi offer fixed rates and institutional security, while decentralized protocols such as Aave use smart contracts to automate lending with algorithmically set interest rates.

Mining

Mining remains a significant way to earn proof-of-work crypto tokens, despite increased competition and the vast amounts of energy often required. Today, crypto mining is an industrial-scale operation requiring specialized hardware and access to low-cost electricity. Many miners join mining pools, combining computational power with others to earn more consistent, though smaller, rewards.

Staking

“Staking” locks up tokens to help maintain the security and operations of a proof-of-stake blockchain network, earning regular rewards in return.

Direct staking involves running validator nodes and offering the highest rewards, but it requires technical expertise and significant upfront capital.

Delegated staking through pooled validators provides a more accessible alternative, while liquid staking protocols like Lido have eliminated lockup periods by issuing tradable tokens representing staked assets.

Important

Staking rates vary by blockchain and period. As of Q1 2025, ETH staking earned about 3.2% annual percentage yield (APY), while SOL staking earned about 7.1% APY.

Running a Master Node

Beyond just staking, “master nodes” offer tech-savvy holders a way to earn passive income by essentially becoming a backbone operator of certain blockchain networks. Master node operators lock up a significant amount of cryptocurrency (say, 1,000 coins) while running powerful servers to help process transactions. In return, they receive regular rewards from the network

DASH popularized this model, while newer networks offer tiered entry points requiring different collateral amounts.

Yield Farming

“Yield farming” allows crypto holders to earn excess returns by providing liquidity to decentralized exchanges and lending protocols, though this also comes with significant risk.

For instance, someone may deposit equal amounts of ETH and USDT into a liquidity pool on Uniswap or Sushiswap, earning a portion of the trading fees generated when other users swap these tokens. They might then stake their liquidity-provider tokens on another platform which becomes loaned capital that generates more yield through protocol rewards. 

Advanced strategies may employ leverage (borrowing) to boost returns, but this requires careful risk management and a solid understanding of the protocol mechanics involved.

Tax Implications for Cryptocurrency Earnings

Cryptocurrency taxation is complex and evolving. In most jurisdictions, including the U.S., cryptocurrency is treated as property for tax purposes, which means every trade, conversion, or sale potentially triggers a taxable event. Capital gains taxes apply when selling or trading cryptocurrencies held as investments.

Mining income may be considered self-employment income, while staking and liquidity rewards are typically treated as ordinary income at their fair market value when received. Interest earned through lending platforms must be reported as ordinary income, just like traditional bank interest.

Warning

Some activities, like swapping tokens or harvesting yield farming rewards, could create taxable events even when no fiat currency is received.

Risks and Considerations

The cryptocurrency market presents significant risks that investors must carefully evaluate, with fraud being a particularly serious concern. Losses from crypto-related fraud totaled more than $5.6 billion in 2023.

Common fraud schemes include the following:

• “Rug pulls” where developers abandon projects after collecting investor funds
• Fake cryptocurrency exchanges that disappear with deposited money
• Phishing scams targeting crypto wallet passwords and security keys
• Social media impersonators promising guaranteed returns
• Pump-and-dump schemes where groups artificially inflate prices

Beyond fraud, market volatility in crypto far exceeds traditional assets. Even Bitcoin, the largest cryptocurrency, has had 70% price drops within months.

Regulatory uncertainty adds another layer of risk. Government policies on cryptocurrency can change suddenly, potentially affecting asset values or even making certain cryptocurrencies illegal in some jurisdictions. China’s 2021 crypto ban, for instance, caused a market-wide sell-off.

Security vulnerabilities also pose significant threats. While blockchain technology itself is secure, the infrastructure around it—exchanges, wallets, and smart contracts—can be hacked.

Common Mistakes to Avoid

• Overinvestment: Risking more than you can afford to lose or taking loans to invest in cryptocurrency without understanding the extreme downside risk.
• FOMO trading: Buying at market peaks or rushing into trending coins without proper research, often followed by panic selling during downturns.
• Bad security practices: Using weak passwords, keeping large amounts on exchanges, or failing to enable two-factor authentication.
• Ignoring the tax implications: Failing to keep proper records of trades and earnings, leading to tax compliance issues.
• Misunderstanding DeFi: Diving into complex yield farming or leveraged trading without grasping concepts like impermanent loss or liquidation risks.
• Lack of diversification: Concentrating investments in a single cryptocurrency or token instead of spreading risk across different assets.

The Bottom Line

Cryptocurrency offers opportunities for generating value, from HODLing and passive investment strategies to active trading and network participation. Success requires a thorough understanding of the technology and market dynamics, careful risk management, and a strategic approach to choosing which earning methods to pursue.

While the potential for significant returns exists, it remains essential to approach cryptocurrency investment with significant caution. Consider consulting with knowledgeable financial professionals for personalized advice based on your specific situation and goals.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own any of the assets discussed here.

Fact checked by Vikki Velasquez
Reviewed by JeFreda R. Brown

BRICS exchange-traded funds (ETFs) offer investors the chance to invest in emerging markets. Investing in a single fund provides convenient access to stocks and bonds from these countries.

While there is a high degree of interest in BRICS ETFs as an investment because of these countries’ high economic growth, they are expected to experience heightened volatility and uncertainty compared to developed markets.

So are they worth it? That depends on you, your financial situation, and your goals. Keep reading to learn more about BRICS ETFs and more pros and cons of investing in these securities.

Key Takeaways

• BRICS ETFs offer an avenue to invest in Brazil, China, Egypt, Ethiopia, India, Iran, Russia, Saudi Arabia, South Africa, and the UAE.
• These funds are appealing because of the growth prospects of the BRICS countries.
• At the same time, emerging market countries like the BRICS often face heightened volatility and unique risks.
• Because they trade like shares on American exchanges, these ETFs offer convenient access and diversification across these emerging markets.

History of BRICs ETFs

The BRIC acronym was coined by economist Jim O’Neill in 2001 in a research paper. He used the term to describe Brazil, Russia, India, and China—four emerging market countries with the biggest economic growth potential. In 2010, BRIC added South Africa, becoming BRICS and five more countries joined the alliance in 2024: Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE.

After Russia invaded Ukraine in 2022, many BRICS indexes dropped Russia from their portfolios, and Russia-specific ETFs were delisted from American exchanges. The expansion marks a push by some BRICS members to balance out a U.S.-dominated world economy.

The first BRIC ETF was launched in November 2007: the iShares MSCI BRIC ETF. Russia was reclassified from MSCI’s ETFs and indexes in 2022.

Pros and Cons of Investing in BRICS ETFs

Pros

• Higher potential returns

• Geographic diversification

• Emerging markets exposure

• Convenient

• Cost-effective

Cons

• Higher volatility and risk

• Political, regulatory, and economic uncertainty

• Currency risk

Pros of Investing in BRICS ETFs

Higher Potential Returns

The higher projected gross domestic product (GDP) growth of BRICS economies compared to developed markets suggests a strong return potential for BRICS ETFs. Investing early in these emerging markets as they expand could supply higher long-term returns.

Growth projections are driven by increased industrialization, urbanization, and consumer demand within these economies. The 2024 additions to BRICS mean it covers not only about 3.5 billion people and many consumers but also about 42% of global crude oil output.

As these countries develop, companies within these markets could see significant gains in revenues and profits, translating to higher stock prices and greater returns for investors in BRICS ETFs.

BRICS countries tend to have younger populations and a growing middle class. This could lead to higher domestic consumption and a growing demand for various products and services from both domestic and foreign producers.

Geographic Diversification

BRICS ETFs offer diversification through exposure to different emerging markets in a single fund. This can help balance an investment portfolio heavily weighted in U.S. and European stocks and bonds.

The diversification of BRICS ETFs can help achieve a more balanced portfolio and enhance returns while mitigating risks compared with investing only in developed markets. For example, emerging economies may grow when developed markets like the United States or Western Europe stagnate.

Emerging Market Exposure

BRICS ETFs offer some of the easiest and most direct exposure to emerging markets. Most of these countries are significant actors on different continents. Not only do they provide geographical diversification, but they also offer broader emerging market exposure. They also have major oil reserves and other significant raw materials exports important for the world economy.

Convenient

Investing in individual stocks in these countries would require a deep understanding of each market, including local economic conditions, regulations, and market dynamics. ETFs streamline the process, providing a single investment vehicle encompassing stocks across each country. By buying shares in a BRICS ETF, investors thus gain exposure to a basket of stocks spread across different sectors and regions in a single transaction.

Because they trade like shares, ETFs are liquid securities that can be bought and sold throughout the trading day, with many brokerages today offering commission-free trading in most ETFs.

Cost-Effective

Direct investment in international markets (such as opening a foreign brokerage account) also often involves higher transaction costs and minimum investment thresholds, which can be prohibitive for individual investors.

BRICS ETFs typically have lower transaction costs than direct international investments, allowing investors to gain exposure to these markets with relatively small investment amounts.

Cons of Investing in BRICS ETFs

Higher Volatility and Risk

Emerging markets tend to experience larger price swings. Therefore, a primary concern with BRICS ETFs is their potential for higher volatility than developed market investments.

Stock markets in the BRICS countries can experience sudden fluctuations because of various factors, including economic uncertainty, political instability, trade disruptions, and global market dynamics. This could lead to significant short-term swings in BRICS ETF values, which could unsettle risk-averse investors.

For example, some BRICS economies, like Brazil, Saudi Arabia, and the UAE, rely heavily on commodity prices. This means that the performance of ETFs invested in these countries can be disproportionately affected by global commodity market fluctuations and geopolitical events, adding other layers of risk.

Political, Regulatory, and Economic Uncertainty

The political and economic environments in the BRICS countries can be less stable than in more developed economies. Changes in government policies, regulations, and political unrest can significantly impact these markets.

For instance, armed conflict or sanctions have affected Russia, while regulatory changes can significantly impact China. Such instabilities can directly affect the performance of companies within BRICS ETFs.

Regulatory environments in the BRICS countries can also be less robust than in developed markets, leading to concerns about corporate governance and transparency. This can make it more difficult for investors to accurately assess the risks and prospects of the companies within the ETF.

Currency Risk

When investing in BRICS ETFs, investors are also exposed to currency risk. Fluctuations in the value of these countries’ currencies against the investor’s home currency can affect returns from these ETFs.

When those currencies weaken vs. the U.S. dollar, it negatively affects the relative performance of those holdings. The fact that the BRICS countries have experienced periods of high inflation in the past also dampened currency values.

Currency risk adds an extra layer of complexity and can either enhance or erode investment returns, depending on currency movements.

Factors to Consider When Investing in BRICs ETFs

When researching BRICS ETFs, review their holdings, expense ratios, liquidity, assets under management (AUM), and historical returns and compare them with each other and benchmarks. Higher expense ratios, for example, can erode net returns, all else being equal.

Comparing several BRICs ETFs can help identify a suitable fund for your portfolio and risk tolerance.

It’s also important to diversify your exposure or pair BRICS ETFs with other emerging market ETFs rather than concentrate your exposure in the BRICS countries. Broader emerging market ETFs could provide more balanced exposure.

Important

Emerging markets, including the BRICS countries, are often less efficient than developed markets. This means that information might not be reflected in stock prices as quickly or accurately as in more developed markets. Skilled investors and fund managers can exploit these inefficiencies to achieve higher returns. However, it’s important to note that these inefficiencies can contribute to higher volatility and increased investment risk.

Other Emerging Market ETFs

In addition to ETFs that track stocks in the BRICS countries, there are other emerging markets funds to consider. The following are a few ETFs that have broad-based emerging markets exposure, with BRICS among those from several other countries:

• Vanguard FTSE Emerging Markets ETF (VWO)
• iShares MSCI Emerging Markets ETF (EEM)
• SPDR Portfolio Emerging Markets ETF (SPEM)
• Schwab Emerging Markets Equity ETF (SCHE)

Individual country ETFs, like those for Indonesia, Mexico, Poland, Thailand, Turkey, and Saudi Arabia, among others, also have emerging market exposure.

Top BRICS ETFs

Top BRICS ETFs
ETF	Ticker	Mandate	Assets Managed	Expense Ratio
iShares MSCI BIC ETF	BKF	Provides broad exposure to securities from three developing countries in the BRICS region: Brazil, India, and China	$70.26 million	0.72%
iShares MSCI Brazil ETF	EWZ	Tracks an index of large-cap and midcap companies from the B3 exchange in Brazil	$3.09 billion	0.59%
iShares MSCI Brazil Small-Cap ETF	EWZS	Tracks a market-capitalization-weighted index of Brazilian small-cap firms	$110.51 million	0.60%
Franklin FTSE Brazil ETF	FLBR	Tracks a market cap-weighted index of Brazilian large-cap and midcap stocks	$155.40 million	0.19%
iShares MSCI India ETF	INDA	Tracks a market-cap-weighted index of the top 85% of firms in the Indian securities market	$8.12 billion	0.62%
WisdomTree India Earnings Fund	EPI	Tracks a total market index of Indian companies selected and weighted by earnings	$3.36 billion	0.87%
Invesco India ETF	PIN	Tracks an index of India-listed stocks, screened for yield and quality and weighted by market cap	$227.1 million	0.78%
iShares China Large-Cap ETF	FXI	Tracks a market-cap-weighted index of the 50 largest Chinese stocks traded on the Hong Kong Stock Exchange	$7.60 billion	0.74%
SPDR S&P China ETF	GXC	Tracks a broad, market-cap-weighted index of investable Chinese shares. The fund’s holdings stretch across all market cap sizes.	$462.25 million	0.59%
iShares MSCI China ETF	MCHI	Tracks a market-cap-weighted index of investable Chinese shares. The fund stretches across all market cap sizes.	$5.87 billion	0.59%
iShares MSCI South Africa ETF	EZA	Tracks the performance of a market-cap-weighted index of South African stocks. It captures 85% of the publicly available market, excluding all small caps.	$340.15 million	0.59%

Note that two Russia-focused ETFs, RSX and ERUS, were delisted following Russia’s invasion of Ukraine in 2022.

Which of the BRICS Countries Has the Highest GDP?

China has the largest GDP of the BRICS countries, at just under $17.88 trillion in 2022, making it one of the largest economies in the world. Despite its significant economic growth and global influence, China’s classification as an emerging market in the financial and investment world can seem counterintuitive. However, this designation is based on its low per-capita GDP, restrictive regulatory environment, capital controls, and limited market accessibility to foreign investors.

Who Created the Category of BRICS?

The concept of BRICS was coined by Jim O’Neill, a British economist, in 2001. At the time, O’Neill was the chair of Goldman Sachs Asset Management. He introduced the term in “Building Better Global Economic BRICs,” published as part of the Global Economics Paper series by Goldman Sachs.

Which BRICS Country Has the Highest Economic Growth?

Here are the estimated GDP growth rates for 2022:

• UAE: 7.5%
• Saudi Arabia: 7.5%
• India: 7.0%
• Egypt: 6.6%
• Ethiopia: 5.3%
• Argentina: 5.3%
• Iran: 3.8%
• Brazil: 3.0%
• China: 3.0%
• South Africa: 1.9%
• Russia: -2.1%

What Is the Most Popular Emerging Market ETF?

The Vanguard FTSE Emerging Markets ETF (VWO) and iShares MSCI Emerging Markets ETF (EEM) are among the most popular and widely traded emerging market ETFs. These ETFs are favored because of their broad exposure to a range of emerging market economies, large assets under management, and liquidity.

Which Are the Most Used BRICS Benchmark Indexes?

• MSCI BIC Index: Broad index of Brazil, India, and China stocks. Widely tracked benchmark for emerging market equity performance.
• Dow Jones BRIC 50 Index: A market capitalization-weighted stock index composed of 50 of the most liquid and largest companies in BRICS (excluding Russia after it invaded Ukraine).
• S&P BRIC 40: Tracks the 40 largest companies in the BRICS countries. Focuses on liquid large-cap stocks.
• FTSE/RAFI BRIC 50 Index: Includes 50 stocks from the BRICS countries weighted by market capitalization. Designed to represent the leading blue chip companies.

The Bottom Line

The key advantages of BRICS ETFs are diversification, access to fast-growing economies, and the possibility of generating higher long-term returns than developed markets. However, there are also greater risks involved. Volatility tends to be higher because of political instability, slower growth, and currency fluctuations. Also, the BRICS countries face challenges with corruption, infrastructure gaps, and economic reforms.

For investors with high risk tolerance, a small allocation to BRICS ETFs can provide portfolio growth potential. But limit exposure to 5% to 10% of the total portfolio value. Emerging markets should be balanced with holdings in stable developed markets.

Always conduct thorough research before selecting a specific BRICS ETF. Compare expenses, liquidity, holdings, and historical performance against other funds and benchmarks. Diversify across several emerging market ETFs rather than concentrating solely in the BRICS countries.

These women lead Fortune 500 companies

Reviewed by Somer Anderson

It is often said that the glass ceiling in corporate boardrooms is still intact. However, a few cracks appear here and there. Though the number of women chief executive officers (CEOs) at the helm of the largest companies is still significantly lower than the number of men serving as CEOs, their ranks continue to grow.

The following are 10 women CEOs leading Fortune 500 companies.

Key Takeaways

• Women represent a small fraction of chief executive officers (CEOs) at the largest corporations, although their ranks are growing.
• Women lead some of the largest corporations in a variety of industries, ranging from technology to finance.
• Not only are women breaking barriers, but some are also changing history by occupying spaces formerly held by men.
• Most of the featured CEOs rank in Forbes’ World’s Most Powerful Women list.

Karen Lynch

CEO, CVS Health (CVS)

Lynch assumed the CEO role in February 2021. Previously, she was executive vice president of CVS Health and the president of Aetna, the corporation’s insurance arm.

CVS is one of the largest health providers in the world. Lynch is number six on the Forbes’ 100 Most Powerful Women in the World 2023 list.

Gail Boudreaux

CEO, Elevance Health (ELV), formerly Anthem

Boudreaux was named CEO of Elevance Health, one of the largest health insurers in the U.S., in 2017. In her first four years as CEO, the company’s stock increased by more than 70%.

Previously, Boudreaux was CEO of UnitedHealthcare, the largest division within UnitedHealth Group. She ranks 11th on Forbes’ 100 Most Powerful Women in the World 2024.

Note

In 2024, 52 CEOs of Fortune 500 companies were women.

Mary Barra

CEO, General Motors (GM)

Barra is the first female CEO of General Motors and pretty much the first for a major automobile company in the United States. She slid into the driver’s seat at GM in January 2014, taking the wheel from Daniel Akerson, who is credited for turning the company profitable after filing for Chapter 11 bankruptcy protection in 2009.

Barra is leading the charge for GM to transition to electric vehicles by 2035. She ranked fifth on  Forbes’ 100 Most Powerful Women in the World 2024 list.

Carol Tomé

CEO, United Parcel Service (UPS)

Tomé came out of retirement to take the helm of UPS in June 2020. She retired as the chief financial officer (CFO) of Home Depot in 2019. Tomé is the first female CEO at UPS and the first UPS CEO who wasn’t promoted from within.

During the first 100 days as CEO, she prioritized planning the logistics for the 2020 holiday season and COVID-19 vaccine deliveries. She is number 22 on Forbes’ 100 Most Powerful Women in the World 2024 list.

Jane Fraser

CEO, Citigroup (C)

Stepping into the role of Citigroup’s CEO in 2021, Jane Fraser became the company’s first female CEO and the first to run a Wall Street bank. She joined Citi in 2004 and held various executive roles, including CEO of Global Consumer Banking and Citi’s president.

Soon after becoming CEO, Fraser initiated a “refresh” to simplify operations. Her goal is to make it “easier to run and improve” bank operations. Fraser is listed as number ten on Forbes’ 100 Most Powerful Women in the World 2024 list.

Corie Barry

CEO, Best Buy (BBY)

Barry was named CEO of Best Buy in 2019 at the age of 44. She was the youngest CEO of a Fortune 100 company at the time. Previously, Barry held positions including chief financial and strategic transformation officer and CFO. Barry joined Best Buy in 1999.

In terms of career advice, Barry says, “Have those uncomfortable moments. Because my strong personal belief is it is those moments that cause you to grow the most yourself, but that also differentiate you the most in your career.”

Tricia Griffith

CEO, Progressive (PGR)

In 2016, Griffith was named CEO of Progressive after prior roles as Personal Lines COO and chief human resources officer. Progressive, a property and casualty insurance firm, reported $75.4 billion in revenue in FY 2024.

Under Griffith’s leadership, Progressive is a top-rated company in diversity and inclusion. In management, more than 20% are people from marginalized groups, and approximately 45% are women. Notably, there is no gender pay gap. Griffith ranks 56th among Forbes’ 100 Most Powerful Women in 2024.

Thasunda Brown Duckett

CEO, Teachers Insurance and Annuity Association of America (TIAA)

Retirement and investment manager TIAA named Thasunda Brown Duckett as its CEO in February 2021.

Duckett succeeded Roger W. Ferguson Jr., who was one of five Black CEOs in the Fortune 500 before retiring. Before TIAA, she was CEO of Chase Consumer Banking. For 2024, Duckett holds the 34th spot on Forbes‘ 100 Most Powerful Women.

Safra Catz

CEO, Oracle (ORCL)

Former Oracle CFO Safra Catz was appointed as one of two company CEOs in 2014 after Lawrence Ellison stepped down from the position. Following the stepping down and eventual passing of co-CEO Mark Hurd, Catz became the sole CEO in 2019.

Under her leadership, the tech giant has pursued an aggressive acquisition strategy, completing more than 130 acquisitions. Catz is listed in the 16th position on Forbes 100 Most Powerful Women in 2024 and 20th on Forbes‘ America’s Richest Self-Made Women 2024 list.

Who Is the Most Famous Woman Chief Executive Officer (CEO)?

Perhaps the most famous woman CEO is Karen Lynch, chief executive officer (CEO) of CVS Health, with more than $357.8 billion in revenue in 2023. Following closely are Gail Boudreaux, CEO of Elevance Health, and Mary Barra, CEO of General Motors.

How Many CEOs Are Women?

In 2023, 52 women were CEOs of Fortune 500 companies, exceeding 10% of the total, marking a record year for women in the highest-ranking corporate role. One-quarter of those women became CEOs in the last year.

Which Companies Have Women CEOs?

As of the end of 2023, some Fortune 500 companies that have women CEOs include CVS Health, General Motors, Rite Aid, Opendoor Technologies, Bed Bath & Beyond, Lumen Technologies, Fannie Mae, Citigroup, United Parcel Service, Best Buy, Progressive, TIAA, and Oracle.

How Many Black Women CEOs Are There?

As of February 2024, there is only Black woman CEO of a Fortune 500 company, Thasunda Brown Duckett. Duckett is CEO of the Teachers Insurance and Annuity Association of America (TIAA).

The Bottom Line

While women still face barriers in the workplace due to gender-based discrimination, they are increasingly joining the ranks of the C-suite at some major companies. And, even though the number of men serving as CEOs far outnumbers the number of women in this top position, every year more women become CEOs. Currently, 52 CEOs of Fortune 500 companies are women, and one-quarter of those women became CEOs in the last year.

Fact checked by Vikki Velasquez

Trusts are a cornerstone of wealth management for the ultra-wealthy, providing asset protection, tax efficiency, and a structured way to pass down wealth. Let’s look at some potential missteps you can avoid to safeguard your legacy.

Key Takeaways

• Neglecting tax planning can cause unnecessary tax bills, and poor wording can lead to confusion.
• Update your trust often, though there might be some legal complexities here.
• You should educate your beneficiaries so they know what to expect and plan accordingly.

Failing to Clearly Define Trust Terms

One of the biggest mistakes in trust planning is vague or overly complex terms. Without clear language, beneficiaries and trustees may interpret provisions differently, leading to disputes and potential litigation. It can also lead to misappropriation of assets, potentially leading to estate taxes, gift taxes, income taxes, or generation-skipping taxes. Trust documents should leave no room for ambiguity—make it easy to understand exactly what you want to happen with specific assets.

This also allows you to be as complex as you want. According to C. Jay Rhoden of Legacy Legal Solutions, ”Another advantage a trust has over just having a will is the level of control they offer you when it comes to distributing assets to your heirs.”

Choosing the Wrong Trustee

Every family has complexities and differing personalities. A well-structured trust might fail if the wrong trustee is in charge.

Some families opt for a relative or close friend. Others appoint a corporate trustee. The best trustees balance professional knowledge with the ability to navigate complex family dynamics.

In short, even though it is a political topic, make sure you pick the right person.

Not Updating the Trust Over Time

Many families create trusts but fail to revisit them as laws, assets, and family situations change. Births, deaths, divorces, and new legislation happen all the time. It’s extra work to make updates each time a major life event happens, but you’ll want to make sure those changes happen (since those life events might have driven changes in your trust). Your trust may also be impacted by evolving tax rules that shift over time.

Keep in mind that updating your trust might involve some extra steps. For example, according to Suze Orman, “If you want to make changes to an irrevocable trust, it will generally require the consent of the beneficiaries of that trust, and you have to have court approval, one or the other or both.”

Not Preparing Your Beneficiaries

You have to make sure your beneficiaries are prepared for their roles. Without knowing what they’ll be tasked with or given, they might not plan their wealth appropriately. More specifically, be clear about how your beneficiaries could and should shield their distributions from tax based on how you planned your estate.

You could incorporate financial literacy programs, mentorship, and phased distributions into your trust planning to help beneficiaries develop responsible money management habits.

Failing to Consider Tax Implications

One of the biggest errors is failing to fund the trust properly. If assets aren’t correctly transferred to the trust, they may not benefit from the intended tax advantages. This can result in the estate or assets being subject to higher taxes, like estate or probate taxes. You can also trigger different tax rules based on the type of trust you set up.

Another mistake is not taking full advantage of tax deductions and exemptions. Trusts can be taxed at higher rates than individuals, so manage income distributions and deductions. Also, some trusts may qualify for charitable deductions if a portion of the assets is allocated to charity. All this means there are delicate rules to be careful of, or else you may encounter unwanted taxes.

The Bottom Line

Trusts are powerful tools for preserving wealth, but poor planning can leave you and your family at risk. You have to think through the impact on your beneficiaries, tax complications, and contract language as you work through setting up or revising your trust.