Reviewed by Charlene Rhinehart

A stock’s ticker symbol is what identifies a company on an exchange, but they are not required to always remain the same. Sometimes, ticker symbols change because a company underwent a merger, was acquired, changed its name, or was delisted. Learn more about why ticker symbols might change.

Key Takeaways

• A ticker symbol is a set of letters that represent and identify a public security listed on an exchange.
• If a company is acquired, its ticker symbol usually changes to the acquirer’s after the completion of a merger.
• Generally, a company that changes its name will change its ticker.
• When companies are delisted from their exchanges, their symbol changes.
• Investors generally don’t need to do anything after a ticker symbol changes.

What Is a Ticker Symbol?

A ticker symbol is a group of characters, usually letters, representing and identifying public securities that trade on exchanges. The word “ticker” originally referred to the devices that received signals via telegraph and telephone lines that printed out abbreviations for companies along with their current stock price. The name stuck, and these symbols are still used today to quickly identify companies and stock prices.

Every security that is listed has a ticker symbol, which is chosen by the company before it is listed on an exchange. Although the symbol may be an abbreviation or other equivalent of the company’s name, this isn’t a requirement.

Companies that trade on the New York Stock Exchange (NYSE) have ticker symbols with three letters, while those listed on the Nasdaq have four letters.

My Ticker Changed!

Ticker symbols help investors identify companies when they’re doing research or making trades. But, like everything else, these symbols aren’t always static. They can change for several different reasons:

• The company merges with another corporation
• The company changes its name
• The company delists from its exchange

Mergers

Mergers take place when one company acquires another one. Since they combine to form one new entity, they can’t both trade on the exchange. So, what happens to the two ticker symbols? When two companies merge, the entity being acquired usually gives up its ticker symbol in favor of the acquiring company’s symbol. Corporate actions, such as mergers, can often be positive for a company, especially if the company is taken over for a premium over the share price.

Name Changes

A ticker symbol may change because the company changes its name. A company name change generally doesn’t mean much to its operations, though investors may interpret it as a positive sign if it reflects a positive change in the company’s overall strategy. Here’s an example: When AOL Time Warner dropped the AOL and became simply Time Warner, it changed its symbol from AOL to TWX.

Delisting

If a ticker symbol has letters preceding it, such as OTCQX, OTCQB, or Pink, the stock is traded on OTC Markets, not on a public stock market. No longer trading on the original exchange, it’s on the less liquid and more volatile over-the-counter market.

A stock that has been delisted is like a baseball player sent from the major leagues to the minors. For some reason, the stock is no longer worthy of trading on a major exchange, generally because it failed to maintain the exchange’s requirements.

Most companies that are listed on the Nasdaq have four-letter ticker symbols. But there are instances when the exchange adds a fifth letter. This letter tells investors something important about the company. Two of these letters are no longer used. Companies that entered bankruptcy proceedings had a “Q” added to the end of the ticker. It also made changes when companies were delinquent with their SEC filings by adding an “E” to the end. The Nasdaq ended this practice in January 2016 and now uses the Financial Status Indicator to denote delinquent regulatory filings or bankruptcy proceedings.

What to Do if Your Stock’s Ticker Changes

A ticker symbol change doesn’t require any action from you, the investor, in the grand scheme of things. The change itself doesn’t do anything to markets or to the way you execute trades, but the change in the company might have an effect on its market price. Since everything is electronic, your trading platform or broker will already update your portfolio to include the new ticker symbol.

Can a Stock Ticker Change?

Yes, and it happens frequently in the market as companies go through changes.

Who Replaced the Ticker Tape?

The physical ticker tape devices were replaced as technology developed, eventually changing to computer-based models as information became communicated through the internet much faster.

How Often Do Stock Tickers Update?

Many exchanges have per-second price changes, but prices can be delayed at set intervals, such as 15 minutes or one hour.

The Bottom Line

Stock tickers are company identifiers on exchanges that allow for quick display and reference of company stock prices. They can change when companies undergo changes like mergers or being delisted on an exchange.

Reviewed by Lea D. Uradu
Fact checked by Vikki Velasquez

A property tax bill is part of the homeownership experience. Local governments collect these taxes to help fund projects and services that benefit the entire community—things such as roads, schools, police, and emergency services. There are two primary ways to pay your property tax bill: as part of your monthly mortgage payment or directly to your local tax office.

Key Takeaways

• Local governments collect property taxes to help pay for services and projects that benefit the community.
• Property taxes are an ad valorem tax, so the tax is based on the value of the property.
• If you have a mortgage, your property tax may be rolled into your monthly mortgage payment. Otherwise, you must pay the tax office directly.
• You may also owe taxes on personal property for items such as your car, boat, or RV.

Ad Valorem Tax

Property taxes are an ad valorem tax, meaning the tax is based on the assessed value of an item. A property assessor determines the value of your property by estimating its fair market value (FMV)—that is, the price a willing buyer and seller would agree upon in an open market.

To do so, the assessor reviews the sales records of comparable properties in the area—known as “comps”—that are similar in condition, features, and size. The assessor may consider other factors, too, such as the property’s rental income history (or potential), replacement costs, maintenance costs, and any recent improvements you made to the property.

How Is Property Tax Calculated?

To determine your tax bill, the tax office multiples your property’s assessed value by the local tax rate. For example, if your home is assessed at $400,000, and the local tax rate is 1%, your tax bill would be $4,000. Of course, the higher the assessed value, the higher the tax bill.

Some local governments apply the tax rate to just a portion of the assessed value. This is known as the assessment ratio. If your home is assessed at $400,000, and your county has an assessment ratio of 80% and a tax rate of 1%, your tax bill would be $3,200 ([$400,000 × .80] × .01).

How to Pay Your Property Tax

In general, there are two ways to pay your property tax bill: as part of your monthly mortgage payment or directly to your local tax office.

PITI

If you have a mortgage, your property taxes may be rolled into your monthly mortgage payment. If so, your lender divides your estimated tax bill by 12 and includes that amount in your monthly payment, along with the principal, interest, and private mortgage insurance—four costs collectively known as “PITI” (principal, interest, taxes, and insurance). For a $4,000 annual property tax bill, for example, you would pay about $334 a month. Your lender estimates your tax bill, so you’ll get a refund if you paid too much, or you might have to make an extra payment if the amount you paid comes up short.

You can find out the total amount of property tax you paid by looking at box 10 (“Other”) of Internal Revenue Service (IRS) Form 1098. Your lender will send this to you by January 31st if you paid $600 or more in mortgage interest during the previous tax year. If you didn’t receive a 1098—and you should have—call your lender or find the information on your lender’s website. You may be able to lower your tax bill by appealing your assessment (if you think it’s too high) or finding out if you’re eligible for any exemptions.

Pay Your Local Tax Office

If you don’t pay your property tax as part of a monthly mortgage payment, you’ll pay the tax office directly. You should receive a bill in the mail that includes payment directions. Depending on where you live, you may have several payment options:

• By check or money order sent through the mail
• Online using a credit or debit card
• Online using an electronic check payment (eCheck)
• By telephone using a credit or debit card

In addition to the different payment options, you may get to choose if you want to pay the bill all at once or split it into monthly, quarterly, or biannual payments. Pay attention to any prepayment discounts offered—some municipalities provide a discount if you pay early.

Important

If you use a credit or debit card to pay your bill, you may be charged a convenience fee—that is, a flat dollar amount or a percentage of the bill, typically 1% to 3.5%.

Personal Property Taxes

Real estate—your land and any property attached directly to it—is called “real property.” When people talk about property taxes, they’re usually referring to this type of property. Of course, real property tax may not be the only property tax you owe.

Depending on where you live, you may also owe taxes on personal property. Personal property is classified as tangible, which includes cars, boats, RVs, and aircraft, or intangible, consisting of things like stocks, bonds, insurance policies, and intellectual property. Like real property taxes (those on your home), personal property taxes are an ad valorem tax, meaning they’re based on the value of the property.

Tangible personal property taxes typically fall from year to year as the property’s value decreases. The value of intangible personal property taxes is made using a method known as calculated intangible value (CIV).

Implications of Not Paying Property Taxes

Not paying your property tax bill can result in a cascade of financial and legal consequences. Initially, you may face penalties and interest on the overdue amount. This will steadily increase the amount you owe.

Failure to address the issue promptly can lead to a tax lien on your property. A tax lien gives the government a legal claim on your property. This can hinder your ability to sell or refinance the property, as you have to disclose whether or not there are liens/legal claims against your property during the sale process.

There is also an industry that will buy this debt. The National Tax Lien Association estimates that $21 billion of real estate property taxes go delinquent each year, with up to $6 billion of these taxes being auctioned off to private investors.

One of the more severe repercussions is the potential for foreclosure. If property taxes remain unpaid for an extended period, the government may initiate foreclosure proceedings. This means they take control of your property, auction it off, and use the sale proceeds to recover the outstanding tax debt. This impact extends beyond the immediate financial burden, as a foreclosure can have long-term effects on credit scores and the ability to secure loans or housing in the future.

When Are Property Tax Bills Typically Due?

Property tax due dates vary by location but are commonly set on an annual or semi-annual basis. The due date is predetermined by local tax authorities. Typically, tax bills are sent well in advance of the due date, providing property owners with sufficient time to make necessary arrangements for payment.

How Are Property Taxes Calculated?

Property taxes are typically calculated by multiplying the assessed value of a property by the local tax rate. The assessed value is determined through evaluations by tax assessors, taking into account factors like the property’s size, location, and features. The tax rate, set by local authorities, is a percentage applied to this assessed value. Additionally, specific local projects or services may result in additional assessments, contributing to the overall property tax bill.

Can I Pay My Property Taxes in Installments?

Yes, many jurisdictions offer installment plans to help property owners manage their tax payments. These plans allow taxpayers to spread the financial burden over multiple payments throughout the year.

What Happens if I Sell My Property Mid-Year?

In the event of a mid-year property sale, property taxes are typically prorated between the buyer and the seller. The buyer assumes responsibility for the portion of taxes owed for the remainder of the year, and a portion of this may be due at closing.

The Bottom Line

Everyone who owns real property is on the hook for property taxes, whether it’s for a house, farm, or vacant land. While you can’t get out of paying property taxes, you can deduct up to $10,000 in combined state and local taxes—including property taxes.

If your property taxes are rolled into your mortgage payment, note that your lender must pay the tax on your behalf before you can claim the deduction. Contact your lender if you have any questions about the payment schedule.

The ultra-wealthy spend a lot of money on luxury goods because they’re hard not to love. But are rare whiskey, designer handbags, and other expensive items also good investments? 

High-end watches and expensive art can be smart additions to your portfolio, but only if you know what you’re doing. Here’s what you need to consider when investing in luxury assets.

Key Takeaways

• Invest in luxury goods with a track record of appreciation.
• Build a strong traditional portfolio before considering luxury goods as a secondary investment.
• Success in luxury investing requires expertise and connections—ensure you have the knowledge to buy, sell, and authenticate assets properly.

What I’m Telling My Clients

There’s something satisfying about owning tangible assets, especially when markets are uncertain. But luxury investments shouldn’t be on your radar if you’re not financially secure. You should first build an ETF-based portfolio of stock and bond investments and then consider diversifying it with alternative assets (e.g., venture capital, private equity, cryptocurrency) and luxury goods likely to be appreciated over time. 

Focus on categories with proven track records and avoid purchasing items just because they’re expensive or popular. Pieces with historical significance, limited availability, or unique craftsmanship are your best bets. Also, make sure to build sufficient market knowledge and industry connections. Without them, it will be harder to find qualified buyers later.

Today’s market shows that art, jewelry, and watches are appreciating while previously popular investments like rare whiskey are declining.

Tip

Do your research and make sure there’s a strong authentication process before you purchase luxury goods.

Here’s what you can expect from investing in luxury items, according to the 2024 Wealth Report by Knight Frank:

The Bottom Line

Luxury goods can be a good way to diversify, but making them your main focus is risky. Anyone considering these investments should start with a solid traditional portfolio first. Once you have established financial security through these more conventional ways, you can consider expanding into luxury goods that have a proven track record of appreciation.

Pet food, frozen foods, vitamins, meal delivery, and a Starbucks licensing deal

Reviewed by Samantha Silberstein

Nestlé S.A. is the largest food and beverage company in the world and has made some major strategic deals since the 1970s. These deals include producers of vitamins, baby food, pet food, frozen food, and a meal delivery service—and even a giant licensing agreement with Starbucks that dwarfs the size of many of its takeovers. It also made no secret of its desire to expand into healthier foods, as obesity becomes a bigger problem. So who are some of these names?

Below, we’ll explore the Starbucks licensing deal and six of the most significant acquisitions in the company’s history. Nestlé does not provide a breakdown of the profits and sales that this licensing deal and these acquisitions contribute to the company.

Key Takeaways

• Nestlé is the world’s largest food and beverage company.
• Acquisitions and strategic deals have helped the company expand its offerings and market.
• The licensing agreement with Starbucks allows Nestlé to sell the coffee chain’s products in its stores.
• Other major acquisitions include Gerber, Purina, and Stouffer’s.

History of Nestlé

Nestlé (NSRGY) began as a producer of infant food in 1867. In 1905, the company merged with the Anglo-Swiss Milk Co. to become Nestlé Group. Nestlé survived World War I, and its products were a staple for U.S. servicemen in Europe during World War II.

Since World War II, the Swiss multinational mounted an aggressive expansion strategy, making a long string of major acquisitions. This helped it expand and strengthen its product portfolio. Nestlé’s total sales in 2023 were roughly 93.0 billion Swiss francs, or CHF, with a trading operating profit of 14.5 billion CHF. As of Jan. 21, 2025, the company’s market capitalization was approximately $210.22 billion.

Nestlé highlighted a shift toward healthier fare when it announced in 2018 the sale of its U.S. candy business to the Ferrero Group, one of the world’s largest chocolate and confectionery companies. It has divested other assets since then:

• In 2019, it sold its U.S. ice cream business for roughly $4 billion
• In early 2021, it sold its regional spring water brands, purified water business, and beverage delivery service in the U.S. and Canada for $4.3 billion

Nestlé has also made acquisitions in organic products, which are increasingly popular with consumers concerned about the environment and their health.

Note

Nestlé employs more than 2,000 brands that are sold in almost 190 countries.

Starbucks Licensing Deal

• Type of Business: Coffee
• Licensing Price: $7.15 billion
• Date of Closing: Aug. 28, 2018

One of the most important deals in Nestlé’s history is not an acquisition but a licensing agreement. We include it in this story because it constitutes one of the largest—and potentially most lucrative—deals in the company’s history.

In 2018, Nestlé agreed to pay Starbucks (SBUX) $7.15 billion for the rights to sell Starbucks-branded coffee in retail stores outside of Starbucks locations. This deal does not allow Nestlé to put its name on Starbucks products—only to sell those items in retail stores.

The deal strengthened Nestlé’s already-strong footprint in the coffee industry, with brands like Nescafe and Nespresso. Within 12 months of the agreement, Nestlé launched 29 Starbucks products across 40 countries. The market expanded to nearly 80 countries by 2023.

On Jan. 13, 2023, Nestlé acquired Seattle’s Best Coffee from Starbucks. As of November 2024, Nestlé is the top coffee company in the world.

Gerber Products

• Type of Business: Baby food
• Acquisition Price: $5.5 billion
• Date of Purchase: Sept. 3, 2007

Founded in 1927, Gerber Products was acquired by Nestlé in 2007. Gerber had nearly $2 billion in annual sales and was owned by pharmaceutical company Novartis AG before the acquisition.

In 2023, Nestlé’s Nutrition and Health Science division, which includes Gerber, accounted for 16.4% of the company’s total sales. Before the acquisition, Nestlé had no major presence in the U.S. baby food market. Nestlé prioritized the development of non-GMO and organic products to expand the Gerber brand.

Ralston Purina

• Type of Business: Pet foods
• Acquisition Price: $10.3 billion
• Date of Purchase: Dec. 11, 2001

Nestlé Purina PetCare was founded as the Robinson-Danforth Commission Co. in 1894 and later became known as Ralston Purina. Under Nestlé, Purina PetCare has dramatically expanded its global sales, with popular brands such as Friskies, Pro Plan, and Felix.

In 2023, Nestlé’s PetCare segment represented 20.3% of the company’s total sales. Ralston Purina fits well with the company’s aggressive growth strategy, as it expands the company’s base beyond its traditional focus on food and beverages for consumers.

Atrium Innovations

• Type of Business: Vitamins and supplements
• Acquisition Price: $2.3 billion
• Date of Purchase: March 8, 2018

Atrium Innovations is a maker of vitamins and nutritional supplements. It started as a subsidiary of a Canadian biotech company before being spun off in 2006. It was acquired in 2014 by an investment consortium led by private equity firm Permira Funds.

As consumers grew more health-conscious, Nestlé moved toward healthier brands and purchased Atrium in 2018. The deal boosts Nestlé’s participation in the vitamin and supplement market and serves a dual purpose: It expands Nestlé’s overall business and helps it to market itself as a healthier company.

Stouffer’s

• Type of Business: Frozen foods
• Acquisition Price: $105 million
• Date of Purchase: March 5, 1973

Stouffer’s was founded in 1922 and went on to build a national chain of restaurants over the next several decades. A key development for the company occurred in 1954 when Stouffer’s began to create frozen meals for sale. Stouffer’s became best known for its line of frozen food products.

Nestlé purchased Stouffer’s in 1973 from Litton Industries, a defense contractor that expanded to offer retail products, including microwave ovens. At the time of the acquisition, frozen meals were popular with consumers and Stouffer’s was a major brand.

Stouffer’s, one of Nestlé’s earlier deals, provided a template for future forays into healthier foods. In 1981, Stouffer’s launched its successful Lean Cuisine line of low-calorie frozen entrées.

Freshly

• Type of Business: Meal delivery service
• Acquisition Price: up to $1.5 billion
• Acquisition Date: Oct. 30, 2020

Freshly launched in 2012 as a meal delivery service, providing fresh, fully cooked meals to customers across the United States. The company offered a weekly subscription service, capitalizing on a growing trend of subscription delivery services across a variety of product areas. In 2020, the company delivered more than one million meals per week to about 20,000 U.S. ZIP codes.

Nestlé acquired Freshly the same year, maintaining it as a stand-alone company with complete control of its products and subscription pricing.

Nestlé’s acquisition helped it gain additional exposure to the growing market for healthy foods while also capitalizing on the rise of meal delivery services such as Blue Apron. Freshly ended meal delivery service and Nestlé divested a majority stake of Freshly in 2023.

The Bountiful Company (Core Brands)

• Type of Business: Supplements and nutrition
• Acquisition Price: $5.75 billion
• Acquisition Date: Aug. 9, 2021

Launched in 1971, The Bountiful Company is a nutrition company providing vitamins, supplements, and related products. Nestlé acquired The Bountiful Company’s core brands for $5.75 billion in August 2021, including Nature’s Bounty, Solgar, Osteo Bi-Flex, and Puritan’s Pride. Nestle folded these brands into Nestlé Health Science, to make it a global leader in nutritional supplements, vitamins, and minerals.

Nestlé Diversity & Inclusiveness Transparency

As part of our effort to improve the awareness of the importance of diversity in companies, we have highlighted the transparency of Nestlé’s commitment to diversity, inclusiveness, and social responsibility. The chart below illustrates how Nestlé reports the diversity of its management and workforce. This shows if Nestlé discloses data about the diversity of its board of directors, C-Suite, general management, and employees overall across a variety of markers. We have indicated that transparency with a ✔.

What Is Nestlé’s Largest Product Line?

Nestlé’s largest product line is the powdered and liquid beverages. Some of the most popular names in this segment include Nescafé, Nespresso, and Nesquik,

How Can I Invest in Nestlé?

Nestlé is a Swiss company whose shares trade on the SIX Swiss Exchange. You can invest in the company by purchasing American depositary receipts (ADRs), which trade over-the-counter (OTC) in the U.S. under the ticker symbol NSRGY. These can be bought and sold through a brokerage account. You can also buy and sell shares of mutual funds and exchange-traded funds (ETFs) that hold the company in their portfolios.

What Are Some of Nestlé’s Most Popular Brands?

Nestlé’s portfolio of brands includes more than 2,000 different names. Some of the most popular ones are Nescafé, KitKat, Nespresso, Maggi, Toll House, and Milo.

The Bottom Line

Nestlé is the world’s largest food and beverage company with a presence in almost 190 countries and over 2,000 brand names under its portfolio. Acquisitions and agreements, including the one with Starbucks, have helped the company expand its offerings and markets. If you’re an investor looking to capitalize on the company’s success, consider trading the company’s ADRs or shares of mutual funds and ETFs that have Nestlé in their portfolio.

Reviewed by Pamela Rodriguez

The answer to this question depends on who you ask, what you plan to do when you get there, and the precautions you’re willing to take while you travel. Some of the advice that you would give to a friend traveling in any U.S. city, including yours, would be the same advice you would follow when traveling around Thailand.

As is so often the case, some of your biggest fears—the threat of terrorism, for instance, or street crime—might be greater than your fear of crossing the road when the latter, statistically, would be a much more realistic threat.

Key Takeaways

• Regularly monitor the State Department’s website, where you can find current Travel Warnings, Travel Alerts, and the Worldwide Caution.
• Pedestrians don’t have the right of way—on busy intersections—without traffic lights, traffic is often controlled by the traffic police.
• Thailand has lots of fun activities to offer apart from spending lazy days on the beach.
• It’s a serious offense to defame, insult, threaten, or defile any image of the Thai royal family.
• Thailand will be safe as long as you exercise the kinds of cautions that are necessary anywhere in the world.

Informing Yourself Before You Travel

The State Department is one of the best and most thorough sources of information on how safe it is to travel to Thailand. It issues Travel Alerts and Travel Warnings for the parts of the world that pose any perceived threat to citizens traveling there.

As of July 24, 2023, the State Department issued a:

• Level 1 travel advisory to Thailand as a whole. This means that travelers should exercise normal precautions.
• Level 3 for the provinces of Yala, Pattani, Narathiwat, and Songkhla. This means that travelers should reconsider travel to these areas because of civil unrest and violence largely directed at Thai government officials. Areas of particular interest include Chana, Thepha, Nathawat, and Saba Yoi.

Any U.S. traveler in Thailand can get in touch with the American Citizen Services Unit of the U.S. Embassy:

• In Person: 95 Wireless Road in Bangkok
• By Phone: +66-2-205-4000
• By Email: acsbkk@state.gov

The American Citizen Services Unit in Bangkok also had an X (formerly Twitter) account, @acsbkk, but it was deactivated in October 2024.

Important

Travel Alerts are meant for short-term threats such as demonstrations or health-related events; Travel Warnings are for more serious threats such as terrorist attacks or civil wars. Click here for a U.S. Embassy and Consulate warning. Read the Country Specific Information for Thailand.

Some Firsthand Observations

Amy Rinehart, a 28-year-old American who lived and worked in Bangkok for two years, says that she felt absolutely safe on the streets of that country wherever she went, including “the mountains in the north, the beautiful beaches in the south and even in the organized chaos that is the capital city of Bangkok.”

Just after Rinehart arrived, the military staged a coup in Thailand. She says that she hardly noticed: “In one part of Bangkok, there were military police everywhere; two stops away on the Skytrain, you wouldn’t know anything was going on. The Thais are used to coups.”

And that’s not just the opinion of young travelers. Jennifer Stevens, executive editor of International Living, knows the older market, specifically folks considering retiring in Thailand. According to Stevens, “We feel very comfortable sending our readers to the parts of Thailand we recommend for retirement living. Places like Chiang Mai, Hua Hin, Koh Samui, and Phuket, for instance, we feel are quite safe. Thousands of expats living in Thailand are at once very happy there and indifferent to the political situation.”

The advice she’d give to travelers to Thailand, she says, is the same she would give to someone going to Rome: Don’t stay out late in seedy parts of town, don’t carry all your money and your passport on your person, etc. Some of the more likely dangers of traveling in Thailand are the traffic, local laws that are difficult for U.S. travelers to understand, and the risks inherent in the country’s many outdoor activities.

The Traffic

“Pedestrians don’t have the right of way in Thailand,” says Rinehart, “and motorcycles, the most popular means of transport, weave in and out of traffic at a dizzying rate.”

According to information passed on to us by Kathleen Peddicord, founder and publisher of Live and Invest Overseas, the combination of heavy traffic and inebriated drivers in some areas, like Phuket, poses a real threat.

And, “from a foreigner’s perspective,” she says, “the main ‘danger’ is being overcharged by tuk-tuks (three-wheeled motor-powered bikes); metered taxis are a safer alternative.”

Outdoor Adventures

From zip lining to hiking, mountain biking, swimming, and diving, visitors to Thailand can choose from a dizzying array of outdoor sports. Which they should, says Rinehart—but not without exercising some caution.

Some of the safety features of the sponsored adventures may not be quite up to the standards that U.S. folks are used to seeing. For instance, equipment may not be as safe, and first aid capabilities may not be all that great.

“Just do a little digging before you sign on,” Rinehart says.

Note

If you want to hunt around for cheap goodies, stick to the markets or bargain shopping malls such as MBK and avoid the brand names.

Watch What You Say About the Royal Family

For travelers from the U.S. who are used to the First Amendment of this country, it is difficult to comprehend how dire the results can be if you are accused by a Thai court of saying something that insults the royal family. In 2024, a man was sentenced to 50 years in prison for social media posts deemed damaging to the king.

How Safe Is It to Travel to Thailand?

Thailand is a relatively safe country to travel to, according to the State Department. According to the agency’s website, travelers should take normal precautions when they visit the country on an overall basis. But there are certain areas that visitors may want to avoid. As of July 2023, the State Department suggests that travelers reconsider visiting the provinces of Yala, Pattani, Narathiwat, and Songkhla because of civil unrest.

Should I Register with the State Department If I’m Traveling to Thailand?

You should register with the State Department if you travel to Thailand or any other location. Enroll in the Smart Traveler Enrollment Program with details of your trip. Doing so is free and voluntary, and can help the agency locate you when you need assistance in case of emergency. You can also register if you ever decide to live abroad.

Can I Use U.S. Currency While Traveling in Thailand?

Yes, you can use U.S. dollars while traveling in Thailand. You may also decide to use the national currency, the Thai baht, during your travels. Most merchants, including hotels, restaurants, retailers, and airlines, use major credit cards like Visa and Mastercard. You can also use your debit card to withdraw cash, which will be in the local currency. Check with your card issuer if there are any fees associated with foreign transactions. Keep in mind there may be fees and additional charges if you use your card at automated teller machines (ATMs) in Thailand.

The Bottom Line

Be especially alert and careful, but the odds are that your trip to Thailand will be safe as long as you exercise the kinds of caution that are necessary anywhere in the world. Heed the warnings of the U.S. Department of State.

Sign up with the department’s Smart Traveler Enrollment Program (STEP) so that the embassy or nearest consulate knows where to send you up-to-the-minute safety reports for Thailand, how to contact you if necessary, and so that it can help your family and friends get in touch with you in case of an emergency.

Thailand has a lot to offer travelers, no matter your budget. You can backpack Thailand on a limited budget, or you can live the luxurious travel life in fancy resorts on the beach.

Reviewed by Khadija Khartit

Mutual funds in India work in much the same way as mutual funds in the United States. Like their American counterparts, Indian mutual funds pool the investments of many shareholders and invest them in a variety of securities depending on the goals of the fund. Also like U.S. funds, there is a wide range of different fund types available for purchase depending on the needs and risk tolerance of any given investor.

Mutual funds are a popular investment option in India because, like American funds, they offer automatic diversification, liquidity, and professional management.

Key Takeaways

• Like mutual funds in the U.S., Indian mutual funds pool the investments of many shareholders and invest them in a variety of securities depending on the goals of the fund, and there is a wide range of different fund types available for purchase depending on the needs and risk tolerance of any given investor.
• Mutual funds are a popular investment option in India because, like American funds, they offer automatic diversification, liquidity, and professional management.
• Any type of mutual fund that exists in the U.S. is mirrored in some way in the Indian market.
• The Securities and Exchange Board of India (SEBI) regulates mutual funds in India.
• The mutual fund sponsor is responsible for applying for registry with the SEBI and, after approval, must form a trust to hold the assets of the fund, appoint a board of trustees or trust company, and choose an asset management company.

An Overview of Indian Mutual Funds

Any type of mutual fund that exists in the U.S. is mirrored in some way in the Indian market. There are mutual funds that invest in equity or stocks and are managed to achieve a range of goals. Some equity mutual funds are designed to generate long-term capital gains through growth or value investing strategies, like the Birla SL Frontline Equity Fund, while others are focused on generating dividend income for shareholders. Some combine the two, such as the popular ICICI Prudential Equity & Debt Fund.

Indian mutual funds may also invest in bonds and other debt securities with the goal of generating regular interest income. Indian debt funds invest in government or corporate debt instruments and money market securities just like American funds.

There are also Indian balanced funds that invest in both equity and debt instruments to create portfolios that offer a degree of stability without completely ignoring the potential for big gains in the stock market. A good example is the DSP Equity Opportunities Fund.

Just like in the American market, the Indian market offers mutual funds that specialize in certain sectors, only invest in government or inflation-protected debt, track a given index, or are designed to maximize tax efficiency.

Regulation

Mutual funds in India are regulated by the Securities and Exchange Board of India (SEBI). Indian mutual funds are subject to stringent requirements about who is eligible to start a fund, how the fund is managed and administrated, and how much capital a fund must have on hand.

To start a mutual fund, for example, the fund sponsor must have been in the financial industry for at least five years and have maintained positive net worth for the five years immediately preceding registry. The SEBI regulations also include a minimum startup capital requirement of 500 million rupees for open-ended debt funds and 200 million rupees for closed-ended funds. In addition, Indian mutual funds are only allowed to borrow up to 20% of their value for a term not to exceed six months to meet short-term liquidity requirements.

Mutual Fund Management Structure

The mutual fund sponsor—either an individual, group of individuals, or corporate body—is responsible for applying for registry with the SEBI. Once approved, the sponsor must form a trust to hold the assets of the fund, appoint a board of trustees or trust company, and choose an asset management company.

The board of trustees or trust company is responsible for overseeing the mutual fund and ensuring it operates with the best interests of its shareholders in mind. The asset management company is the entity in charge of managing the fund’s portfolio and communicating with shareholders.

If the asset manager wishes to expand the product line, introduce a new scheme, or change an existing scheme, they must first obtain approval from the board of trustees or trust company. In addition, the trustees must appoint a custodian and depository participant who is responsible for keeping track of asset-trading activity and safeguarding both the tangible and intangible assets of the fund.

What Is a Mutual Fund?

A mutual fund is an investment vehicle that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities (according to the fund’s stated strategy). It allows individual investors to gain exposure to a professionally managed portfolio traded on an exchange and potentially benefit from economies of scale, while spreading risk across multiple investments.

Who Regulates Mutual Funds in India?

Mutual funds in India are regulated by the Securities and Exchange Board of India (SEBI). The SEBI is the leading regulator of securities markets in India and is the counterpart of the Securities and Exchange Commission (SEC) in the U.S.

Is There a Minimum Startup Capital Requirement for Mutual Funds in India?

Yes. Securities and Exchange Board of India (SEBI) regulations include a minimum startup capital requirement of 500 million rupees for open-ended debt funds and 200 million rupees for closed-ended funds. The rupee is the national currency of India. Its currency code is INR, and the rupee currency symbol is ₹.

The Bottom Line

Like mutual funds in the United States, mutual funds in India pool the investments of many shareholders and invest them in a variety of securities, depending on the goals of the fund. Also like U.S. funds, there is a wide range of different Indian mutual fund types available for purchase, depending on the needs and risk tolerance of the investor.

Mutual funds in India offer automatic diversification, liquidity, and professional management, like their American counterpart.

Reviewed by Ebony Howard
Fact checked by Vikki Velasquez

British trust law has a long, fascinating history dating back to the feudal times of the 12th century and the Statute of Uses adopted during the reign of Henry VIII in the 16th century. Back then, trust and equity rules were established as a parallel justice system to address inequity of common law around property disputes (and to appease disgruntled claimants).

Initially, trust funds were mostly utilized for the management of “will monies” and to create family settlements. Today, “trust” has evolved into an umbrella term for a variety of financial frameworks that allow citizens to protect assets, distribute earnings, and manage wealth both for the present day and for future generations. Although traditionally associated with millionaires and magnates, trusts can benefit middle-class families as well.

Key Takeaways

• Trusts are basically the same in every country, but individual quirks in the U.K. system mean you need to go through the trust line by line with a professional.
• A trust is a legal arrangement that allows a third party to hold assets for a beneficiary.
• Trusts are not only for the wealthy.

What Is a Trust Fund?

In principle, a trust is a very simple concept. It’s a private legal arrangement in which the ownership of someone’s assets (which might include stock shares, cash, real estate, or even artworks) is transferred to a private fund, and held or managed by an individual (or group of individuals) for the benefit of the trust members.

The person providing the assets is generally referred to as the settlor. Those appointed to look after the assets are known as trustees, and those who receive disbursements from the trust are the beneficiaries.

Important

Once assigned to the trust, in most cases, assets are no longer deemed personal possessions of the settlors and are thus safeguarded from creditors (even in cases of bankruptcy), financial setbacks, family disagreements, and lawsuits.

Trusts are a widely used safe haven arrangement for family and business assets.

Why Create a Trust?

Trusts serve a variety of needs, and the reasons for establishing them are seemingly endless. The most common include:

• To control and protect family assets
• Estate and inheritance planning
• When someone is too young or incapacitated to handle their own financial affairs
• To protect spendthrifts against their own lack of control
• For management and distribution of pension or retirement funds during the term of an individual’s employment

What Types of Trusts Are There?

Since trusts function as multipurpose legal tools, they take many forms. The United Kingdom recognizes numerous trust arrangements (each with its own specific procedures and regulations) that generally fall into one of the following categories.

Bare Trusts

Also known as a simple trust, property or assets in this form are held in the name of a trustee who has no discretion over what income is paid to the beneficiary and has no active duties to perform. The beneficiary has the absolute right to all of the capital and income of the trust at any time—if they are 18 or older (in England and Wales), or 16 or older (in Scotland).

Bare trusts are often utilized as a vehicle through which assets are passed to young people. Trustees simply manage the assets until the beneficiary is old enough to handle that responsibility, which means assets set aside by the settlor will always go directly to the intended beneficiary.

Interest in Possession Trusts

This structure provides an individual with a “present right to the present enjoyment” of something, so the trustee must pass on all trust income to the beneficiary as it arises (less any expenses and tax). This type of trust can give the “interest in possession” to a beneficiary for a fixed period, an indefinite period, or most frequently, for the rest of the beneficiary’s life.

In a “life interest” trust, the interest in possession ends when the income beneficiary (known as the “life tenant”) dies, relocates, or remarries.

Discretionary Trusts

As the name implies, this instrument provides the trustee with discretion over distributions from the trust. Discretion must be exercised in accordance with the terms of the trust deed. However, it is entirely up to the trustees to decide as to the timing, size, and nature of the distributions, and even, in some cases, which of the potential beneficiaries is to benefit.

The assets are said to be “held in trust” for the beneficiaries to one day decide what to do with those assets. A discretionary trust is a very flexible form of trust commonly used to keep wealth within families while allowing them some flexibility to make decisions about where the assets go.

Accumulation and Maintenance Trusts

This version allows the trustees to augment the trust’s capital and income. Trustees of an accumulation and maintenance trust are given the power to “accumulate” the trust’s assets (through savings and investments), until a certain date, at which time the beneficiary is entitled to the property of the trust, or to some of the income arising from that property. When the beneficiary reaches the age of 18 (at least, but no older than 25), they become entitled to the full income generated by the trust.

Mixed Trusts

This form contains different types of trusts within one structure. Some assets may be set aside in an interest in possession trust, while others may be treated in a discretionary trust manner. Mixed trusts are often created to benefit sibling beneficiaries who reach inheritance age at different times.

How Do I Create a Trust?

While simple in theory, trusts can become a web of complexity if they’re to operate properly. A solicitor is needed to draw up a trust because the legal wording must be precise. The process can be costly (around £1,000 or more), depending upon the extent of the advice required. By being prepared before you start in the consultation process, however, you can considerably reduce professional advice time and associated costs, irrespective of trust type.

Step 1: Decide Upon the Assets

You will need to list the items and value of those items that have been allocated, or will otherwise be acquired, at trust inception.

Step 2: Appoint Trustee(s)

Select an individual or management company you trust (banks are often used), because the trustee will bear significant legal authority with control over trust assets.

Step 3: Determine the Beneficiaries

Compile a list of people or entities that will be entitled to receive benefits, and include the percentage of those benefits to which each beneficiary is entitled.

Step 4: Outline the Terms

A trust is generally created by way of a deed. A trust deed is a legal document prescribing the rules that govern your fund and the powers of the trustee. It includes the following:

• The fund’s objectives
• Original trust assets
• The beneficiaries
• How benefits are to be paid (either via a lump sum or an income stream)
• How the trust may be settled (that is, terminated)
• The rules for the operation of the trust bank account

Although the deed itself should be crafted by someone with adequate specialized legal, tax, and financial knowledge, you should decide all of these aspects and sketch them out for the professional preparer.

The trust deed will specify the following:

• The identities of the trustees and beneficiaries
• Which assets are being passed into the trust for management by the trustee
• How the money or property is to be managed
• The permitted use of the money
• Who receives the money or property when the trust is terminated

Who Can Set up a Trust Fund?

You don’t need to be wealthy to start a trust fund. As long as you have assets (not necessarily high-value assets), savings, property, or business shares, you can set up a trust fund. Be aware, though, of the costs associated with setting up a trust fund.

How Much Does It Cost to Set up a Trust in the U.K.?

Creating a simple trust typically costs anywhere from £1,000 to £1,500, depending on how much initial legal advice you need and how long it takes your solicitor to draft the wording. If you have a complex collection of assets, including foreign assets, as well as business interests, the cost can be as high as £10,000.

Are Trust Funds Taxed?

Yes. Different rates of income tax, capital gains tax, and inheritance tax are applied to trust funds depending on the type of trust and trust income received.

The Bottom Line

Given their practicality, flexibility, and many financial benefits, trust funds have become an incredibly popular way of structuring financial affairs. However, the complex nature of many trusts requires a crystal-clear understanding of the legal relationships and obligations involved.

If you’d like to set up a trust, you can always start with your own solicitor, accountant, or tax advisor. Law societies also maintain searchable databases to help you find a qualified solicitor in your area.

Reviewed by JeFreda R. Brown

Contrary to what we are led to believe, investors can only spend compound returns, not average returns. Nevertheless, the average returns are so often mentioned by those seeking to promote an investment approach. This practice can often mislead investors who don’t understand how money is made and lost over a period of time, due to compounding, in markets that move up in one year and down in the next.

Two factors can have a significant impact on the realized returns experienced by investors: the dispersion of returns and the impact of negative returns. Read on to discover the impact these factors could have on your portfolio, and how you can use this knowledge to gain higher compound returns and avoid the negative side of compounding.

Key Takeaways

• Compound interest has been referred to by economists as a financial “miracle,” creating exponential returns over time as new interest is earned on both principal and earned interest.
• In the real world, however, many asset classes experience down years, which can also amplify the negative impact of losses over time.
• Adapting to bear markets or rising volatility is key to preserving returns and taking advantage of compounding in bull markets while avoiding its potential dark side.

Back to Basics

First, let’s review the mathematics used to calculate simple and compound averages. The simple return is the mathematical average of a set of numbers. The compound return is a geometric mean, or the single percentage, usually annual, that provides the cumulative effect of a series of returns. The compound return is the mathematical calculation describing the ability of an asset to generate earnings (or losses) that are then reinvested and generate their own earnings (or losses).

Let’s say you invested $1,000 in the Dow Jones Industrial Average (DJIA) in 1900. The average annual return from 1900 to 2005 for the DJIA is 7.3%. Using the annual average of 7.3%, an investor has the illusion that $1,000 invested in 1900 would become $1,752,147 at the end of 2005 because $1,000 compounded annually at 7.3% yields $1,752,147 by the end of 2005.

However, the DJIA was 66.08 at the beginning of 1900 and ended at 10,717.50 in 2005. This results in a compound average of 4.92%. In the market, you only receive compound returns, so $1,000 invested at the beginning of 1900 in the DJIA would result in only $162,547 by the end of 2005. (To keep things simple and relevant to the discussion, dividends, transaction costs, and taxes have been excluded.)

What happened? There are two factors that contribute to the lower results from compounding: dispersion of returns around the average and the impact of negative numbers on compounding.

Dispersion of Returns

As the returns in a series of numbers become more dispersed from the average, the compound return declines. The greater the volatility of returns, the greater the drop in the compound return. Some examples will help to demonstrate this. Figure 1 shows five examples of how the dispersion of returns impacts the compound rate.

The first three examples show positive or, at worst, 0% annual returns. Notice how in each case, while the simple average is 10%, the compound average declines as the dispersion of returns widens. However, half of the time, the stock market moves up or down by 16% or more in a year. In the last two examples, there were losses in one of the years. Note that as the dispersion in returns grows wider, the compound return gets smaller, while the simple average remains the same.

This wide dispersion of returns is a significant contributor to the lower compound returns that investors actually receive.

Impact of Negative Returns

It is obvious that negative returns hurt the actual returns realized by investors. Negative returns also significantly impact the positive impact compounding can have on your total return. Again, some examples will demonstrate this problem.

In each of the examples in Figure 2, a loss is experienced in one year and the compound average return for the two years is negative. Of particular importance is the percent return required to break even after the loss. As the loss increases, the return required to break even grows significantly as a result of the negative effect of compounding.

Another way to think about the impact of negative returns on compounding is to answer this question: “What if you invested $1,000 and in the first year you earned 20%, and then lost 20% the following year?” If this up-and-down cycle continued for 20 years, it would create a situation that is not that different from what occurs in the market. How much would you have at the end of 20 years? The answer is a disappointing $664.83—not exactly something to brag about next time you’re at a party.

The impact of dispersion of returns and negative numbers can be deadly to your portfolio. So, how can an investor overcome the dark side of compounding and achieve superior results? Fortunately, there are techniques to make these negative factors work for you.

Overcoming the Dark Side of Compounding

Successful investors know that they must harness the positive power of compounding while overcoming its dark side. Like so many other strategies, this requires a disciplined approach and homework on the part of the investor.

As academic and empirical research has shown, some of a stock’s price movements are due to the general trend of the market. When you are on the right side of the trend, compounding works for you, in up markets as well as down markets. Therefore, the first step is to determine whether the market is in a secular (long-term or multiyear) bull or bear trend. Then, invest with the trend. This also holds true for shorter-term trends that take place within the secular trends.

During bull markets, it is fairly easy to do well—the common quip “a rising tide floats all boats” is correct. However, during a bear or flat market, different stocks will perform well at different times. In these environments, winning investors seek stocks that offer the best absolute returns in strong sectors. Investors must become good stock pickers rather than just investing in a diversified portfolio of stocks. In such cases, using the value approach to investing can have excellent results. It can also be useful to learn to short the market when the trend is down. Another strategy is to use bonds to build a ladder that provides a relatively safe return that can be used in a weak stock market environment.

During weak markets, when negative compounding can substantially harm your portfolio, it is even more important to employ proven capital management techniques. This starts with trailing stops to minimize losses and/or capture some profit from an investment.

Another important technique is to rebalance your portfolio more frequently. Rebalancing capitalizes on short-term cycles in the financial markets. By selling part or all of the top performers in one asset class or sector, it provides capital to invest in new promising opportunities. A variation of this strategy is to sell part of your position when you have a quick gain to capture some profit and move the stop to or above your entry price. In every case, the investor is actively seeking to offset the negative side of compounding or even work with it.

What Is Compounding?

Compounding is the process in which an asset’s earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will generate earnings from both its initial principal and the accumulated earnings from preceding periods.

What Are Compound Returns?

Compound returns are the rate of return, usually expressed as a percentage, that represents the cumulative effect that a series of gains or losses has on an original amount of capital over a period of time. Compound returns are usually expressed in annual terms, meaning that the percentage number that is reported represents the annualized rate at which capital has compounded over time.

What Is a Portfolio?

A portfolio is a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange-traded funds (ETFs). A portfolio may also contain assets such as real estate, art, and private investments. You may choose to hold and manage your portfolio yourself, or you may allow a money manager, financial advisor, or another finance professional to manage your portfolio.

The Bottom Line

Overcoming the dark side of compounding requires that an investor be an active manager of their portfolio. This requires learning the skills needed to recognize market trends, find appropriate investment opportunities, and employ proven capital management techniques. Overcoming the negative side of compounding and beating the market can be a very satisfying experience—after all, it’s your money that’s at stake.

What potential buyers need to know

Fact checked by Marcus Reeves
Reviewed by Julius Mansa

Sellers are required to disclose property information to the realtor and potential buyers based on state and local laws. A disclosure document details a property’s condition and what might negatively affect its value. Sellers who willfully conceal information can be sued and potentially convicted of a crime.

Disclosure laws are available from local and state real estate planning departments and vary by location. Buyers and sellers can also consult a real estate attorney for rules and information.

Key Takeaways

• Property sellers are required by law to disclose negative information about a property.
• The seller must follow local, state, and federal laws regarding disclosures.
• Selling a home “as is” may speed up the homebuying process, but it does not exempt sellers from disclosure requirements.

1. Deaths or Crimes

State rules vary on disclosing information about a death in a home. In Texas, deaths from natural causes, suicides, or accidents unrelated to the property do not have to be disclosed. However, sellers commonly disclose deaths related to the condition of the property or violent crimes.

Some states impose a duty to disclose a stigmatized home or apartment in which there has been a suicide or murder. Some states even go so far as to impose an affirmative duty on a seller if they know that their real estate is being haunted by the dead.”

Georgia doesn’t require the disclosure of homicide or suicide unless the seller is directly asked. However, sellers may want to err on the side of informing the buyer of a death on the property. Buyers will likely hear information or gossip from neighbors, so immediate disclosure is preemptive.

2. Neighborhood Nuisances

A nuisance is often a noise or odor from a source outside the property that could irritate the property’s occupants. North Carolina requires sellers to disclose noises, odors, smoke, or other nuisances from commercial, industrial, or military sources that affect the property.

Michigan requires sellers to disclose farms, farm operations, landfills, airports, shooting ranges, and other nuisances in the vicinity. These laws vary from state to state. Sellers and buyers should know what the law requires regarding neighborhood nuisance disclosures.

3. Hazards

If the home is at an increased risk of damage from a natural disaster or has known or potential environmental contamination, sellers may be required to disclose this information to the buyer. Texas law requires sellers to disclose the presence of hazardous or toxic waste, asbestos, urea-formaldehyde insulation, radon gas, lead-based paint, and previous use of the premises for the manufacture of methamphetamine. 

States may also require disclosing mine subsidence, underground pits, settlement, sliding, upheaval, or other earth-stability defects. California’s Natural Hazards Disclosure Act requires sellers to disclose whether the property is in a seismic hazard zone and subject to liquefaction or landslides after an earthquake. 

New York State’s Property Condition Disclosure Act requires sellers to notify buyers about whether:

• The property is located in a floodplain, wetland, or agricultural district
• Whether it has ever been a landfill site
• If there have ever been fuel-storage tanks above or below ground on the property
• If and where the structure contains asbestos
• If there is lead plumbing
• Whether the home has been tested for radon
• Whether any fuel, oil, hazardous, or toxic substance has been spilled or leaked on the property 

Important

The federal government mandates one disclosure: that lead-based paint may be present on any property constructed before 1978.

4. HOA Information

If the home is governed by a homeowners’ association (HOA), sellers must disclose this. Associations generally impose monthly fees and rules on their membership that a prospective buyer might not find acceptable. Buyers also need to know about the HOA’s financial health.

5. Repairs

What has a seller repaired, and why? Buyers need to know the home’s repair history such as electrical or plumbing work to have their home inspectors pay extra attention to problem areas.

Texas law requires sellers to disclose previous structural or roof repairs; landfill, settling, soil movement, or fault lines; and defects or malfunctions in walls, the roof, fences, the foundation, floors, sidewalks, or any other current or previous problems affecting the home’s structural integrity.

Warning

Selling a property “As Is” does not always exempt a seller from disclosures. 

6. Water Damage

Water in a home can damage personal possessions, undermine the home’s structure, and create a health hazard by causing mold growth. Sellers should disclose past or present leaks or water damage. Michigan requires sellers to disclose evidence of water in a basement or crawl space, roof leaks, significant damage from floods, the type of plumbing system, and any known plumbing problems.

Sellers commonly rely on a home inspector to find evidence of water and other damage within a home. Sometimes the seller may not be aware that previous damage occurred so they should check with the state’s laws regarding disclosing information they are unaware of.

7. Missing Items

Sometimes homebuyers don’t realize until the move-in day that their new homes are missing something they assumed would be there such as a light fixture or refrigerator.

Some states’ disclosure laws attempt to prevent this problem. Texas and Michigan require sellers to disclose whether the property comes with kitchen appliances, central air conditioning and heating, rain gutters, exhaust fans, and water heaters.

8. Permits and Pests

Buyers need to know if the home is in a special historic district because it will affect their ability to make repairs and alterations. Sellers may also be required to disclose problems with drainage or grading, zoning, pending litigation, changes made without permits, boundary disputes, and easements.

Texas law requires sellers to disclose active termites or other wood-destroying insects, termite or wood-rot damage in need of repair, previous termite damage, and previous termite treatment. Michigan and North Carolina law also require sellers to disclose any history of infestation. Sellers should consult their state’s laws to see if they must disclose information about pests.

What Is a Seller’s Disclosure Document?

A seller’s disclosure is a real estate document that provides details about a property’s condition and how it might negatively impact the value of the home. It is often required by law, though what it needs to contain can vary by state and locality. The seller should make all disclosures in writing, and both the buyer and seller should sign and date the document.

How Are Property “Flippers” Affected By Disclosure Rules?

Disclosure rules can affect anyone selling a home. Still, they’re especially likely to affect property flippers, who buy properties to upgrade them and resell them for a quick profit. Property flippers often deal with properties in poor condition.

What Happens if a Seller Lies on a Disclosure?

A seller often risks being fined, sued in court, or both. Lying on a seller’s disclosure is illegal, as the undisclosed hazards could cause serious damage to an unknowing buyer.

The Bottom Line

Even if a particular disclosure is not required in a seller’s locality, sellers who have information about their house might want to disclose it anyway. This avoids the expense and hassle of a potential lawsuit. Sellers who have any concerns about whether they’ve disclosed the property’s condition correctly should contact a real estate attorney in their state.

Investing in mutual funds is a popular way to grow wealth, thanks to their professional management and diversification benefits. While brokerage firms are commonly associated with mutual fund investments, many banks also offer these financial products. Because of their familiarity and integrated financial services, banks might seem like a natural choice for purchasing mutual funds.

This article considers the advantages and disadvantages of purchasing mutual funds through banks to help you decide if it’s the right choice for your investment needs.

Key Takeaways

• Banks offer convenience and potentially lower minimum investment requirements for mutual funds.
• Limited fund selection and potential conflicts of interest are key disadvantages of bank-sold mutual funds.
• Brokerage firms may provide a wider variety of funds and more specialized investment advice.
• Understanding fees and aligning investment goals are crucial before purchasing mutual funds from banks.
• Comparing banks and brokerage firms can help investors make informed decisions.

What Are Mutual Funds?

Mutual funds are managed investments that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities. This investment vehicle offers professional management and diversification, making it an attractive option for both novice and experienced investors. These funds aim to achieve specific investment objectives, such as growth or replicating a broad market index. By investing in mutual funds, individuals can access a diversified portfolio without needing extensive knowledge of the financial markets.

When you invest in a mutual fund, you’re purchasing shares of the fund itself, not direct ownership of the underlying securities. Each share represents a proportional ownership of the fund’s holdings and any income they generate.

The fund’s structure is designed to provide several key benefits to investors. The portfolio manager invests the pooled money according to the fund’s stated investment objective, which might be growth, income, or a combination of both. As securities in the portfolio generate earnings—whether through dividends, interest, or capital gains—these are typically passed through to shareholders. Investors can choose to receive these distributions in cash or reinvest them to purchase additional fund shares.

Most mutual funds today are “open-ended” funds, meaning they continuously issue new shares to investors and redeem (buy back) existing shares from investors who wish to sell. The price per share, known as the Net Asset Value (NAV), is calculated daily by dividing the total value of all the fund’s assets, minus its liabilities, by the number of outstanding shares. This ensures that investors buy and sell shares at a fair price based on the current market value of the fund’s holdings.

Banks as Mutual Fund Providers

While banks are primarily known for traditional banking services like savings and checking accounts, CDs, and loans, many have expanded their offerings to include investment products, including mutual funds. These funds are often offered through the bank’s investment division or affiliated brokerage services. This expansion into investments and mutual fund offerings allows banks to provide more comprehensive financial services to their customers as a sort of one-stop shop.

Some larger banks (such as JPMorgan Chase, Wells Fargo, and Barclays Bank) have established their own mutual fund families, often operating as separate subsidiaries or divisions. These fund companies, while bearing the bank’s brand name, are typically structured as distinct legal entities to comply with regulatory requirements. For example, a bank might have its own asset management divisions that create and manage proprietary mutual funds, often focusing on core investment strategies that appeal to its existing customer base.

Other banks, particularly regional and smaller institutions, partner with established fund companies to offer mutual funds directly to customers. These partnerships allow banks to provide investment products without the overhead of maintaining their own fund management infrastructure. Under these arrangements, banks typically act as distributors or selling agents for the partner company’s funds, earning commissions (sometimes called “loads“) or fees for their distribution services.

Important

it’s important to note that investment services are typically not a bank’s primary focus or area of expertise.

Advantages of Buying Mutual Funds Through Your Bank

One of the most compelling reasons to purchase mutual funds through your bank is convenience. Banks offer integrated account management across various banking and investment accounts, along with unified statements showing all your financial holdings. This means you can monitor your checking, savings, and investment accounts in one place. Physical branch locations for in-person assistance may also be available.

Funding your investments and moving money between accounts is also easy, as internal transfers are often instant and free of charge.

Importantly, a bank may have lower account balance requirements than a brokerage firm, making investing a real possibility for more individuals. If a bank mutual fund has, for example, a $1,000 minimum requirement, ask if you can have that requirement waived in light of your ongoing relationship with the bank and other deposits. This can make investing more accessible to those just starting their investment journey or those with limited capital to invest.

People often already have a long-standing relationship with their bank, which can provide a certain level of comfort when venturing into investments like mutual funds. This existing relationship can provide customer support and make the process feel less intimidating for first-time investors.

Disadvantages of Buying Mutual Funds Through Your Bank

Banks don’t generally specialize in investing since they are more about savings, day-to-day financial transactions, and loans. That means that a bank may offer a more limited variety of mutual fund families to choose from. In some cases, this limitation can restrict your ability to diversify across different fund categories, sectors, or investment strategies.

Relatedly, banks that sponsor their own mutual funds may focus primarily on their own proprietary funds, which can lead to potential conflicts of interest where the banks’ recommendations are based on sales targets rather than investor needs. These preferred funds may also carry higher fees or expense ratios than similar funds offered by competitors.

Pros

• Convenience

• Easy funds transfers

• Lower investment minimums

• One-stop shop

Cons

• More limited selection of funds

• Higher costs

• Potential conflicts of interest

Comparing Banks and Brokerage Firms

To make an informed decision, it’s helpful to compare the features of banks and brokerage firms when it comes to buying mutual funds.

Considerations Before Buying Mutual Funds from Banks

Before committing to purchasing mutual funds through your bank, it’s important to conduct a thorough evaluation of both the financial implications and your personal investment needs. This decision requires careful consideration of several key factors that could significantly impact your investment outcomes.

Understanding the full cost structure of bank-offered mutual funds is essential. Banks may layer various fees into their mutual fund offerings, and these costs can add up to impact your long-term returns. Start by examining the expense ratio of any fund you’re considering; this ongoing cost reflects the percentage of your investment that goes toward the fund’s operation and management annually. However, expense ratios are just the beginning. Some bank-sold funds also carry sales charges, known as loads, which can be charged either when you purchase the fund (front-end load) or when you sell (back-end load). Look for “no-load” funds when available and appropriate. Additionally, banks may impose account maintenance fees, transaction costs for buying or selling shares, and early redemption penalties if you need to sell your holdings before a specified holding period.

But when evaluating these costs, it’s crucial to consider them in the context of the services you’re receiving. While higher fees might be justified if you’re getting valuable access to other banking services, investment guidance, and superior fund performance, they can be harder to justify if you’re primarily paying for basic fund access and minimal support.

Beyond the fee structure, take time to reflect on how bank-offered mutual funds align with your broader investment strategy. Consider your investment timeline. Are you saving for a near-term goal, like a home purchase, or are you building wealth for retirement decades away? Your time horizon should influence the types of funds you select and whether a bank’s typically more conservative offerings suit your needs. Risk tolerance plays an equally important role in this decision. Banks tend to favor more conservative investment options, which might align well if you’re a risk-averse investor. However, if you’re comfortable with more market exposure and seeking potentially higher returns, you might find bank offerings too restrictive. Consider how the available fund selection fits with your comfort level for market volatility and potential losses.

What Fees Are Associated With Buying Mutual Funds From a Bank?

Fees can include sales charges (loads), annual management fees (expense ratios), and account maintenance fees. Some banks may also charge a transaction fee—$20 to $50 per trade, for example—though many now offer no-transaction-fee funds. It’s important to ask for a detailed explanation of all fees before investing.

How Do Bank Advisor Incentives Affect the Mutual Funds They Recommend?

Most bank advisors are held to a less stringent “suitability” standard rather than a fiduciary duty, which would strictly mandate them to recommend the products that are in the best interest of their customers. Under this standard, they must recommend investments that are suitable for the client’s needs, but not necessarily the best or lowest-cost options. Thus they can prioritize their own interests or their bank’s interests over the client’s interests. Banks, moreover, may have only a limited selection of funds to offer, and these may carry higher fees. In addition, advisors are human and may receive commissions or incentives for selling certain funds, particularly those affiliated with the bank. This could ultimately lead to recommendations that favor the advisor’s interests over yours.

Are There Specific Mutual Fund Types That Banks Are More Likely to Offer?

Banks often promote their proprietary funds or those from partner institutions, which might limit exposure to funds from independent or competing fund families. In general, funds offered through banks may be more conservative than other offerings, and may include more simply structured funds, such as index funds.

How Do I Know if a Bank-Offered Mutual Fund Aligns With My Investment Strategy?

Always review the fund’s prospectus for information on its investment objectives, risk factors, fees, and historical performance. Also evaluate any additional fees or expenses layered on by the bank itself. Compare this data with your personal investment goals, time horizon, and risk tolerance.

The Bottom Line

While buying mutual funds from banks offers convenience and familiarity, it comes with important potential trade-offs in terms of fund selection, costs, and investment guidance. For some investors, particularly those just starting out or those who value integration with their banking services, bank-sold mutual funds may be an appropriate choice. However, more experienced investors or those seeking a wider range of investment options might find better alternatives through traditional brokerage firms.

Before making any investment decision, carefully consider your investment goals, compare costs and options across different providers, and ensure you understand all fees involved. Remember that the right choice depends on your individual financial situation, investment knowledge, and long-term objectives.