financial

Fact checked by Suzanne Kvilhaug
Reviewed by David Kindness

Investors interested in tapping into the United Kingdom’s stock markets have options. One is to open a brokerage account in the U.K. to buy stocks. Another is to invest in mutual funds focusing on U.K. equity securities. An easier and arguably more efficient choice for gaining exposure to this market is through U.K. equity exchange-traded funds (ETFs).

These funds are tied to a market where there’s a wealth of data and news available, an investor who knows many of the leading companies, a long trading history and shared language for those in the U.S., and a wide variety of equity ETFs to choose from. In this article, we highlight how to invest in these securities along with their pros and cons.

Key Takeaways

• U.K. equity ETFs trade like stocks and are designed to mimic the performance of indexes like the FTSE 100 Index.
• Review the underlying holdings, performance history, and fees of each ETF you choose.
• Thoroughly research any prospective ETF or consult a financial advisor to ensure it aligns with your investment goals and risk profile.
• Keep abreast of market changes, reevaluate your investments, and review the tax implications and regulations of investing in U.K. equity ETFs before you invest any money.

What Are U.K. Equity ETFs?

U.K. equity exchange-traded funds are convenient, traded on stock exchanges like stocks, and are designed to mirror the performance of U.K. indexes like the FTSE 100 Index. These ETFs pool funds to buy a diversified portfolio of assets based on a chosen index’s composition.

Country-specific ETFs are an increasingly popular choice among investors seeking diversified exposure to specific geographic markets. U.K. equity ETFs offer specific benefits that some other regional ETFs cannot.

These ETFs allow investors to efficiently gain exposure to the U.K. market, including various sectors and different levels of market capitalization. Investors interested in these equity ETFs should consider their investment goals, risk tolerance, and the specific characteristics of the ETFs available, including their underlying holdings, performance over time, the reputation of their managers, and fees.

Understanding the U.K. Market

The United Kingdom has the sixth-largest economy in the world. The country’s gross domestic product (GDP) reached $3.11 trillion as of 2022. The country faced a highly complex financial trajectory for an economy long considered among the world’s most stable. GDP peaked at $3.09 trillion in 2007 before dropping to $2.41 trillion two years later before recovering and hitting another peak in 2014 of $3.14 trillion.

Among those peaks were the 2008 financial crisis, Brexit (which took effect in 2020), and the COVID-19 pandemic. GDP per capita declined from $50,397 in 2007 to $49,465 in 2023. For comparison, U.S. GDP per capita grew by over 72% to $82,769 in the same period.

The country’s economy is expected to grow from 1.2% to 1.7% in 2025. This is largely due to measures announced in the country’s fall budget, which led to a rise in domestic demand. Prices are expected to remain high, as inflation is expected to range between 2.4% and 2.7% throughout the year. Labor market conditions are expected to deteriorate with forecasts of the unemployment rate to average between 4.4% to 4.7% in 2025.

Economists expect tariffs placed on trading partners by the U.S. to have an effect on confidence and growth in the euro area. They predict an impact to spill over into the British economy, although it may be small. But, the potential for a free trade deal between the U.K. and the U.S. could help, along with the possibility of strengthening ties with the European Union (EU).

Major exports include cars, gas turbines, gold, crude petroleum, and packaged medications. London remains a global center for finance and insurance. As a significant trading power, though, the U.K.’s economy and financial markets are sensitive to changes in international trade. The strength or weakness of the British pound (GBP) relative to other currencies, especially the U.S. dollar, significantly affects the country’s exports and imports.

Investing in U.K. equity ETFs presents unique prospects despite the U.K.’s recent economic challenges. Those considering U.K. equity ETFs should weigh the following factors to make more informed decisions:

• A historically resilient but recently fluctuating GDP
• A significant and vital financial sector
• The impact of Brexit
• The potential for sector-specific growth

The U.K.’s established financial markets and potential in emerging industries could make it a worthwhile option for a diversified portfolio of international investments.

How Do U.K. Equity ETFs Work?

Most equity ETFs track the performance of a specific index, such as the FTSE 100 or FTSE 250. These ETFs aim to replicate the index’s exposure and performance by holding the same stocks in similar proportions. They trade on stock exchanges like individual stocks so investors can buy and sell shares of a U.K. equity ETF throughout the trading day at market prices.

U.K. equity ETF shares are created in large blocks called creation units. These are typically bought and sold by institutional investors and are exchanged for a basket of underlying securities that mirror the ETF’s portfolio. Market makers ensure liquidity in the ETF. They assure trading by buying and selling ETF shares, working to keep an ETF’s market price close to its net asset value (NAV).

They accomplish this by using arbitrage. If the ETF trades at a significant premium or discount to its NAV, then institutional investors (or authorized participants) can profit from the price difference by creating or redeeming creation units, which helps realign the ETF’s market price with its NAV.

ETFs typically have lower expense ratios compared to mutual funds. This is because most ETFs are passively managed, tracking an index rather than actively selecting stocks and other securities. Also, if U.K. equities pay dividends, they are typically passed on to ETF shareholders in cash or as additional shares in the ETF.

Like other ETFs, U.K. equity ETFs are transparent about their holdings. Investors can easily access information about a fund’s assets and contrast them against others. ETFs can be more tax-efficient compared with mutual funds or with holding individual stocks.

What to Consider When Investing in U.K. Equity ETFs

There are several main factors to assess when investing in U.K. equity ETFs:

1. Top-down assessment: Incorporate a top-down approach to this investment vehicle. This means analyzing the economic and market conditions in the U.K., including its political stability, prospects for economic growth, interest rates, and the strength of its currency.
2. Continuing Brexit fallout: You’ll also want to see how the U.K. continues to negotiate Brexit through the 2020s, especially for financial regulations that might remain continuous with the EU or diverge in meaningful ways. This will help in understanding the risks and opportunities in the U.K. market.
3. Currency risk: Be aware that exchange rate changes between your home currency and the GBP can affect the value of your investment.
4. Market exposure: Determine how and what kind of U.K. equity exposure fits your investment strategy. You should assess their investment objectives. They can be growth- or income-oriented, seek diversification, or have specific exposure to certain sectors or themes. They could also focus on or spread across small-, mid-, and large-cap equities. Make sure you understand the makeup of the index that the ETF follows as well.
5. Costs: A more quantitative factor to consider includes expense ratios. Lower expense ratios can significantly affect long-term returns, especially for passive index-tracking ETFs.
6. Tracking errors: Assess the tracking error. This is the difference between the ETF’s performance and its benchmark. A lower tracking error indicates a better match with the index’s performance.
7. Past performance: ETF performance is another critical factor to consider. While past performance does not determine the ETF’s returns going forward, reviewing historical returns can tell you how the ETF has done through different market conditions, which the U.K. has undoubtedly gone through over the last 15 years. You’ll want to know how it weathered those storms.
8. Income: To receive income, you’ll want to look closely at the distribution policy and yield. Generally, ETFs periodically distribute the dividends they receive. Some U.K. equity ETFs offer attractive distribution yields.
9. Taxes: Having discussed income, you’ll then want to understand the tax implications of investing in U.K. equity ETFs, both in the U.K. and the U.S. This would include dividend and capital gains tax.

Doing thorough research and consulting with a financial advisor, especially one with experience with the U.K. market, is prudent to ensure that your chosen U.K. ETF aligns with your investment goals and risk profile. Keeping abreast of changes in market conditions and periodically reevaluating the investment are also critical for ensuring that the ETF continues to align with your needs.

Benefits and Risks of Investing in U.K. Equity ETFs

Benefits

• Diversification

• Exposure

• Income

• Market access

• Liquidity

• Lower costs

• Mature market

• Shared language

• Simplicity

• Tax efficiency

• Transparency

• Variety

Risks

• Market risk

• Foreign exchange risk

• Liquidity risk

• Concentration risk

• Interest rate risk

• Political and regulatory risk

• Geopolitical risk

• Taxation risk

• Tracking error risk

Benefits

U.K. equity ETFs offer several benefits in line with investing in ETFs. Here are some:

• Diversification: U.K. equity ETFs provide investors with exposure to a broad range of U.K. stocks or sectors, helping to spread risk across securities. This diversification can reduce the impact of volatility in individual stocks or sectors.
• Exposure: For investors seeking to specifically invest in the U.K. or hedge against other geographic exposures, U.K. equity ETFs offer a targeted way to do this.
• Income: Once stocks within ETFs pay dividends, they are usually distributed to ETF shareholders, providing a potential source of income.
• Market access: ETFs are traded on stock exchanges like stocks, making them accessible to retail and institutional investors.
• Liquidity: U.K. equity ETFs offer high liquidity because of their ability to be traded throughout the trading day. This allows you to move quickly in or out of your position if needed.
• Lower costs: Compared with mutual funds, ETFs have lower expenses. This particularly benefits passive investors looking for market exposure without high management fees.
• Mature market: The U.K. has one of the world’s oldest and most established stock markets—indeed, it helped to invent them—with a long history of investing and a robust regulatory infrastructure. This offers stability and predictability compared with emerging markets.
• Shared language: For English-speaking investors, the U.K. market is remarkably accessible. All company reports, regulatory filings, and news are published in English, making it easier for investors to stay informed about their investments. Also, significant events and financial news from the U.K. are covered by U.S. media outlets.
• Simplicity: ETFs provide a simple avenue for investors to gain exposure to a diversified portfolio without the need to select and manage a large number of stocks individually.
• Tax efficiency: ETFs can be more tax-efficient than mutual funds because of their creation and redemption process, which can minimize capital gains distributions.
• Transparency: ETFs provide daily disclosure of their holdings.
• Variety: U.K. equity ETFs are available in various forms, including funds that track major indexes, specific sectors, and particular investment themes or strategies. This allows you to tailor your equity ETF investment to your goals and risk tolerance.

Risks

While investing in U.K. equity ETFs has several advantages, like any investment, there are also disadvantages. Here are some key risks:

• Market risk: U.K. equity ETFs are subject to market fluctuations and the volatility of the U.K. stock market. Economic conditions, political events, and market sentiment can all affect the performance of U.K. equities and the ETFs that track them.
• Foreign exchange risk: There could be changes in the exchange rate between your home currency and the British pound. This can affect the return on your investment when converting to your local currency.
• Liquidity risk: While most U.K. equity ETFs have good liquidity, there is still some risk, particularly if it’s a niche or sector-specific U.K. equity ETF. Those types of ETFs often have less trading volume, making it harder to buy or sell shares quickly without impacting the price or without paying more from wider bid-ask spreads.
• Concentration risk: Given that some U.K. equity ETFs are focused on specific sectors or industries, this can lead to concentration risk. If that sector or industry underperforms, it can disproportionately affect the ETF’s performance compared with the broader U.K. market.
• Interest rate risk: U.K. financial sector equity ETFs and other interest rate-sensitive equities may be affected by changes in interest rates. This is especially important to watch as the U.K. negotiates slow growth and the need to combat inflation, which could affect the direction of its interest rates.
• Political and regulatory risk: Changes in the U.K.’s fiscal and monetary policies and regulations or political instability in the U.K. will affect its markets and, consequently, U.K. equity ETFs.
• Geopolitical risk: International events and geopolitical developments can impact the U.K. market, affecting the trade, energy, finance, and manufacturing sectors, among others, as well as the ETFs invested in them.
• Taxation risk: Changes in tax laws or regulations, both within the U.K. and in your home country, could affect your after-tax returns.
• Tracking error risk: This is the risk that the ETF will not accurately track the performance of its underlying benchmark. This can result from fund management fees, the timing of dividend reinvestments, or differences in the ETF’s holdings compared with the index.

Top U.K. Equity ETFs

The table below provides the largest U.K. equity ETFs. While most of these ETFs are listed on the London Stock Exchange (LSE) and denominated in GBP, there are also ETFs on U.S. exchanges, denominated in U.S. dollars. The iShares Core FTSE 100 UCITS ETF (ISF) is the largest measured by assets under management (AUM), at £11.87 billion.

For expense ratios, the top U.K. equity ETFs have a range from as low as 0.07% to 0.50%. ISF offers the most competitive expense ratio within the selection, providing a 0.07% value.

These ETFs vary widely in distribution yields, ranging from 0% to 5.47%. The iShares UK Dividend UCITS ETF (IUKD) has the highest distribution yield at 5.47%, making it an attractive option for income-seeking investors.

Top U.K. Equity ETFs as of February 2024
Ticker	Name	Assets Under Management	Expense Ratio	Distribution Yield
ISF	iShares Core FTSE 100 UCITS ETF	£11.78 billion	0.07%	3.46%
VUKE	Vanguard FTSE 100 UCITS ETF	£3.85 billion	0.09%	3.40%
EWU	iShares MSCI United Kingdom ETF	$3.21 billion	0.50%	3.97%
VMID	Vanguard FTSE 250 UCITS ETF	£1.65 billion	0.10%	3.20%
IUKD	iShares UK Dividend UCITS ETF	£889.00 million	0.40%	5.47%
MIDD.L	iShares FTSE 250 UCITS ETF	£669.24 million	0.40%	3.11%
FTAL	SPDR FTSE UK All Share UCITS ETF	£508.34 million	0.20%	N/A
FLGB	Franklin FTSE United Kingdom ETF	$740.37 million	0.09%	4.06%

What Is the Best U.K. Equity ETF?

The best U.K. equity ETF depends on your financial goals and risk tolerance. There is no one-size-fits-all ETF. Nevertheless, some general factors to review include historical performance, distribution yield, ETF volatility, expense ratios, tracking error, and liquidity.

How Do Changes in the British Pound Affect U.K. Equity ETFs?

Changes in the pound’s value can significantly impact U.K. equity ETFs in several ways:

• Exchange rate changes relative to the home currency can affect the total return on investment (ROI).
• The pound’s strength or weakness can have diverse effects on U.K. companies, influencing their profitability and competitiveness.
• A weaker pound will increase the cost of imports, potentially leading to higher inflation in the U.K., which could lead to higher interest rates.
• The value of the GBP influences investor sentiment and capital flows in and out of U.K. assets.

Are There Other Geographically Based ETFs?

Many geographically based ETFs are available, covering a wide range of regions, countries, and specific areas within those countries. These ETFs allow exposure to different global markets, each with its own unique characteristics and investments. Some include global ETFs, regional ETFs, country-specific ETFs, emerging market ETFs, frontier market ETFs, and developed market ETFs.

The Bottom Line

U.K. equity ETFs are investment vehicles that offer an efficient way to gain diversified exposure to the U.K. stock market. The funds, traded on stock exchanges, typically aim to track the performance of specific indexes like the FTSE 100 or FTSE 250 or focus on particular sectors within the U.K. economy.

Like other ETFs, U.K. equity ETFs offer advantages such as diversification, liquidity, lower relative costs, transparency, and flexibility in investment strategies. However, investing in U.K. equity ETFs has certain risks, including market volatility, currency exchange rate fluctuations, and sector-specific risks. These risks should be weighed against your investment goals and risk tolerance.

SBA loans usually take 30 to 90 days from applying to funding

Fact checked by Vikki Velasquez
Reviewed by Katie Miller

If you are applying for a U.S. Small Business Administration (SBA) loan, you can expect the entire process from application to funding to take about 30 to 90 days.

The SBA loan application process takes time in part because it requires extensive documentation. If a small business owner needs funds on a tight timeline, they may find that other loan options will be faster.

Key Takeaways

• It typically takes 30 to 90 days to receive funding from an SBA loan, but the timeline can vary.
• Factors such as the specific lender and type of loan affect how long it will take to get an SBA loan.
• If your small business needs funding faster, consider alternatives to an SBA loan.
• Alternatives to an SBA loan include a conventional business loan, a line of credit, or a secured loan.

What Is an SBA Loan?

SBA loans provide small businesses anywhere from $500 to $5.5 million in funding. These loans are backed by the federal government and funded by SBA-approved lenders, which can include banks, credit unions, and other specialized lenders.

The SBA’s most common loans are offered through its 7(a) loan program. The SBA also offers loans through its 504 and microloan programs.

Average SBA Loan Amount

The average loan size is $436,270 in the SBA 7(a) program and $1,157,142 in the 504 loan program as of March 8, 2025.

The SBA Loan Process

What can you expect during the SBA loan process?

1. The SBA’s Lender Match will connect you with potential SBA-backed lenders within two days.
2. Once you are matched with potential lenders, you can compare loan rates, terms, and fees.
3. Gather all of the necessary documentation you need to apply for an SBA loan. Documentation requirements will vary depending on the lender, but you will typically need items like your business plan, financial projections, and information on your industry experience.
4. Choose the lender you want to work with and submit a loan application.
5. The lender will consider your documentation, your credit history, and the amount of funds you have requested. The lender may also appraise collateral if it is required for the loan. This step in the process is known as underwriting.
6. The lender will reach out to you with a decision.
7. If you are approved, the lender will send you the loan agreement documents, and you will go through the closing process.
8. Once the loan is closed, you will receive the funding for your small business.

Factors That Affect the SBA Loan Funding Time

How long does it take for a business loan to be approved? The amount of time will depend on several factors, including the individual lender and the type of loan.

Lender

The SBA has specific borrower eligibility criteria, but depending on the type of loan that you are applying for, individual lenders may also have specific requirements. SBA-backed lenders may also have varying application processes.

SBA Loan Approval Rate

Approximately 34% of SBA loans and lines of credit were fully approved in 2023 (latest information).

Type of SBA Loan

The funding time for different types of SBA loans can vary. Let’s look in more detail at how specific SBA loans are funded.

• 7(a) loan: SBA 7(a) loans can give small businesses funding for working capital, real estate, refinancing debt, machinery, and other supplies. The maximum loan amount is $5 million. 7(a) loans are typically approved within 60 to 90 days.
• 504 loan: SBA 504 loans are a type of long-term, fixed-rate financing typically used for fixed assets, such as land or machinery. Loans can be up to $5.5 million. It can take up to six months to receive funding.
• SBA Express loan: SBA Express loans are a part of the 7(a) loan program. The maximum loan amount is $500,000. While faster than some other SBA loans, Express loans can still take time. You may receive funds within 20 days.
• Microloan: Microloans are small SBA loans of up to $50,000. These loans are distributed by local community-based lenders. The average microloan amount is $13,000. The time to funding is similar to 7(a) loans.
• Disaster loan: The SBA offers low-interest loans to help businesses and nonprofits recover following a disaster. These loans can provide up to $2 million in funding. Approval can take two to four weeks, but the exact amount of time varies. The first loan disbursement follows within five days of closing.

What Is the Max Amount I Can Get With an SBA Loan?

SBA 7(a) loans and 504 loans are typically capped at $5 million. Certain projects related to energy efficiency and manufacturing may be eligible for 504 loans of up to $5.5 million each.

How to Speed Up the SBA Loan Processing Time

The SBA loan process requires patience, but you can take some steps to potentially make the process faster.

• Be prepared: Documentation is essential for the underwriting process. Research what kind of documentation you will need for the specific loan you want. Ensure that these documents, like your tax returns and other financials, are up to date. The more complete and current your documentation, the less likely the lender will need to ask you questions, which can slow the process during the underwriting.
• Select an SBA-preferred lender: SBA-preferred lenders are granted the authority to make final decisions on SBA loans. The time to funding may be faster because this type of lender does not have to wait for SBA approval.

What Is the Easiest SBA Loan to Get Approved For?

SBA microloans offer loans up to $50,000 for eligible borrowers. The funds are given out by nonprofit community-based lenders. Each microloan lender determines borrower eligibility. If a small business needs a smaller amount of money, then a microloan may be the easiest type of SBA loan to get.

What happens after an SBA loan is approved? You will receive your funds, and you will need to begin repayment as dictated by your loan’s terms.

Alternatives to SBA Loans

SBA loans are not the only funding option for small businesses. Alternatives include:

• Conventional loans: Many banks and credit unions offer small business loans outside of the SBA loan program. You can explore these options, but keep in mind that lenders offering traditional financing will still want to see a good track record from your business and good credit scores.
• Lines of credit: If you do not want to take out a loan, you can potentially secure a business line of credit. You can use the credit as needed, instead of taking a lump sum from a loan.
• Equity financing: Some small businesses, including startups, may find equity financing appealing. Investors, such as friends, family, or professionals, will buy ownership shares, which gives the company cash to grow.

How Long Does It Take to Get Approved for a Small Business Loan From a Bank?

The amount of time it takes to get approved for a small business loan varies, depending on many factors. You will need to spend the time applying. Next, the bank will conduct the underwriting process. If the loan is approved, the bank will fund it and move money into your account. The entire process can take days or more than a month.

How Long Does It Take to Get Approved for a Small Business Loan From an Online Lender?

Some online lenders offer same-day approval for business loans, but the amount of time it takes can differ. Just like a traditional bank, online lenders will use a variety of criteria to determine your eligibility for a loan.

Is It Easy to Get Approved for an SBA Loan?

It may be easier to qualify for an SBA loan than a traditional bank loan, but you still must meet certain eligibility criteria. For example, you must demonstrate creditworthiness and an ability to repay the loan.

How Can I Know If I am Approved for an SBA Loan?

Financial institutions, such as banks, work with the SBA to give out small business loans. Once you match with a lender and apply, that lender will inform you if your loan application is approved or denied.

What Is the Fastest SBA Loan I Can Get?

The SBA offers SBA Express loans as a part of the 7(a) loan program. This type of SBA loan offers an expedited application response time.

The Bottom Line

SBA loans can help small businesses get the funding they need to grow, but it can take months to go through the process, from applying to receiving the funding. If you need to access funds sooner, you can explore conventional lending options.

Reviewed by Andrew Schmidt

The term business analyst tends to be a generic job title in multiple industries. Although the job duties can vary immensely, these analysts generally work within a business or organization to identify and implement improvements to help a company achieve its goals. The title business analyst can describe both entry-level workers, and tenured professionals, and compensation varies accordingly. This article discusses the work, salary, and outlook for business analysts.

Key Takeaways

• The term business analyst is often a generic business title that is used in different industries.
• Data analysts, solutions providers, and researchers are often classified as business analysts.
• Some of the qualities of business analysts include listening skills, multitasking, and negotiation skills.
• People who want to work as business analysts should have an undergraduate degree in a suitable field.

What Do Business Analysts Do?

Business analysis is a disciplined, structured, and formal approach to analyzing a business process, identifying improvements, and implementing changes so that the business can better achieve its goals. It is based on facts, figures, and observations.

Business analysts can serve many functions in almost any industry. For example, a systems analyst is a business analyst who focuses on how to best use technology to solve problems and improve outcomes. Other job titles where an employee performs business analysis include data analyst, solutions provider, change agent, requirements manager, specifications writer, researcher, product owner, product manager, or management consultant.

Business analysts may perform quality assurance, requirements gathering, documentation, or client support. They may also specialize in improving sales by focusing on pre-sales, customer service, client relationships, and account management. Business analysts may also be very internally focused on process improvements within an organization and coordination across multiple departments and stakeholders. 

Note

The International Institute of Business Analysis says a business analyst works to “identify and define the solutions that will maximize the value delivered by an organization to its stakeholders. Business analysts work across all levels of an organization and may be involved in everything from defining strategy, to creating the enterprise architecture, to taking a leadership role by defining the goals and requirements for programs and projects or supporting continuous improvement in its technology and processes.”

Qualities of a Business Analyst

Some qualities of a good business analyst include the following:

• Good listening skills
• Openness to change
• Adept in multitasking
• Expertise in prioritization, based on the needs of multiple stakeholders
• Good negotiation skills, to seek timely buy-in on essential decisions and prioritization from all stakeholders
• Identifying process improvement opportunities, which can lead to efficiency and output improvements

Education and Career Path of Business Analyst

A bachelor’s degree or higher is typically required to find work as a business analyst. Possible majors include finance, technology, management, and accounting. Because of the number of necessary skills, most business analyst positions are not open to new college graduates. Most business analysts attain their first position after a few years in a related job such as data analyst, functional analyst, systems analyst, business requirements analyst, or financial analyst. 

The career path of a business analyst can include becoming a senior business analyst, a business analyst specialist in specific areas (such as SAP, Agile, or ScrumMaster), a business manager, a business architect, an enterprise architect, and finally a director or VP-level position. Other experienced business analysts become independent consultants, taking assignments on contract.

Almost any industry can employ business analysts, but most jobs are in information technology or management consulting firms. Other industries include accounting, investment banking, finance, and market research. 

Salary and Compensation for Business Analysts

The compensation varies widely and is determined by factors like location, experience level, and industry. For example, a business analyst working in a large New York-based investment bank will earn more than a business analyst performing market research for an automobile company in Michigan.

Candidates who specialize in a specific technology (like SAP) may command higher premiums. Below are the average salary ranges and bonus percentages for business analysts.

• Entry Level: $80,350
• Mid-Career: $87,399 
• Senior Level: $103,232
• U.S. Average: $85,600

What Are the Responsibilities of a Business Analyst?

That depends entirely on the industry and specific job. But, there are some general functions that all business analysts do, including reviewing trends, understanding and developing business strategies, planning, budgeting, forecasting, and identifying their firms’ needs and goals.

What Is the Salary Range for a Business Analyst?

The salary range of a business analyst depends on several factors. These include experience, geography, and the company among others. The average salary for business analysts in the United States is $85,600 according to Indeed.

What Qualifications Do I Need to Become a Business Analyst?

Business analysts generally need at least an undergraduate degree to get a job in their industry. Related work experience may also benefit them to get into their field or to advance in their careers. Specific requirements depend on the industry, which means if you’re looking for a job in finance, you should have a background and experience in that field. Pay can depend on experience, education, and other factors like certification and designations.

The Bottom Line

A business analyst is a general title for many different job functions in almost any industry. A good candidate should have an undergraduate degree and several years of work experience in the area of business analysis that they are interested in. Candidates can also take business analysis certification courses like those from the International Institute of Business Analysis.

Assets can be either commodities or securities, although it is less clear with digital assets

Fact checked by Suzanne Kvilhaug
Reviewed by Charlene Rhinehart

A commodity is a basic good that can be interchanged with other goods of the same type, often a raw material used in producing other goods or services. Meanwhile, a security describes a tradable financial instrument with monetary value.

While they are both assets that traders can buy and sell, securities receive stricter regulatory oversight than commodities. Companies that issue securities like stocks and bonds must provide investors with detailed, transparent information, while commodities are subject to less stringent reporting requirements.

The distinction between trading basic goods and trading financial instruments seems clear enough. However, when it comes to digital assets like cryptocurrency, the classification becomes murkier. Depending on your perspective, cryptocurrencies could be considered commodities or securities. How this debate is resolved could have a big impact on the future of crypto.

Key Takeaways

• A commodity is a basic good that can be exchanged with other goods of the same type, while a security is a financial instrument representing an investment in a common enterprise.
• Commodities are subject to less stringent regulations, while securities involve strict reporting requirements designed to ensure transparency for all investors.
• The classification of cryptocurrencies remains a subject of debate, and the determination of whether digital assets are commodities or securities could have widespread implications.

What Is a Commodity?

A commodity is a tangible product, often a raw material that can be used to make other products. Hard commodities include energy goods like oil and gas as well as metals like gold and silver, while soft commodities are generally agricultural goods like grains, livestock, and cotton. Traders can buy and sell commodities on the spot market or by using derivatives such as futures and options.

A lot of commodities trading takes place between companies that use the goods, like food producers that depend on agricultural products, and industrial companies that use metals. However, it is generally recommended that all investors have some exposure to commodities as part of a diversified portfolio. That’s because commodities tend to have a low or negative correlation with other assets like stocks and bonds, often performing well when other areas of the financial market are struggling. Commodities may also be a useful tool for investors aiming to hedge against inflation.

The Commodity Futures Trading Commission (CFTC) regulates the trading of derivatives in the U.S. When the commission was established in 1974, agricultural products dominated futures trading. Since then, the markets overseen by the CFTC have become more complex, with fintech and digital currencies underpinning more intricate commodities transactions.

What Is a Security?

A security is a fungible and tradable financial instrument issued by corporations and governments to raise capital. In general, securities represent equity (the rights to an ownership share in an enterprise), debt (loans that are repaid in periodic installments), or a hybrid of equity and debt.

Securities typically refer to stocks and bonds along with related products like mutual funds and exchange-traded funds (ETFs). However, the legal interpretation of what constitutes a financial security is quite broad. In the case of Howey vs. SEC in 1946, the Supreme Court determined that a contract involving the sale of agricultural land and services represented a security.

This case resulted in a list of criteria—known as the Howey Test—to determine whether instruments should be regulated as a security. According to federal laws, a financial contract meets the threshold of a security if there is an investment of money made in a common enterprise in anticipation of a profit driven by the efforts of others.

In the U.S., the Securities and Exchange Commission (SEC) regulates the buying and selling of instruments that meet the criteria to be classified as securities. Self-regulatory organizations (SROs) such as the National Association of Securities Dealers (NASD) and the Financial Industry Regulatory Authority (FINRA) also play a role in regulating securities.

When a corporation or government entity wants to raise capital from the public by issuing securities, it must follow strict reporting requirements set out by the SEC. These rules are designed to ensure transparency in the securities market, ensuring that investors have access to all the information they need to make informed decisions.

Key Differences Between Commodities and Securities

The fundamental difference between a commodity and a security hinges on what is being bought and sold. There’s also regulatory issues to consider. Here are the main differences between the two.

Definition and Nature

Commodities are raw materials or primary goods that are interchangeable with other goods of the same type, such as oil, gold, or agricultural products. They are primarily used for consumption or industrial production. Securities, on the other hand, represent financial ownership or a claim on an entity. They can’t really be used in manufacturing, as they usually just represent an intangible ownership stake.

Regulation and Oversight

The regulation of commodities and securities falls under different government agencies. In the United States, commodities are primarily regulated by the CFTC. Securities are regulated by the SEC.

Trading Markets

Commodities are mainly traded on specialized exchanges such as the CME or ICE. These exchanges facilitate futures contracts, which allow traders to buy and sell commodities at a predetermined price for future delivery. Securities are, instead, traded on stock exchanges like the NYSE or NASDAQ.

Price Determination

The price of commodities is primarily influenced by supply and demand dynamics. Factors like weather conditions, geopolitical events, and production levels can cause price fluctuations. For example, a drought can drive up the price of wheat, while increased oil production can lower fuel costs. Securities derive their prices from the financial performance and future prospects of the issuing company or government. Stock prices, in theory, are based on the future cash flow of a firm and not necessarily based on the supply and demand of the specific shares.

Tangibility

Commodities are physical goods that can be delivered and stored, making them tangible assets. Investors can purchase and take possession of commodities like gold bars or barrels of oil, though most trading occurs through contracts rather than direct ownership. Securities, meanwhile, are intangible financial instruments that represent ownership or a claim. Though you can physically hold a piece of paper that might represent a security, you can’t touch the actual security in the same way you can a commodity.

Role in the Economy

Commodities are used in the global supply chain since they are used in manufacturing, energy production, and consumer goods. Their availability and prices affect industries ranging from agriculture to technology, and they play an important part as an input into the global economy. Securities, instead, are mainly used by companies to raise capital. They’re also used by investors to generate wealth.

Note

Whether cryptocurrency is classified as a commodity or a security depends on the specific digital asset and how it is used.

Is Cryptocurrency a Commodity or Security?

The differentiation between commodities and securities may seem relatively straightforward when it comes to traditional assets like gold and oil or stocks and bonds. However, digital assets like cryptocurrencies have stretched the delineation between the two types of assets.

The debate over whether cryptocurrencies constitute commodities or securities remains unresolved. In fact, the intricacies of the question may make it impractical to come up with a one-size-fits-all solution, with some cryptocurrency tokens presenting characteristics more like commodities, while there are valid arguments for considering some cryptocurrencies as securities.

The ultimate determination of how to classify crypto will likely have a significant impact on how digital assets are regulated and determine the future of the cryptocurrency industry.

Cryptocurrencies as Commodities

Since securities are subject to tighter regulations, it may come as no surprise that crypto industry executives and proponents argue that cryptocurrencies should be considered commodities. According to their perspective, cryptocurrencies are used as a store of value, similar to commodities like gold. Traders and investors may purchase crypto assets for speculative purposes—hoping to profit from price swings—which is another way that cryptocurrencies mirror commodities.

Another key argument that cryptocurrencies should not be considered securities revolves around their decentralized nature. The Howey test specifies that a security involves investing in a common enterprise and profiting from the efforts of a third party. The lack of a centralized entity underlying cryptocurrencies supports the idea that they should be classified as commodities rather than securities.

Cryptocurrencies as Securities

Although crypto advocates generally argue against the more stringent regulations that would come from classifying the digital assets as securities, subjecting crypto to securities rules could make the assets more attractive to a wider range of investors.

In addition, there are some elements of the cryptocurrency markets that seem to fall closer in line with the definition of a security. For instance, when blockchain or crypto-related companies raise capital through initial coin offerings (ICOs), they issue digital coins that allow investors to participate in the crypto project and earn a share of its profits. Therefore, ICOs resemble the initial public offerings (IPOs) that companies use to bring their stock onto the public markets, lending credence to the idea that they should be similarly regulated as securities.

Other areas of the crypto markets are reminiscent of debt securities. For example, crypto lenders may provide credit in the form of cryptocurrency in exchange for interest or fees—a structure that closely resembles bonds.

Is Bitcoin a Security or a Commodity?

There is an ongoing debate about whether Bitcoin and other cryptocurrencies should be classified as a security or a commodity. The decentralized nature of Bitcoin raises questions about whether the asset meets the criteria of the Howey Test that would classify it as a security. The Commodity Futures Trading Commission (CFTC) considers Bitcoin to be a commodity and asserts that it holds regulatory authority over BTC under the Commodity Exchange Act.

Is Ethereum a Commodity or Security?

Much like Bitcoin, Ethereum remains in a regulatory grey area and subject to differences in opinion about its classification. When it filed its lawsuit against Binance, the CFTC explicitly declared that Ethereum, along with Bitcoin and Litecoin, are considered commodities. However, the SEC has applied the Howey Test and argued that other crypto tokens such as Ripple’s XRP are securities and should be subject to the associated regulations.

Why Is a Commodity Not a Security?

Commodities—such as energy assets like oil, metals like gold, and agriculture products like corn—are not considered securities because they do not involve investing in a common enterprise and profiting from the efforts of others.

Can a Commodity Become a Security?

Commodities can serve as the underlying asset for derivatives such as futures and options. Futures establish an obligation to buy or sell a commodity at a set price and date in the future, while options provide holders with the right (but not the obligation) to buy or sell the commodity.

The Bottom Line

Assets are traditionally classified as either commodities, which are basic goods used in making other products, or securities, which are financial instruments designed to generate profits from a shared enterprise. Digital assets like cryptocurrencies have stretched the limits of these categorizations, with different perspectives on how to classify digital assets. A concrete determination on whether crypto counts as a commodity or a security could have broad implications for the regulatory framework and the future of cryptocurrencies.

Fact checked by Vikki Velasquez
Reviewed by Andy Smith

In the United Kingdom, there are three primary ways to accumulate pension funds to provide a steady income upon retirement. Those types are the government-backed State Pension, the employer-sponsored workplace pensions, and the individually established personal pensions. Depending on how the plan pays out, these plans are further divided into Tier 1 and Tier 2.

Key Takeaways

• Understanding pension types, eligibility, and contribution requirements is important for achieving financial stability in retirement.
• The U.K. State Pension requires reaching pension age and making sufficient National Insurance (NI) contributions, while workplace pensions depend on employment status and earnings.
• Employers in the U.K. are generally required to enroll eligible employees into workplace pensions, with both parties contributing.
• U.K. personal pensions may be an ideal option for self-employed individuals or those seeking additional retirement savings, as they are flexible and open to almost anyone in the country.

Breakdown of Types of Pensions in the U.K.

The U.K. offers three main pension types: the State Pension, workplace pensions, and personal pensions:

• The State Pension is government-provided, with eligibility based on National Insurance contributions and age.
• Workplace pensions are set up by employers and include defined benefit and defined contribution plans.
• Personal pensions are independently managed private schemes, including stakeholder pensions and self-invested personal pensions (SIPPs).

It’s crucial to understand all these options for effective retirement planning in the U.K. Consider seeking financial advice for personalized guidance.

State Pension

A State Pension is a government-provided pension that you receive when you reach the State Pension age—currently 66 for both men and women. The State Pension amount received depends on your National Insurance (NI) contributions record. There are two types of State Pension:

• Basic State Pension: For people who reached the State Pension age before April 6, 2016.
• New State Pension: For people who reach the State Pension age on or after April 6, 2016.

Note

Retirement benefits are the financial compensation or perks that an individual receives after they retire from their job. These benefits can include pensions, social insurance or Social Security payments, and other forms of savings or investment accounts intended to provide income during retirement.

Workplace Pensions

Also known as occupational pensions, these are now required to be set up by employers to provide retirement benefits for their employees in the U.K. There are two main types of U.K. workplace pensions:

• Defined benefit (DB) schemes: Also known as final salary pensions, these guarantee a specific income in retirement based on your salary and years of service with the employer.
• Defined contribution (DC) schemes: In these plans, both you and your employer contribute to your pension savings, and the amount is then invested. The size of your pension depends on the amount contributed and the investment performance.

Personal Pensions

Personal pensions in the U.K. are individual pension schemes, usually defined contribution plans, available to anyone, including those who are self-employed. They are designed to help individuals save money for retirement and offer flexibility in terms of contributions and investment options.

These are private pension schemes that you can set up independently of an employer, or through some workplaces. They are typically managed by insurance companies, banks, or investment firms. You can choose from various investment options, and the eventual pension payout depends on the contributions made and investment performance. Personal pensions generally include:

• Stakeholder pensions: These are low-fee, flexible personal pensions with minimum standards set by the government.
• Self-invested personal pensions (SIPPs): These offer a wider range of investment options compared with traditional personal pensions, allowing you greater control over your pension investments.

Setting Up a Pension in the U.K.

Setting up a pension in the U.K. typically involves the following steps:

• Check eligibility: Confirm if you’re eligible for the State Pension, workplace pensions, or personal pensions based on age, employment, and residency.
• Enroll in a workplace pension: Employers automatically enroll eligible employees into a pension scheme and contribute on their behalf.
• Choose a personal pension: Self-employed individuals or those seeking additional savings can set up a personal pension. Make sure to compare providers, fees, and investment options.
• Make regular contributions: Fund your pension through salary deductions for workplace pensions or direct payments for personal pensions. The State Pension relies on National Insurance contributions.
• Monitor investments: Review and adjust your investments in defined contribution workplace pensions and personal pensions to align with your retirement goals.
• Seek financial advice: Consult a financial advisor for personalized guidance on pension options, investments, and tax implications to maximize your retirement savings.

Remember that setting up a pension is an ongoing process that requires regular monitoring, adjustments, and contributions throughout your working life to ensure a comfortable retirement.

Important

Retirement savings are the funds that an individual sets aside during their working years to provide financial security during retirement. These savings can come from various sources, such as employer-sponsored plans, personal savings accounts, or other investment vehicles designed to help individuals save money for their future.

Who Is Eligible for a Pension in the U.K.?

Eligibility for pensions in the U.K. depends on the type of pension scheme. Here’s a breakdown of eligibility criteria for the main pension types:

State Pension: You must have reached the State Pension age, which is currently 66 for both men and women. You need to have made sufficient National Insurance (NI) contributions or have received NI credits. For the new State Pension, you typically need at least 10 qualifying years on your NI record to receive any payment. The years don’t need to be consecutive.

Workplace pensions: You must be employed by a company that offers a workplace pension scheme. Automatic enrollment criteria: Age from 22 to the State Pension age, earning more than £10,000 per year, and working in the U.K. Employees not meeting these criteria may still be eligible to join the scheme voluntarily.

Personal pensions: There are no specific eligibility criteria for personal pensions, as they are open to anyone looking to save for retirement. Both employed and self-employed individuals can set up a personal pension. Age restrictions may apply, depending on the pension provider and their terms.

It’s essential to understand the eligibility criteria for different pension schemes to plan your retirement effectively. If you’re unsure about your eligibility, consider seeking professional financial advice.

U.K. Pension Withdrawals

In the U.K., the minimum age for accessing private pension funds is currently 55, set to rise to 57 in 2028 under the Finance Act 2021. This applies to defined contribution pensions and self-invested personal pensions, allowing individuals to begin withdrawing their savings before reaching the State Pension age.

The State Pension itself, governed by the Pensions Act 2014, is typically accessible from age 66, increasing to 67 by 2028. Early access before the minimum age is only permitted under exceptional circumstances, such as terminal illness, and may be subject to significant tax penalties.

Pension withdrawals can be structured in different ways, with many opting for a tax-free lump sum and an income drawdown plan. Income drawdown, introduced as part of pension freedoms under the Taxation of Pensions Act 2014, allows retirees to withdraw income while keeping the remainder invested flexibly. However, those who take lump sums beyond the 25% tax-free threshold must adhere to the Money Purchase Annual Allowance, which limits further tax-efficient pension contributions. Retirees also have the option to purchase annuities, which provide a guaranteed income for life, as regulated under the Pension Schemes Act 2015.

Pension Protection and Risks

The Pension Protection Fund (PPF) was established under the Pensions Act 2004 to safeguard members of eligible defined benefit pension schemes when their employers face insolvency and the pension scheme lacks sufficient assets to meet its obligations. Funding for the PPF is sourced from levies imposed on eligible pension schemes, returns on investments, assets from transferred schemes, and recoveries from insolvent employers.

In contrast, defined contribution pension plans accumulate funds based on contributions from employers and employees, which are then invested in various assets. Members of defined contribution schemes are exposed to market risks; fluctuations in investment markets can directly affect the value of their pension pots. This means that individuals bear the investment risk, and poor market performance can lead to reduced retirement income.

Do All British Citizens Get a Pension?

No, not all British citizens get a pension. Eligibility for different pension types depends on factors like age, National Insurance contributions, and employment status.

How Many Years Do I Have to Work in the U.K. to Get a Pension?

For the new State Pension, you typically need at least 10 qualifying years on your National Insurance record to receive any payment.

How Much Is the State Pension in England?

The (full new) State Pension in England as of June 2023 is £203.85 per week.

Can I Still Get My Pension If I Live Outside the U.K.?

Yes, you can still receive your pension while living abroad, but the payment rules and annual increases may vary depending on the country and the type of pension.

The Bottom Line

U.K. pension schemes help secure financial stability during retirement. The three main types are the State Pension, funded by National Insurance contributions; workplace pensions, where employers are required to enroll and contribute for eligible employees; and personal pensions, available to anyone, including self-employed individuals. Understanding eligibility criteria and contribution requirements is essential for effective retirement planning.

Fact checked by Vikki Velasquez
Reviewed by David Kindness

A limited liability company (LLC) is a business structure that helps shield the personal assets of the business owner or owners in the event of a lawsuit, legal judgment, or bankruptcy.

This article explains the steps involved in forming an LLC, as well as how to decide whether an LLC is the right business structure for you.

Key Takeaways

• Limited liability companies (LLCs) provide legal protections for their owners’ assets if the business is sued or goes bankrupt.
• Unlike sole proprietorships, LLCs must register with their home state and any other state in which they plan to do business.
• In addition to the initial filing requirements, states have ongoing compliance rules that LLCs must follow.
• LLCs must also obtain an employer identification number (EIN) from the IRS.

Step 1: Choose a Business Name

Unlike a sole proprietorship, which can simply do business under its owner’s name, LLCs must register a formal name with their state. Typically, the name must clearly indicate that the business is an LLC.

State laws may prohibit or restrict the use of certain words in business names, so it’s worth learning the naming rules for your state and any other states where you plan to do business.

You can also ask the state offices where you will be filing your paperwork to check their records and make sure that the name you have in mind isn’t already taken.

Otherwise, the general rules for naming any kind of business also apply to LLCs. Try to make it unique and memorable.

Consider making it specific enough so that people will have some idea of what your business does, but not so restrictive that it will no longer be a good fit if you decide to diversify and expand into other areas.

Important

Your LLC can have only one legal name at a time, but it can have an unlimited number of DBA (doing business as) names, which can be used on your website, in ads and promotions, and elsewhere.

Step 2: Research State Requirements

LLCs must generally be registered in their home state and any other states where they operate.

According to the U.S. Small Business Administration (SBA), “operating” can include having a physical presence or employees in a state, meeting regularly and in person with clients in that state, or receiving a significant portion of the company’s revenue from clients in that state.

In most states, registration is handled by the secretary of state’s office, or a business office or agency, which can provide details on their state’s requirements. Often, the registration process can be completed online.

Step 3: Prepare LLC Formation Documents

In general, anyone who wants to form an LLC must create and file two documents with the appropriate states: articles of organization and an operating agreement.

• The articles of organization provide basic information, such as the company name, its address, and its members (as the owners are called).
• The operating agreement goes into greater detail about the company’s decision-making structure and the role that each of its owners will play in making decisions.

The SBA recommends that you create an operating agreement to protect yourself and your business, even if it’s not required by a state.

An LLC filing service can help you with the above tasks, for a fee. Here’s our rundown of the Best LLC Services.

Step 4: Appoint a Registered Agent

States require that the owners of an LLC have a registered agent—a person or company designated to serve as the primary contact point between the state and the LLC for any legal or tax matters.

In preparing articles of organization for the states where it plans to do business, the LLC will need to indentify a registered agent. So this is a decision that has to be made early in the process, although LLCs can change registered agents later.

LLCs can select one of their owners, their attorney, or someone else they know to be their registered agent.

However, experts generally advise choosing an individual or company that does this professionally. A professional registered agent is likelier to know the rules and be available whenever needed.

Step 5: File LLC Formation Documents

Once it has prepared its formation documents, an LLC needs to file them with its home state and other states where it intends to do business (often referred to as “foreign states”).

Each state has its own procedures. Relevant instructions—and often applications—are available online.

The filing fees tend to be relatively modest—rarely exceeding $200 in most states—but can add up for an LLC that plans to operate in many locations.

Step 6: Obtain an EIN and Business Licenses

LLCs must obtain an employer identification number (EIN) from the Internal Revenue Service (IRS) to use on their tax forms and for other purposes.

The exception to this is a single-member LLC that is a disregarded entity (i.e., does not elect to be treated as a corporation), with no employees and no excise tax liability. However, if a bank or state requires a federal EIN, this type of LLC can apply for one.

LLCs can apply online at the IRS website and receive a number right away. There is no charge for this service.

In addition, the new LLC may need to apply for federal or state business licenses or permits. This depends largely on the nature of the business.

For example, the federal government licenses some companies in the agriculture, transportation, and broadcasting industries, among others. States may require licenses for businesses such as dry cleaners, plumbers, and restaurants.

Step 7: Maintain Compliance and Record-Keeping

Once it has been established, an LLC must keep up with a variety of ongoing compliance rules. The SBA divides these into external and internal requirements.

External requirements are things that the LLC must do to satisfy federal and state government rules, such as filing the proper forms and paying taxes.

Internal requirements are matters to which the LLC must attend in order to comply with the LLC’s own organizational rules, such as proper record-keeping and holding annual meetings for members.

Most external requirements are imposed on the state level. According to the SBA, those typically include:

• Filing an annual report or biennial statement, depending on which the state requires.
• Paying statement filing fees and possibly franchise taxes. Franchise taxes don’t refer to franchises like hamburger chains, but to taxes that some states impose on companies for the right to do business in them.
• Updating the LLC’s articles of organization with the state if something significant has changed, such as the company name, address, or ownership.

As to internal requirements, the SBA notes that the rules for LLCs are more flexible than those for corporations.

However, LLCs “are generally advised to maintain an updated operating agreement, issue membership shares, record all membership interest transfers, and hold annual meetings.”

Is an LLC Right for You?

LLCs are more complicated to start up and maintain than sole proprietorships, but they offer greater protection for the owner’s personal wealth in case legal issues arise.

If you have a lot of assets that could be at risk, an LLC might be the better choice, especially if you’re going into the kind of business where lawsuits are common.

If your business will have more than one owner, a sole proprietorship is no longer an option. Instead, your choices will be between an LLC, a partnership, an S corporation, or a C corporation.

Partnerships are less complex than LLCs. One type—a limited liability partnership (LLP)—does provide some liability protection to its owners, although less than an LLC in some states.

S corporations are another option. According to the SBA, corporations “offer the strongest protection to its owners from personal liability, but the cost to form a corporation is higher than other structures. Corporations also require more extensive record-keeping, operational processes, and reporting.”

C corporations are more complex and tend to be very large companies.

What Is Better for Tax Purposes, a Sole Proprietorship or an LLC?

Sole proprietorships and LLCs are treated similarly for tax purposes. Both are considered pass-through or flow-through entities. This means that the business isn’t taxed on its income. Instead, the owners must account for any profits or losses on their personal tax returns. One exception is an LLC that has elected to be treated as a corporation; in that case, the business must pay tax on its profits before they are passed along to the owners, who are also subject to taxes on their share of them.

Can You Convert an LLC to a Sole Proprietorship?

Yes, you can convert an LLC into a sole proprietorship or a sole proprietorship into an LLC.

Do You Need a Physical Address for an LLC?

States require that you provide a valid street address (not a P.O. box) when you register as an LLC. This doesn’t mean that you must have a separate business address. If you are starting a business out of your home, you can file using your home address.

Where Should You Form Your LLC?

Many business owners find it most convenient to form their LLCs in the state where they live. However, you can choose any state you wish.

The Bottom Line

Starting a limited liability company (LLC) involves some extra paperwork and added costs compared with a sole proprietorship.

However, the legal protections that an LLC provides may make it more than worthwhile for some business owners.

Assessing and mitigating risks while making informed crypto investment decisions

Fact checked by Suzanne Kvilhaug
Reviewed by JeFreda R. Brown

Despite high volatility, cryptocurrencies are extremely popular, with a market cap of $2.7 trillion in March 2025. With more clients expressing interest or already investing in crypto, financial advisors are looking for best practices for this new asset class.

Conducting comprehensive due diligence means going beyond just looking at historical returns or projections. Advisors need to dive into the technology, security measures, liquidity, regulations, and other factors that impact the risk and return profile. Ongoing monitoring and adapting to new developments in the fast-evolving crypto space are also essential.

Key Takeaways

• Financial advisors’ fiduciary responsibilities extend to meticulously vetting crypto assets.
• Key due diligence areas include technical analysis, market dynamics, regulatory compliance, and security protocols.
• The job of financial advisors in this area is made more difficult since many crypto assets operate outside regulations from the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC).
• Real-world crypto failures highlight the need for enhanced due diligence, regulatory adherence, and investor education.
• Ongoing monitoring and education are crucial for navigating the risks and evolving regulations in the crypto sector.

Understanding Crypto Due Diligence

Financial advisors have a fiduciary responsibility to act in the best interests of their clients at all times. This includes thoroughly vetting any investment products they recommend and fully understanding the risks and benefits for their clients.

Download Link: Are your clients interested in crypto? Use this discussion guide.

Cryptocurrencies represent a new frontier that many advisors are just beginning to explore. Without proper due diligence, advisors could expose their clients to undue risk. This involves thoroughly vetting and analyzing factors like the cryptocurrency’s underlying technology, development team, market changes, risk metrics, and security provisions.

Through due diligence, advisors can gain an in-depth understanding of a crypto asset and assess their applicability to their client’s portfolios. Ongoing monitoring and adapting to new developments in the field are essential since events evolve quickly in the crypto sphere.

Additionally, regulatory compliance needs to be a central focus during due diligence. This task in the crypto space can be a problem because many crypto assets operate overseas or in other ways to avoid being regulated by the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC).

Yet the financial advisors themselves must adhere to all applicable regulations from bodies like the SEC, the Financial Industry Regulatory Authority (FINRA), and state agencies when considering crypto for clients. This ranges from disclosure requirements to custody procedures, licensing maintenance, transaction reporting, and more.

Rigorous due diligence processes demonstrate an advisor’s commitment to ethical conduct, risk management, and fiduciary duty—upholding the highest standards of financial responsibility. This is critically important given the complexity, risks, and frequent regulatory shifts inherent to the cryptocurrency asset class.

Financial Responsibility in the Crypto Industry

Financial responsibility is the prudent management of monetary assets and transactions to ensure ethics, transparency, risk mitigation, and regulatory compliance. This takes on greater importance in the cryptocurrency realm, given its historical volatility, lack of investor protections, and a frequently shifting regulatory landscape.

For individuals investing in crypto, financial responsibility starts with only allocating disposable income that you are prepared to lose, given the asset class risk.

Setting stop losses, taking profits when prudent, and implementing security measures like multifactor wallet authentication and cold storage (putting assets offline) are also advised. Paying cryptocurrency-related taxes and adhering to reporting requirements are essential as well.

For financial advisors, financial responsibility means thoroughly vetting any crypto assets before making client recommendations through their due diligence processes. Portfolio allocations should match client goals and risk tolerance. As with other types of alternative investments, the ongoing monitoring of crypto holdings, clear client communication, and keeping up with regulatory changes are critical, too.

Conducting Crypto Due Diligence

When conducting due diligence on crypto assets, advisors need to dig deep into the technical, financial, regulatory, and security aspects of a cryptocurrency. Proper due diligence takes considerable time and effort. However, it is the only way for advisors to fulfill their fiduciary duty when dealing with crypto assets.

Core Areas of Crypto Due Diligence

Here are the core areas that financial advisors need to cover in crypto due diligence:

• Assess the legitimacy and technical details: Advisors should review the cryptocurrency’s white paper, development team, blockchain specifications, and consensus protocol. Vetting the utility, security, and capabilities of the platform is essential.
• Analyze market dynamics and liquidity: Evaluate real-world adoption metrics, trading volume, volatility, market capitalization, use cases, and historical returns. Assess liquidity risk and the potential influence that changes in liquidity can have on crypto values.
• Review exchanges, platforms, and the custody of the crypto assets: Vet any crypto exchanges, wallets, custodial services, or trading platforms for security practices, insurance coverage, segregated asset storage, and regulatory compliance.
• Evaluate the cryptocurrency’s volatility, allocation, and risk modeling: Use risk analysis frameworks like value at risk or modern portfolio theory to model crypto asset volatility and how these relate to other parts of the client’s portfolio. Construct an appropriate allocation of crypto based on the client’s risk tolerance.
• Understand the regulatory landscape: Research legal classification, taxation policies, reporting requirements, investor protections, and other regulations applicable to the crypto asset in the relevant jurisdictions, then monitor for ongoing changes. Confirm that the platform is licensed or registered within its jurisdiction and that it is subject to real and frequent third-party financial audits.
• Look for transparency: More credible platforms are upfront about all fees, ensuring that there are no surprises for your client. A platform should maintain open communication, especially during market upheavals or technical challenges.
• Become a skeptic: Approach projects promising sky-high returns with great caution. If the promoters of the crypto are promising excessively favorable returns, it warrants skepticism. A crypto’s promoters need not be fraudulent but can be taken away with their rhetoric and hopes. Many projects are nothing more than replicants of existing cryptocurrencies and blockchains with different names and terms—at the stage the industry is in, it is very rare for something new (and legitimate) to be introduced.

Additional Factors to Review for Crypto Assets

In addition to these core areas, advisors should pay attention to the evolving nature of the crypto industry and consider the following:

• Cybersecurity measures: Assess the cybersecurity measures employed by the crypto asset or project to safeguard against hacks, fraud, and unauthorized access. This includes evaluating the security protocols of both the blockchain and any associated platforms, exchanges, or wallets. Platforms should deploy robust security measures, including two-factor authentication and end-to-end encryption.
• Token governance and ownership structure: Examine the governance and ownership structure of the crypto asset to understand who holds decision-making power and how decisions are made and implemented. This helps assess the level of decentralization and the potential influence of major stakeholders.
• Community and developer engagement: Look into the ongoing interaction among the community, developers, and the project team. A strong, active engagement indicates a healthier ecosystem and support for future development.
• Competence and integrity: An evaluation to assess the competence and integrity of the team behind the crypto project is also crucial. A team that has no or questionable experience or credentials may not engineer a quality product.
• Long-term vision and road map: Review the long-term vision and road map of the crypto asset or project to gauge its ambition and feasibility, and the team’s commitment to achieving its outlined goals.
• Competitor analysis: Conduct a competitor analysis to understand the crypto asset’s positioning within the broader market and identify any unique selling points or advantages over similar projects—or the opposite: points that stand out as potential disadvantages.
• Third-party audits and reviews: Seek third-party audits and reviews of the crypto asset or project, which can provide an independent assessment of its technical, financial, and legal standing.
• The potential for integration and interoperability: Explore the potential for integration with existing systems and its interoperability with other blockchain platforms, which would provide more uses and a greater ability for others to adopt the crypto asset.
• Education and resources: Evaluate the availability of educational resources that the project provides to help investors and users understand the asset, its utility, and the technology behind it.
• Public and media perception: Monitor public and media perception, as it can significantly affect investor confidence and the market for crypto assets.
• Historical performance and resilience: Analyzing historical performance during varying market conditions and the asset’s resilience to past market downturns can shed light on its potential performance.
• Ethical considerations: Assess any ethical issues that might arise with the crypto asset or project, such as energy consumption, data privacy, and social impact. Many crises in crypto have been brought about not by a problem within a platform or asset itself, but from misuse of client funds. Platforms associated with respected crypto entities or established financial institutions generally carry more credibility.
• Review token economics: Understand the underlying “tokenomics” to ensure the platform’s sustainability and long-term viability. How well does it trade? What is its trading volume? How is its liquidity? These should be easy to answer if the asset is worth investing in. If a platform or outlet deals with stablecoins or offers returns, ensure that it can do so.
• Stay updated: The crypto sector rapidly evolves, and projects and companies frequently refresh their services and tools. This might indicate a commitment to innovation, growth, or usability; however, it might also mean they are just trying to catch the next wave of crypto excitement.

Mitigating Crypto-Related Risks

As with any investment, crypto comes with the risk of loss. While the growth of cryptocurrencies presents potential opportunities, advisors need to be able to counsel clients about mitigating the substantial risks involved in crypto.

Some key crypto investment risks include market volatility, regulatory uncertainty, technological vulnerabilities, and liquidity issues. Here’s a closer look at these risks and how advisors can help mitigate them:

• Market volatility: Cryptocurrencies are known for their significant price fluctuations over short periods. Advisors should educate clients on the volatile nature of crypto assets and encourage a long-term investment perspective. Diversifying assets can be a prudent strategy to mitigate the influence of volatility. As with other investments, advise clients to put no more into crypto than they are willing and able to lose.
• Technological vulnerabilities: Crypto assets depend on technology susceptible to hacking, fraud, and operational failures. Any crypto projects or assets should have robust security measures, and advisors should encourage clients to adopt secure wallets and exchanges to help mitigate these risks. The digital nature of cryptocurrencies thus makes them a target for cyberattacks. Utilizing secure and reputable platforms, employing multifactor authentication, and educating clients on best practices for digital security can help mitigate cybersecurity risks.
• Liquidity issues: The liquidity of a crypto asset can vary greatly depending on its market demand, trading volume, and the platform on which it is traded. Advisors should assess the liquidity risk of crypto assets and advise clients accordingly, perhaps recommending assets with higher liquidity and established exchanges.
• Misinformation, scams, and lack of transparency: The crypto sector and the wider online world around it can often be opaque and filled with misinformation. Conducting thorough due diligence, seeking transparent projects, and utilizing reputable sources for information are crucial steps to navigate through misinformation. The crypto space has been a fertile ground for various scams and fraudulent schemes. Ensuring thorough vetting of projects and educating clients on red flags associated with fraudulent activities can help mitigate these risks.
• Operational risks: Operational risks, including system failures or management incompetence, could adversely affect a crypto asset. Try to assess the operational robustness of crypto projects and the competence of their management teams.

Some of the operational risks of cryptocurrency projects include:

• Reputational risks: The reputation of a crypto asset or project can significantly affect its market value. Monitoring public and media perception and steering clear of projects with negative reputations can be prudent.
• Legal and tax implications: Understanding the legal and tax implications of crypto investments is essential. Advisors should seek to stay updated on changes in the legal and regulatory environment, as well as the tax obligations associated with crypto transactions.
• Smart contract risks: Smart contracts automate transactions on the blockchain but could have vulnerabilities or unintended consequences. Assessing the quality and security of smart contracts is crucial.

Advisors have a fiduciary duty to provide well-informed guidance to clients on navigating these risks. By fostering a culture of education, transparency, and prudent risk management, advisors can help clients make informed decisions in the crypto domain, aligning their investments with their financial goals and risk tolerance.

Regulatory Framework and Compliance

The regulatory framework surrounding cryptocurrencies and the due diligence necessary for financial advisors can be complex because of the novel nature of these digital assets and the potential for regulatory changes.

Here are the notable regulations and compliance essentials for individuals and businesses involved in crypto transactions, focused on the United States.

The U.S. is moving toward establishing a streamlined set of regulations for digital assets. The regulatory landscape involves various federal agencies, each with a unique mandate concerning cryptocurrencies:

• The Financial Crimes Enforcement Network (FinCEN): Oversees digital assets concerning anti-money laundering (AML) and countering the financing of terrorism regulations​.
• The SEC: Supervises the issuance and resale of digital assets deemed as securities​. These can include the crypto exchange-traded funds (ETFs) approved in January 2024, the stocks of crypto-mining companies, or even the cryptocurrencies themselves.
• The CFTC: Regulates digital assets that are classified as commodities or used as derivatives​. These can include futures and options contracts listed on crypto, such as Bitcoin or Ethereum.

Note

Various jurisdictions worldwide are either enacting or on the verge of implementing regulatory systems for digital assets. These regulations aim to encourage a conducive environment for innovation, consumer protection, and sector growth while ensuring financial responsibility in the crypto sector.

Several federal laws may apply to crypto assets, depending on the nature of the asset:

• The Bank Secrecy Act (BSA): Along with amendments to the USA Patriot Act and the Anti-Money Laundering Act, the BSA establishes a framework for preventing money laundering.
• The Commodity Exchange Act and Securities Exchange Act: These are relevant for the registration requirements for assets considered securities and commodities​.
• The Responsible Financial Innovation Act: An initiative that creates the beginnings of a comprehensive regulatory framework for digital assets.
• U.S. Department of the Treasury and Internal Revenue Service (IRS) regulations: Newly proposed regulations touch on the sales or exchanges of digital assets, including cryptocurrencies, and relate to information-reporting requirements and the determination of the amount realized, basis, and backup withholding.

Compliance

Compliance is essential for mitigating the risks associated with crypto transactions.

Compliance Requirements

• Registration and compliance with the relevant regulatory bodies: Companies directly dealing with digital currencies must register with FinCEN, the SEC, and the CFTC, depending on the nature of the assets, and follow the relevant regulations.
• Assessing risk and AML programs: Regulated businesses should conduct risk assessments concerning money-laundering activities and implement AML programs proportional to their size and nature​.
• Customer identification programs: Know Your Client (KYC) is the term used for the standard practice in the U.S. of verifying customer identities and legal status during onboarding and transactions​ to meet regulatory requirements.

Case Studies: Lessons Learned From Crypto Failures

The Collapse of FTX Exchange

The crash of the FTX exchange was a significant event in the crypto industry that shed light on the importance of due diligence and financial responsibility.

FTX was once a reputable name in the cryptocurrency exchange domain, known for facilitating crypto trading and derivative products. However, it faced a sudden collapse from mismanagement and fraudulent activities that quickly led in the fall of 2022 to a significant mismatch between its assets and liabilities.

Unlike traditional financial institutions where assets and liabilities are continuously audited, the FTX case exposed a gaping hole in the crypto sector’s self-regulation.

The core issue was that the exchange was supposed to make money off slim fees from each transaction on the exchange while taking care to keep client assets safe. Instead, those assets were put into risky investments, which meant that once clients called for their funds and those couldn’t be provided, its native token, FTT, collapsed in value.

Impact:

• This failure affected not only the stakeholders of FTX but also sent a ripple of uncertainty through the crypto market.
• The collapse of FTX highlighted the need for enhanced financial compliance measures, better management practices, and the utilization of blockchain’s transparency feature to ensure continuous auditing of crypto firms to prevent such catastrophic events.
• The collapse disrupted the crypto market and led to significant financial losses for investors.
• The collapse brought attention to the regulatory shortcomings in the crypto industry, catalyzing discussions around creating more stringent regulations.

Important

Former FTX CEO Sam Bankman-Fried was convicted on Nov. 2, 2023, on seven counts of fraud and conspiracy after his business partners, some of whom were close friends from his teen years, testified against him at trial. Once among the wealthiest people ever under age 30, he faces decades in prison.

The Bankruptcy of Genesis Lending Unit

Genesis was a well-regarded name in the crypto lending sector. However, it faced bankruptcy after not managing its liabilities following a freeze on withdrawals. After filing for bankruptcy in early 2023, its restructuring unit listed $43.8 billion owed to creditors.

This bankruptcy underscored the inherent risks associated with crypto lending platforms, especially in volatile market conditions. It also raised further concerns about the industry’s financial management practices and the need for stricter regulatory compliance within crypto lending platforms.

Impact:

• A significant financial loss for creditors
• A negative ripple effect for other entities in the crypto market
• The dispute between Genesis and crypto exchange Gemini over a crypto lending product called Earn showcased the complex legal and financial intricacies in crypto lending agreements​.

TerraUSD Crash

TerraUSD (UST), an algorithmic stablecoin, was designed to maintain a stable value by being pegged to the U.S. dollar. However, it suffered a severe crash and deviated significantly from the dollar, dropping from $1 to $.35 in 2022. It regained its value by the spring of 2023.

The crash was triggered by a rapid sell-off on digital asset exchanges, which were not adequately buffered by the algorithmic mechanisms. The fallout was significant, leading to legal action and a loss of confidence in the stability of algorithmic stablecoins.

The case underscored the challenges inherent in algorithmically stabilizing currencies and the need for continuous monitoring while managing crypto assets. Also highlighted was the importance of robust stabilization mechanisms and regulatory oversight to ensure the integrity and stability of crypto stablecoins.

Impact:

• The crash disrupted the wider stablecoin market, shaking investor confidence in crypto stablecoins.
• Legal action ensued against the project, further straining its resources and reputation.
• Investors and stakeholders suffered financial losses from the sudden decline in value.

The Bybit Exchange Cyberattack

In 2025, Bybit, one of the largest cryptocurrency exchanges, suffered a $1.5 billion theft due to a large cyberattack, which almost caused the exchange to collapse. The attack was credited to hackers from North Korea, exposing massive holes in Bybit’s security infrastructure and adversely impacting the crypto market.

The attack was specifically on Bybit’s cold wallet storage which resulted in transfers of unauthorized funds. As the attack spread, users panicked, leading to mass withdrawals, severely impacting the exchange’s liquidity.

The attack on Bybit showed the risks users face when entrusting their money to centralized exchanges, and the vulnerabilities of exchange security measures as they do not have the same cybersecurity regulations that traditional financial institutions do.

Impact:

• The cyberattack on the Bybit exchange led to a liquidity crisis, requiring Bybit to secure $280 million in funding to stabilize the situation.
• As Bybit is one of the largest crypto exchanges, it suffered serious reputational damage, highlighting the increased risks of cryptocurrencies.
• The theft from hackers underscored the need for increased checks and security in the cryptocurrency industry.

What Are the Biggest Risks and Challenges With Crypto Investments?

Key risks include high volatility, liquidity constraints, cybersecurity threats, lack of investor protections, regulatory uncertainty, susceptibility to scams, and more. The lack of adoption of crypto tokens for real-world uses, the extreme price swings, and the speculative nature seen in crypto markets in the past present ongoing challenges.

How Can Individuals and Businesses Find Financially Responsible Crypto Outlets?

Ensuring financial responsibility in the crypto sector starts with education and awareness. Individuals and businesses should acquire a good understanding of blockchain technology and the specific cryptocurrencies in which they are investing. Regular financial audits can ensure transparency and financial health, while compliance with existing regulatory frameworks in the jurisdictions in which they operate is crucial to avoid legal complications.

What Are the Compliance Requirements for Those Involved in Crypto Transactions?

The compliance requirements for individuals and businesses involved in crypto transactions vary depending on the jurisdiction. However, common requirements include following KYC and anti-money laundering and combatting the financing of terrorism (AML/CFT) regulations to prevent illegal activities.

Tax compliance is also crucial, with individuals and businesses required to report and pay taxes on cryptocurrency profits in almost any jurisdiction. If a crypto asset is classified as a security, then securities compliance is necessary. Data protection compliance to ensure the protection and privacy of user data is also a crucial aspect of compliance in crypto transactions.

The Bottom Line

Cryptocurrency investments are still relatively new for many financial advisors. They have unique challenges that demand meticulous due diligence. The fiduciary responsibility of advisors extends to in-depth vetting of crypto assets so they can make informed recommendations to their clients.

Beyond analyzing historical returns, advisors should learn about the intricacies of blockchain technology, security protocols, market changes, liquidity, and an ever-evolving regulatory landscape.

The aim is to ensure financial responsibility, risk management, and regulatory compliance in a sector known for its volatility and lack of investor protections. Well-known fraud and conspiracy cases in the sector have created some valuable lessons—they should be used to develop a basis for essential practices that uphold integrity and foster trust.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our warranty and liability disclaimer for more info.

Reviewed by David Kindness

Nike, Inc. (NKE) is a global designer, marketer, and retailer of athletic footwear, sneakers, apparel, equipment, services, and accessories. Most of Nike’s products are manufactured by independent contractors. The company sells its products direct-to-consumer through both retail outlets and its digital platforms as well as through independent distributors and retailers.

The top shareholders of Nike are Phil Knight, Mark Parker, John Donahoe, Swoosh LLC, Vanguard Group Inc., and BlackRock Inc. (BLK).

Nike’s 12-month trailing revenue and net income for 2024 are $51.4 billion and $5.7 billion respectively. The company has a market capitalization of $116.24 billion as of March 9, 2025.

Nike has two classes of stock. Class A shares aren’t available on the open market. They’re convertible into class B shares on a one-for-one basis. Class B shares the normal Nike shares available to all investors. The primary difference is that holders of Class A shares elect nine of the 12 members of Nike’s board. Holders of Class B shares elect the other three.

Phil Knight, the co-founder of Nike, and his son Travis Knight own more than 97% of outstanding Class A shares along with the holding companies and trusts they control. This allows the Knight family to exercise effective control of Nike even though it’s a publicly traded company.

Key Takeaways

• Nike, Inc. is a leading retailer of athletic footwear and apparel.
• Nike was founded by Philip Knight and Bill Bowerman in 1964.
• Class B shares of Nike are publicly traded but Class A shares are largely controlled by the founder and his family.
• Most of Nike’s directors are elected by Class A shares, giving the founder effective control of the company.
• Most Class B shares are held by institutions like Vanguard and BlackRock.

Top 3 Individual Insider Shareholders

This list reflects direct ownership. It doesn’t include indirect ownership of shares or shares that are accessible through stock options.

Important

The term “insider” refers to people in senior management positions and members of the board of directors, as well as people or entities that own more than 10% of the company’s stock. It has nothing to do with insider trading in this context.

Philip Knight

Billionaire Philip Knight directly owns 23,879,487 shares of Class A and 32,215,174 shares of Class B Nike stock, representing 8.0% of outstanding Class A shares and 2.6% of outstanding Class B shares as of June 28, 2024.

Knight co-founded Blue Ribbon Sports, later to be renamed Nike, with his former track coach, Bill Bowerman, in 1964. Nike would become one of the world’s biggest and most powerful brands in sports shoes and apparel over the next six decades, making Knight one of the world’s wealthiest individuals.

Knight ran the company as president from 1968 to 1990, except for a brief interlude, and again from 2000 to 2004. Knight has served on the board of directors since the 1960s and retired as the chair in June 2016. He was appointed Chair Emeritus, a non-voting board member. He was appointed Chair Emeritus, a non-voting board member. He and his family are ranked 47nd on the Forbes list of billionaires with a net worth of $35.4 billion.

Mark Parker

Mark Parker held 2,740,543 shares of Nike stock, representing roughly 0.2% of outstanding Class B shares, as of June 28, 2024.

Mark Parker serves as Executive Chair of Nike, having previously served as the President, CEO, and chair for 14 years. Parker stepped down as CEO in 2019.

Parker’s career at Nike began in 1979 as a footwear designer and he has also held executive leadership positions at the company in business lines such as Consumer Product Marketing, Global Footwear, and Nike Brand.

John Donahoe II

John Donahoe held 1,710,599 shares of Nike stock, representing about 0.1% of all Class B shares, as of June 28, 2024.

Donahoe is the former President and CEO of Nike after succeeding Mark Parker in 2019. He’s served as chief executive at eBay and ServiceNow before his leadership position at Nike and he continues to serve on the board of PayPal.

Top 3 Institutional Shareholders

Institutional investors hold the majority of Nike’s shares at about 80.73% of total shares outstanding.

Swoosh LLC

Swoosh LLC owns 230,750,000 shares of Nike Class A stock and another 230,750,000 of Class B stock, according to the company. That adds up to 77.5% of all outstanding Class A shares and 16.1% of all Class B shares.

Swoosh is the limited liability company created by Phil Knight to hold the bulk of Knight’s shares in Nike. Knight transferred his voting interests in Swoosh to a trust owned by his son, Travis Knight, upon his retirement from his position as chair of Nike’s board in 2016. Travis Knight serves on Nike’s board of directors.

Vanguard Group, Inc.

Vanguard Group owned 109,539,710 shares of Nike, representing 9.0% of all Class B shares outstanding, as of June 28, 2024.

Vanguard is primarily a mutual fund and ETF management company with about $10.1 trillion in global assets under management (AUM). The Vanguard Dividend Appreciation ETF (VIG) tracks an index of U.S. companies with steadily increasing dividends over 10 or more consecutive years and has $105.7 billion in AUM.

BlackRock, Inc.

BlackRock owns 89,773,424 shares of Nike Class B stock, representing 7.3% of the shares outstanding.

The company is primarily a mutual fund and ETF management company with approximately $10.65 trillion in global AUM. The iShares Core S&P 500 ETF (IVV) is among one of BlackRock’s largest ETFs with approximately $575.6 billion in AUM. Nike represents 0.19% of IVV’s holdings.

Diversity and Inclusiveness of Nike

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of more than just who are the shareholders at Nike. We highlight the company’s commitment to diversity, inclusiveness, and social responsibility as a whole.

Find out how Nike reports the diversity of its management and workforce. The ✔ shows if Nike discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall across a variety of markets.

Nike Diversity & Inclusiveness Reporting
	Race	Gender	Ability	Veteran Status	Sexual Orientation
Board of Directors
C-Suite
General Management	✔	✔
Employees	✔	✔

How Did Nike Get Famous?

Nike was originally founded as Blue Ribbon Sports by Phil Knight in 1964. Knight was a runner at the University of Oregon.

Knight was impressed by the speed and quality of the manufacturer after touring a shoe factory in Japan and signed a deal to sell the shoes in the United States under the Blue Ribbon Brand. The company changed its name to Nike in 1971 and adopted the famous Swoosh logo. The defining moment was when the young company signed Michael Jordan in a $2.5 million marketing deal.

What Is the Ownership Concentration of Nike?

About 65.8% of public Nike stock is held by institutional investors with the general public holding an additional 13.3%. Company insiders held 20.7%, as of May 2024.

More than 97% of Class A shares are still controlled by the original owner, Philip Knight, and his family through holding companies and trusts. This gives the Knight family effective control over Nike’s board because the Class A shares elect nine out of 12 directors.

Who Created the Nike Symbol?

The famous Nike swoosh symbol was created by Carolyn Davidson, a graphic design student at Portland State University. It was originally accompanied by a wordmark in Futura Bold Condensed font.

Davidson also provided other work for Nike’s founders in addition to the Swoosh symbol, such as graphics and chart design. Davidson was only paid $35 for the logo but Knight later awarded her 500 shares of the company which are worth about $39,000.

The Bottom Line

Nike is one of the leading brands in high-end athletic wear and one of the most successful and recognized companies in the retail sector. Most of its shareholders are institutional investors like pensions and mutual funds. Founder Phil Knight and his family continue to exercise a controlling influence over the board of directors because of the way share classes are structured.

Reviewed by David Kindness
Fact checked by Yarilet Perez

Inheriting jewelry may come with sentimental value, whether you’re safeguarding family heirlooms, dividing them among heirs, or using them as a valuable resource, like for a home down payment.

However, old age doesn’t always equal financial value. The piece may be a sought-after collector’s item, or it could have lost its appeal over time. Factors such as current gemstone and metal prices, quality of artistry, craftsmanship, and the designer also affect its worth.

Regardless of what you plan to do with the inherited jewelry, one of your priorities should be to determine its value, particularly if you need to insure it. That requires getting a professional appraisal.

Key Takeaways

• If you’ve inherited potentially valuable jewelry, one of your priorities should be having it appraised.
• To find an appraiser, contact one or more of the significant associations that require their members to meet specific standards and adhere to a code of ethics.
• Because gems and precious metals can fluctuate in value, consider having the jewelry reappraised every few years.

How to Find a Jewelry Appraiser

Pretty much anyone can claim to be a jewelry appraiser, whether they own a jewelry store or not. There are no federal or state licensing requirements the way there are for real estate appraisers. So it’s primarily on you to determine whether an appraiser is equipped to evaluate your inherited items.

That involves more than heading to the nearest jewelry store since merely working in the industry doesn’t qualify an individual as an appraiser. What’s more, most jewelry retailers don’t have their gem lab or the instruments required to examine a stone and properly determine its quality. For example, a ring appraisal may call for an appraiser who is familiar with diamonds.

Several industry groups require their members to meet certain qualifications and adhere to a code of ethics. You can locate an appraiser in your area by visiting the following websites, listed here in alphabetical order:

• Accredited Gemologists Association (AGA) 
• American Gem Society 
• American Society of Appraisers 
• Appraisers Association of America
• Appraisers International Society (AIS) 
• Association of Independent Jewellery Valuers 
• International Society of Appraisers 
• Jewelry Judge
• National Association of Jewelry Appraisers 

Besides having a recognized qualification, the appraiser should also be a graduate gemologist (GG) of the Gemological Institute of America (GIA). Having a gemological degree means that an individual can identify and grade gem materials. However, it does not, in itself, provide the training required to become a jewelry appraiser. An appraiser should also be knowledgeable about the current jewelry market.

Never dismiss costume jewelry; some pieces are worth more than you might think.

What to Expect From a Jewelry Appraisal

A competent appraisal, according to the American Society of Appraisers, should:

• Clearly state the kind of value being determined, such as fair market value (used for tax purposes), the replacement value (for insurance coverage), or liquidation value (for bankruptcy or business dissolution).
• Describe the property being valued.
• Detail the procedures used to arrive at the estimate, such as an analysis of comparable sales.
• Specify the qualifications of the appraiser.
• Include the appraiser’s signature.

Important

When appraising jewelry, the appraiser should clearly state whether the value being determined is fair market value, replacement value, or liquidation value.

How Do I Find a Reputable Jewelry Appraiser?

Start by asking your friends and family who they have used in the past. Visit the websites of the American Society of Appraisers or the National Association of Jewelry Appraisers to learn about appraisers in your area.

How Much Does it Cost to Have Jewelry Appraised?

It depends on the appraiser. It could be anywhere from $50 up to $150 per item.

Do Jewelers Offer Free Appraisals?

Yes, but not always. If you know a local and reputable jeweler, they might offer an appraisal of your piece for free, especially if they think you will sell it to them. High-end auction houses, for example, like Sotheby’s, offer a free appraisal estimate. If you think your jewelry is extremely valuable, you can contact Sotheby’s.

How Do You get Antique Jewelry Appraised?

Suppose you have strong reason to believe that your antique jewelry is valuable. In that case, you might try getting it appraised by a high-end auction house like Sotheby’s. Conversely, you could search on the Better Business Bureau to find reputable antique jewelry appraisers.

The Bottom Line

Putting a value on inherited heirlooms requires a qualified professional. To find an appraiser in your area, contact one of the major industry associations listed above for names. Don’t hesitate to ask potential appraisers, “What qualifies you to value this type of jewelry.”

Be prepared to pay a premium given the specialist training and equipment required for the job. Costs can range from about $50 to $75 per item, or $50 to $150 or more per hour, depending on the appraisal’s items. And given that the prices of precious metals tend to fluctuate dramatically, appraisals should be carried out every few years to keep your insurance coverage up to date. Should you decide to sell your inherited jewelry, knowing its value will help you obtain a fair price for it.

Reviewed by David Kindness
Fact checked by Vikki Velasquez

With home ownership seemingly out of reach for many young people today, parents may wonder whether they should just give their house to their children at some point? This can happen when parents downsize or move to another property. However, while such generosity may be admirable, giving a house away is a decision with serious financial consequences for everybody concerned.

Key Takeaways

• Giving your house away means you can’t sell it or access a reverse mortgage if you face unexpected financial challenges.
• Gifting your house may result in your child having a larger taxable gain if they sell the home.
• If you still have a mortgage, it might not be transferable to your child, or they might struggle to refinance it.
• Even if you give the house to your child, if you continue living there, there could be estate tax concerns or family disputes.

Before transferring ownership to your adult child, consider these factors.

1. You May Need the Money One Day

Aside from the funds you have in your retirement accounts, your home equity could be the largest asset you possess. If you give up your house, you won’t be able to sell it and harvest the cash or take out a reverse mortgage to borrow against your accumulated equity should you ever need to. Even if you are financially comfortable now, a large medical or nursing home bill late in life could leave you scrambling to come up with money to pay it.

2. You Could Be Giving Your Child a Huge Tax Bill

If you give your house to your adult child while you’re still living, their tax basis will be the same as yours: whatever you paid for the home plus the cost of any improvements you’ve made over the years. So, for example, if you bought your home 20 years ago for $300,000 and redid the kitchen to the tune of $50,000, your cost basis is $350,000. 

However, if you leave the house to your adult child in your will, rather than making a gift while you’re still alive, the cost basis will step up to the home’s fair market value at the time of your death.

Let’s say your house is worth $700,000 today and will be worth $1 million in another 10 years. A child you give the house to, and who later sells it for $1 million, will owe tax on a gain of $650,000. If they inherited the property instead, the taxable gain would be only $300,000.

In both cases, the child could generally exclude some of that gain by living in the home for at least two years before selling. The exclusion is $250,000 for an individual, $500,000 for couples who file a joint return. But even so, the difference in taxes could be substantial.

3. Your Mortgage Might Be an Obstacle

With more Americans carrying mortgage debt into their retirement years, you might still have a loan on your home by the time you consider giving it to a child. If your mortgage is transferable, your child will become responsible for it, which could be a financial burden. If it isn’t transferable, your child might have to refinance that debt, which might be even more expensive—or impossible, if your child does not have a strong credit history.

4. You Might Still Want to Live There

For estate planning purposes, you might consider giving your house to a child even if you plan to continue living in it. One reason is estate taxes. For tax year 2025, federal estate taxes only affect estates worth $13.99 million or more, so unless you own a mansion, that may not be an issue. Your state, however, may set a lower threshold. Oregon has the lowest exemption levels at $1 million.

If you do want to give your house to a child and still reside there, consult an estate-planning attorney about your options, including putting your home into a trust. One type, the qualified personal residence trust, could also allow you to freeze your home’s value for estate tax purposes, so you wouldn’t have to worry about future appreciation pushing you into estate tax territory.

Of course, there any number of potential downsides to becoming your child’s tenant. One is the potential for a family rift if you disagree on matters like home maintenance or who is responsible for what. And even if you and your child have an ideal relationship, you could find yourself at the mercy of a less-agreeable son- or daughter-in-law someday—perhaps someone who isn’t even in the picture yet.

Can My Child Sell the House Immediately After I Give It To Them?

Yes, your child can sell the house after you give it to them, but depending on the property’s value and their tax basis, they may face steep tax liabilities. If the house appreciates in value, they could owe capital gains tax on the difference between the home’s sale price and its original value (if it was gifted).

Is It Better to Gift the House or Pass It Down In My Will?

If you gift the house while you’re alive, your child may face a larger tax bill due to the capital gains tax. If you leave the house in your will, the property’s tax basis is stepped up to its market value, which can reduce potential taxes for your child. It’s often better to consult with a tax advisor to decide what’s best for your family.

If I Give My House To My Child, Can I Still Claim Tax Deductions Like Mortgage Interest or Property Tax?

Once you transfer the house to your child, you can no longer claim tax deductions for mortgage interest or property taxes on that property since you will no longer own the home.

The Bottom Line

Giving your home to your grown-up child is not a decision to be taken lightly. It is in your and your child’s best interests to consider all of the financial ramifications of such a move. Consult with a financial planner and an estate planning attorney if you plan to remain living in the home. These steps will help ensure that you make a decision that works for everyone.