From an investment strategy standpoint, traditional exchange-traded funds (ETFs) are designed to track indexes. While passive investing is a popular strategy among ETF investors, it isn’t the only strategy.

Passive Investing
ETFs were originally constructed to provide a single security that tracks an index and trades intraday. While the intraday trading capability is certainly a boon to active traders, it is merely a convenience for investors who prefer to buy and hold, which is still a valid and popular strategy - especially if we keep in mind the often-cited statistic that 80% of actively managed mutual funds fail to beat their benchmarks. In sum, ETFs provide a convenient and low-cost way to implement indexing, or passive management.

Active Trading

Despite indexing’s track record, many investors aren’t content to settle for so-called average returns. ETFs provide the perfect tool. By allowing intraday trading, ETFs give these traders an opportunity to track the direction of the market and trade accordingly.
While ETFs are structured to track an index, they could just as easily be designed to track a popular investment manager’s top picks, mirror any existing mutual fund or pursue a particular investment objective. While actively managed ETFs run by professional money managers aren’t available in the United States, they are already on the market in Germany.

Actively managed ETFs have the potential to benefit mutual fund investors and fund managers as well.

Because ETFs trade on a stock exchange, there is the potential for price disparities to develop between the trading price of the ETF shares and the trading price of the underlying securities. If the ETF is trading at a premium to the value of the underlying shares, investors can short the ETF and purchase shares of stock on the open market to cover the position.

With index ETFs, arbitrage keeps the price of the ETF close to the value of the underlying shares. Ideally, those selections are to help investors outperform their ETF’s benchmark index. The investors would then buy the underlying securities and avoid paying the fund’s management expenses. Therefore, such a scenario provides no incentive for money managers to create actively managed ETFs.

Conclusion
Active and passive management are both legitimate and frequently used investment strategies among ETF investors.

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Health insurance can be one of the best things you can get for yourself as this ensures that somehow, when the need arises, you’d get adequate healthcare. However, we know that insurers and clients always clash in the sense that they want to keep costs down while you want to make sure that your health is up.

In the past, Indemnity Insurance was the most common type of insurance and pays a portion of your medical bills. You need to spend a certain amount each year, deductibles, before you can start benefiting from it, by that time your plan will be covering about 60 to 80 percent of your medical expenses.

However, with the soaring indemnity insurance fees, a new more cost-efficient system called Health Maintenance Organizations emerged. HMOs are connected with specific hospitals, clinics, and doctors and hospitals, which then become the healthcare plan’s network. Unlike indemnity insurance, there will be no deductible and the co-payments will be, usually, low. The monthly premium you pay will cover doctor visits, hospitalization, emergency care, laboratory tests, and therapy.

For most healthcare needs HMOs can be a cheaper alternative.

There may be times when you feel that your financial advisor is not giving you the advice that’s best for the situation, and so you wonder: Is your financial advisor working for you, or is he doing all this in his own interest? Read on and find out the difference.

To be sure the financial advisors come from different backgrounds, different knowledge and levels of experience. It is only understandable that they may have varied opinions regarding a particular financial dilemma, however, some of their advice can just be downright ugly, and here’s how you can tell whether or not you’re getting good advice.

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No one can predict the future with certainty, so you cannot really expect your financial advisor not to make mistakes. There is, however, a big difference between a mistake made based on sound judgment and analysis, and one made because of lack of knowledge and carelessness.

There are two common reasons why you’re getting bad investment advice:

• The advisor places his own interest before yours; and
• Your advisor lacks knowledge and fails to observe due diligence.

Bad advice can have both short term and long term consequences. But they all have the same effect overall: loss of money. So, as an investor, you should never fully trust your financial advisor. Yes it’s good to have someone to confide to once in a while, but remember, the final decision is still yours.

Long term care insurance has been on the rise as the public came to realize that the government is unable or unwilling to pay the cost for long-term care. This has prompted a lot of people to seek help from their employers.

However, according to survey only a few employees understand what LTC insurance is all about, which is why active employee participation is, for the time being, a mere two percent.

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Basically, the provisions of individual LTC policies and those sponsored by the employer are about the same, except for the fact that in the case of the employer-sponsored policies, the employer shoulders the premium for the employees’ benefit.

The main idea behind LTC is to protect assets in case of illness or injury that requires long-term care.

To qualify for the benefits of LTC, the insured must not be incapable of doing two of the six dialy living tasks, such as eating, bathing and dressing or the insured must be suffering from dementia or other forms of severe cognitive impairment.

There’s usually an elimination or waiting period before the patient can avail of LTC insurance benefits.

Group policies may have limited benefits compared to individual individual LTC policies. However, employees may opt to purchase more coverage by paying additional premium.

On the part of the employer, premiums paid are tax deductible. Since LTC is a non-qualified benefit, it can be used as a form of incentive for employee performance.

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As globalization spreads a lot of people find themselves traveling more frequently. So, if you’re one of those travelers, your expenses can include a lot of things, such as accommodation (hotel/motel rooms, etc.) to interesting souvenirs that you find along the way. Needless to say, you must be well funded every time you travel. Now here are some pointers on how to finance your travel as well as how to avoid surcharges that are unnecessary.

Avoid excessive currency exchange fees. It is a good idea to be prepared before hand and have a few dollars, say about a hundred, exchanged for the equivalent currency of your country of destination. Use Automated Teller Machines that are affiliated with major banks. This way, you can dodge those high currency exchange charges.

Sometimes you wonder whether you should use cash or credit card when you travel. In many places, cash will be the norm, so you need to have your dollars exchanged before hand, preferably at home, to the local currency. However, some local merchants are willing to accept US dollars, so you might as well use that before exchanging your dollars into the local currency. Take note of how much the merchant is charging you in dollars, as he may be using a rate that’s favorable only to him. You should always be updated regarding the latest exchange rate by consulting financial Web sites.

Credit cards may charge you a uniform one percent conversion fee. However, you still need to confirm your credit service rates ahead of time - preferably prior to leaving home. There may also be an additional one to two percent service charge, so it is best to prepare for that. Many travelers confine the use of credit cards to hotel rooms.

No matter where you travel or for how long, you will always be needing money. The different forms of currency, and the exchange rates and fees can be mind boggling at times. A little planning ahead of time can spare you from both unnecessary expenses and headache. Doing some research can be well worth it. Bon voyage!

If you’re searching for a good house to buy at a decent rate, one of the first places you need to look at, are those being sold by banks. Banks reposess properties that their owners have not been able to pay for, mostly due to defaulting on their monthly payments.

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Since banks don’t want to get into the real estate business, they are more or less desperate to sell these houses, and will probably offer you a good bargain to get them off their books.

However, you probably don’t want to buy directly from a bank, since they are used to dealing only with professionals. Buy your property from a broker instead.

You will need to search the Internet for a full listing of these properties, and for a monthly fee, you can even use sites like Foreclosures.com or RealtyTrac.com

However, you might want to be careful about houses that have remained unsold for a long time. There’s a reason why they have not been sold, and you have to find out why. Maybe it’s in real bad shape, and to get it up and running, you may have to shell out tens of thousands of dollars.

So those of you keen on buying a place at the best pricee need to keep in mind this great resource.

Along with rising costs, comes another element that is perhaps more dangerous than inflation.  That is a feeling of helplessness. I mean what can you do to beat the rising costs of fuel? Or groceries for that matter.

Amada Gengler, a writer at CNN money, has some great ideas to beat the rising costs that harass us. Let us take a look at what they are:

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Save 33% of your gas bills

According to Amanda, the way we drive can have a significant impact on our fuel expenses. Apparently, driving at a slower steadier state, allows you to save upto 33% of your gas. This essentially means getting your foot off the pedal, and increasing the efficiency of your engine.

Take a list with you to shop

Supermarkets are laid out in such a manner, that they force you to buy things you don’t want. This is the reason for long aisles, and attractive displays. Keeping in mind your shopping list ensures that you don’t get distracted.

Also, search more for your goods. Firms pay a lot of money to get their goods on the best shelves, and so the most visible product is not necessarily the cheapest

Cut down on Vampire Appliances

Vampire appliances are those that take up energy even when not in use, like your computer which may be in suspend mode, or your Xbox. Amanda estimates that you can save upto $300 a year on these appliances.

So take heart, and follow these good strategies to keep your money in your wallet.

It’s nice to have a government that cares. Even one that might go a little overboard, when it comes to deciding how much money you need to put away into retirement.

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Election candidates are proposing to start a scheme whereby anyone earning belo$75,000 a year, will have 3% of their income socked away into an IRA automatically. Previously, options like these were optional, with employees choosing to opt in instead of opting out.

So if you’re an employee, it really comes down to a question of whether or not you’re willing to allow the government to take away 3% of your salary from you. Suppose you need that money for something else? The governmnet however, thinks that it has a social obligation to induce people to save more, and is therefore offering to contribute upto $1000 to match your own savings.

This actually sounds like a very sweet deal for the common man. The money that would be put away, would be invested in a low cost index linked fund. It could also help the economy by slightly de-freezing credit lines, since the extra money that is being saved, will go to helping firms that need the cash to grow.

So it ends up benefiting everyone. If pulled through, it would be the best thing that can happen to boost savings.

The surging oil prices that are raising exporters’ costs to ship everything from steel to sofas to America are encouraging customers to buy more domestically made goods — and giving the producers of those goods more room to raise their prices.

“It’s changing global costs,” says Jeffrey Rubin, chief economist at CIBC World Markets in Toronto during a Bloomberg interview. For importers, the rising cost of shipping is “like an increase in tariffs,” says San Francisco Fed economist Reuven Glick.

Just as duties on imported goods give domestic industries cover to raise their own prices, higher shipping costs have the same inflationary effect, Rubin says. Fuel costs have made it so expensive to ship low-priced bookshelves to the U.S. that Ikea is starting to make them in America. Asian steel exporters, saddled with higher freight rates, are losing U.S. market share, allowing domestic producers to boost their prices.

The cost of foreign goods excluding petroleum climbed at an annual rate of 6.6 percent in May, the fastest increase since 1988, the BLS says.

Iron and Steel

Iron and steel import prices were up 46.4 percent in May from a year earlier, government figures show. U.S. steel production has risen nearly 3 percent this year as imports have declined 12 percent, according to the American Iron and Steel Institute in Washington.

Chinese Firms’ Disadvantage

Chinese steelmakers are doubly disadvantaged by higher oil prices. The result may be higher business costs and inflation, he adds.

Furniture companies are among those redoing the sums. Prices for imported furniture and related products rose 6.3 percent in May compared with the year-ago month.

The largest U.S. bank is about halfway through the 6,000 job cuts at the division signalled in March, said the person, who declined to be identified because Citigroup hasn’t disclosed the plans publicly. Citigroup employs about 300,000 people worldwide and has announced more than 13,000 job reductions this year.

Chief Executive Officer Vikram Pandit is lowering costs and shedding assets after the New York-based company reported two straight quarterly losses totalling $15 billion. The world’s largest banks and brokerage firms have slashed more than 80,000 jobs since subprime mortgage defaults infected credit markets and led to almost $400 billion of writedowns and losses.

“I see more downsizing to come,” said Andy Mantel, managing director of Pacific Sun Investment Management Ltd. in Hong Kong during a Bloomberg interview. “Banks need to take precautionary measures.”

Citigroup, whose shares rose 8 cents in early German trading today to $19.38 according to Bloomberg data, has disclosed plans to eliminate more jobs during the past year than any other financial institution, according to data compiled by Bloomberg. UBS AG, Lehman Brothers Holdings Inc. and Merrill Lynch & Co. are among the companies to announce more than 5,000 job reductions.

Second-Quarter Loss

The company probably will report a second-quarter loss of 40 cents a share after $8.7 billion of asset writedowns, UBS analyst Glenn Schorr said in a June 20 note to clients.

Schorr’s prediction came after Chief Financial Officer Gary Crittenden forecast “substantial” additional writedowns and more losses on consumer loans. Citigroup’s $42 billion of credit losses and writedowns since last year account for about 10 percent of the global total, according to Bloomberg data.

Citigroup has lost more than any company in the mortgage market rout and its shares tumbled 63 percent in the past year. Pandit, 51, was promoted in December to replace Charles O. “Chuck” Prince, who was ousted two months earlier.

Goldman Jobs

Citigroup then said in April it would slash 7,000 jobs outside the investment banking group over the next year, and executives have said further reductions are likely.

Goldman Sachs Group Inc., the biggest U.S. securities firm, will get rid of as much as 10 percent of the jobs in its investment banking division in one of the company’s largest single rounds of headcount reductions this year, the Financial Times reported today, without citing anyone.