This post is sponsored by Emperor Investments. All opinions are my own.
Whether you are new to equity investing, have heard the term before, or are just curious to learn more, this post is for you.
When it comes to investing your money in the stock market, you have some choices like different assets, industries to choose from, and even techniques for investing.
However, what you chose to do and how much will be determined by a few things like:
- Your investing goals
- How much you have to invest
- How financially secure you currently are
One way to diversify* your investment portfolio and potentially help build a recurring passive income stream is through pure equity investing.
In this post, we’ll cover everything you need to know and how you can get started in equity investing. Feel free jump to your desired section in the table of contents below.
What is Equity I
Equity investing or “equity investments” are pretty straight forward. It’s another way to say stock investing, or buying pieces (“shares”) of ownership in a business.
Equity investors purchase company shares with an expectation that they will rise in value where they receive compensation from the company.
There are two ways to generate income for your equity investments: capital gains and dividends.
Capital gain is a rise in the value of your shares that gives it a higher worth than the purchase price. Your gains however are not realized until you sell your shares.
A capital gain can also be split into two categories:
- Short-term (one year or less)
- Long-term (more than one year)
Anytime you make any capital gains outside of a retirement account, you have to report it for taxes every year. And for your retirement accounts, you do not owe taxes on capital gains until you start taking your distributions.
When you own shares of companies, many offer dividends for your investment with them. Dividends are the cash rewards paid to you as a part-owner of a business that is performing well.
As an investor you can choose to cash out your dividends or reinvest them. Dividend reinvesting is popular with equities because it helps your investment compound overtime.
This means your dividends are used to buy more shares automatically that in turn generate more dividend income in the future. The process then continues for your unique desired amount of time.
Related: Want to learn more about dividends? Read this post: Money Doesn’t Grow on Trees, but Dividends Might as Well
How Equities Compare To ETFs and Mutual Funds
When it comes to equity investing or “investing in stocks,” there are some stark differences compared to some other investment types.
For you to really understand it all, it’s important to define some other investment assets.
ETF or “exchange traded fund” is an asset designed to track a particular segment of the market.
When you purchase an equity ETF, you are buying a “package” that is made up of all the stocks that trade in that industry or segment of the market. You can also buy bond ETFs that offer specific exposure to segments of the fixed income market, like of corporations, cities, and national governments.
ETFs can be bought cheaply compared to other funds. However, the downside is companies that perform poorly are not removed from the fund. They are also not very personalized to your specific goals.
A mutual fund is a collective pool of money provided by individual investors to invest in various securities like stocks and bonds, and is operated by a money manager.
It helps investors get exposure and diversify, without having to make decisions. But, by being easier for the investor it means there is a premium to pay.
Annual operating fees generally are 1%-3% of the annual funds under management on top of any fees paid by the shareholder when they elect to buy or sell funds.
Disclosure: Mutual Funds and Exchange Traded Funds (ETF’s) are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
The Easy Way to Start Equity Investing
A great way to get involved with equity investing is through Emperor Investments. A purely automated way to diversify your money and help you reach your financial goals.
Trying to manage, research, and choose companies to invest in on your own is no easy task. Plus, it is also time consuming, which can be challenging for those of us who lead busy lives. This is exactly why Emperor Investments exists.
How Emperor Investments Works
Emperor Investments simply builds you an exclusive portfolio of equity investments based on your specific goals. This allows the team to be highly selective when choosing companies for your portfolio.
With Emperor equity investing:
- You directly own the companies in your portfolio.
- There are no worries about any hidden expenses, including ETF and trading fees.
- You receive a portfolio more attuned to your personal investment goals.
Your tailored portfolio is built based on a few questions you answer before you invest. And how the companies are chosen happens in three steps:
Step 1: Every quarter, their technology sifts through the universe of U.S. companies based on a proprietary blend of criteria. The only criteria they share is that all of their companies have not reduced dividends for at least 20 consecutive years. Since they even paid dividends during the financial crisis of 2007/08, they are likely to continue to paying dividends into the foreseeable future.
Step 2: Their stock analysts then dive deeper into that pool of companies from step 1. They look for companies with a: compelling value proposition, strong and sustainable competitive advantage in their markets, and a quality management team.
Step 3: These first two steps determine the pool or ‘Dream Team’ of companies that they deem quality. When you create a goal on their platform, they use another kind of technology to then create an optimal portfolio for you based on the current prices of the stocks and your goal.
The minimum entry is $500 to get started and only a 0.6% annual fee. That’s it, no other fees! You can open an Individual account, Roth IRA, Traditional IRA or a Rollover IRA.
There is a TON more information on their FAQ page that breaks it all down. So if you have more specific questions, make sure you check that out.
Why Emperor Investments Can Be A Good Choice
When you are putting your money to work, it is always good to understand the advantages you have as an investor with the institution of your choosing.
If equity investing excites you, you’re investing for the long-term, and you see the value in earning passive income with portfolios design to earn dividends, then Emperor Investments is the right choice for you.
To recap, some of the advantages of equity investing with Emperor Investments are:
- PURE EQUITY PORTFOLIOS: Your portfolios are comprised of 100% stocks, never ETFs.
- ALL-IN-ONE MANAGEMENT FEE: Only 0.6% annual fee, there are no other fees involved.
- PERSONALIZED PORTFOLIOS: Your portfolios are finely tailored to your investing preference and financial goals.
- DIVIDEND RE-INVESTING: To meet your long-term investment goals and take advantage of compounding, you have the option of automatically reinvesting your dividends.
- AUTOMATIC REBALANCING*: Your portfolio is regularly monitored and optimized to help you stay on track.
Interested in getting your portfolio set up to get closer to your future financial goals? Get a sample portfolio by taking Emperor Investments’ on-boarding questionnaire.
*Rebalancing/Reallocating can entail tax consequences that should be considered when determining a rebalancing/reallocation strategy.
Hopefully, you now have a pretty good understanding of equity investing and how it can help you achieve your investing goals.
It’s a great way to build a strong, yet diversified portfolio with the benefit of dividend payments. These can help your portfolio grow and also help you reach your personal financial goals.