QQQ (#atozchallenge)

Today we’re going to wander into the world of finance and investing. No, wait! Don’t run away! I’m going to keep it simple, I promise. And I promise not to try and sell you anything.

A popular way to invest money for retirement is to take money every payday and invest it in a mutual fund. The mutual fund collects money from you and other holders of the mutual fund and invests it according to its investment objectives. There are all kinds of funds: growth funds, income funds, large-cap stock funds, small-cap stock funds, total stock market funds, bond funds, bond and stock funds, precious metal funds, etc. etc. etc. (When you decide to invest in a mutual fund, be sure and read the prospectus and make sure you understand everything there is to know about it before investing.) At the end of the day, the fund figures out the net asset value (NAV) of the fund by taking the total value of their investments and dividing it by the number of shares they have outstanding.

One of the most popular types of mutual funds is the index fund. The fund manager invests the money of the fund into the stocks that make up a specific index. So, if you had a fund that used the Dow Jones Industrial Average, which consists of thirty large companies on the New York Stock Exchange and the NASDAQ, the fund would invest in those thirty stocks, and the NAV of the fund would rise and fall with the index.

A few years ago, a couple of investment firms came up with the idea of exchange-traded funds, or ETF’s. ETF’s were like mutual funds in that they held stocks in other companies, but instead of the prices of their shares being set at the end of the day, they would be traded as any other stock and the value of the shares would be set by market activity.

One such ETF is PowerShares QQQ, sold by Invesco PowerShares Capital Management LLC. It tracks the NASDAQ-100 Index, but the price of the ETF can vary greatly during the day, where the net asset value of a mutual fund changes only at the end of the trading day.

I don’t want to get too deeply into this, because I already see some eyes glazing over. I know the feeling. For the longest time, I believed the stock market was a three-headed beast that would eat you alive, kind of like King Ghidora. The more I learned about it, the more I understood what kinds of risks I was willing to take. There are people who buy sophisticated software and play the stock market like some teenagers play with their PlayStations and XBOXes. The best way to start is by reading everything you can about the stock market and about trading. I recommend the books by Charles Schwab and The Motley Fool as good books to start with. Regardless of where you are or what exchange you’ll be trading on, the principles in these books will help you.

As I said, I’m hardly an expert on investing and trading stocks, but I’ll bet some of you are, or at least better at it than I am. What books on investing have you read that you would recommend to people who might be reading this? What advice can you give your fellow readers on investing?


Author: John Holton

I'm a writer and blogger who writes and blogs about things that interest me.

16 thoughts on “QQQ (#atozchallenge)”

  1. I made it to the end of your interesting post. My father-in-law used to dabble a bit when he was alive but it’s not something I’ve ever really felt drawn to. Or had the spare funds to do so. 😉


    1. It was all a mystery to me until my mother passed away (15 years ago today) and left a few stocks in her portfolio. She did all right, but I have a feeling her broker did better. I put a lot of money into my 401(k) when I was working, and it’s done all right.


  2. I’ve seen people putting all they can into their 401(k) but live in deep debt, with little liquid savings, so some overall financial strategy may be in order for some of your readers. Books by Dave Ramsey or Suze Orman can be helpful. Jerrold Mundis also writes about getting out of debt, and his books were helpful to me as well. There was a time in my life when I had these problems, and now that I don’t, I’m very frugal and a conservative investor. We have limited our exposure to the market and invest in bonds. We don’t make as much this way, but we sleep well at night.


    1. Every financial expert I’ve heard says get out of debt, then start investing. A lot of them said to have six months’ salary in a simple savings account, but given the lousy return on savings accounts these days, I’m not sure they still are (maybe a money market account or a savings account at a credit union). I’ve always heard that you don’t put any money into the market you aren’t willing to lose, bonds as well as stocks, because either one could be worthless tomorrow. I’ve got money in the market, but I try very hard not to lose sleep over it.


  3. I like “The Truth About Money” by Ric Edelman. I am trying to remember the name of the one that starts with Chapter 1: Never take responsibility for anything that eats. That’s the entire chapter. Chapter 2 begins with: now that you’ve completely ignored chapter 1,…..

    Liked by 1 person

    1. The problem is there aren’t enough solutions that don’t involve some sort of market exposure anymore. Used to be you could get 5% at the bank or 5.5% at a savings and loan for passbook savings and more for a CD, all of which were reasonably safe. Now the S&L’s are all but gone and the banks all want to be brokerage houses and insurance companies. About the only other choice is savings bonds…


  4. I am a Credit Counsellor but we rarely venture into this line since we deal with people who are in debt. The Wealthy Barber is a great way to start in anything regarding finances and it is an easy read which is good. I always say, read everything but if you do not understand nor wish to look further, you must find a bank/institution that is trustworthy. You must think of it as a retirement so it must stay in place for a long time and you have to think if you are a risk take or more conservative, your age plays a factor. You can do higher risk the younger you are. If you are someone who does not like much risk plus may not follow it too closely then low risks are better to go. See I don’t know much but I think this does help a smidget


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