Tech Investments: A Smart Way to Earn More
Investing in tech stocks can be a great way to grow your money. Many people think that buying stocks directly is the best way to go. But there are other options that might give you better returns.
Closed-End Funds (CEFs)
One of these options is closed-end funds, or CEFs. These funds invest in a mix of stocks and pay out dividends to their investors. The two funds we will look at are:
- BlackRock Science and Technology Trust
- Columbia Seligman Premium Technology Growth Fund
Fees and Performance
These funds have lower fees than most CEFs, around 1.1%. This is still higher than the fees charged by index funds, which are usually below 0.5%. But the higher fees might be worth it because these funds have performed better than the S&P 500 index fund.
The fees for CEFs are taken out of the fund's portfolio before dividends are paid out. This means that the dividends you receive are after fees have been deducted. So, if a fund has a 7.7% yield, you will receive $770 a year for every $10,000 you invest.
Trading at a Discount
Another benefit of investing in CEFs is that they often trade at a discount to their net asset value. This means you can buy shares for less than the value of the underlying assets. For example, the BlackRock Science and Technology Trust is currently trading at an 8.9% discount to its net asset value. This means you are essentially getting the management of the fund for free.
Exposure to Tech Stocks
Investing in CEFs can also give you exposure to a range of tech stocks, including Microsoft. The Columbia Seligman Premium Technology Growth Fund has 4.2% of its portfolio in Microsoft, while the BlackRock Science and Technology Trust has 7.6% of its portfolio in Microsoft.
Investment Strategy
One strategy for investing in CEFs is to sell funds when they are overvalued and buy when they are undervalued. This can help you maximize your returns and minimize your risks.
