A type of mutual fund where a fund manager does all the buying and selling of secuitiesr (stocks, bonds, etc.) for the mutual fund. The fund manager decides what type of securities to buy with investors' money. The goal of an actively-managed mutual fund is to beat or outperform a stock market index in terms of returns. This type of fund typically costs more to operate, has higher expense ratios, compared to passively-managed mutual funds.
A term that refers to a stock market that is falling, suffering big drops exceeding a certain percentage. You may hear people say, "We are in a bear market." This is a period of persistent stock losses.
A term that refers to a stock market that is experiencing big gains exceeding a certain percentage. You may hear people say, "We are in a bull market." This is a period of consistent stock gains.
Money that you loan to a company or government. They promise to pay you the principal and interest earned on that money.
The increase in value or price of an investment to a price higher than the initial purchase price.
A term that refers to how investors reduce risk by spreading their money in different investment types instead of putting their money in a single or very limited investment types.
Also known as simply as the Dow, a stock market index that tracks or represents a weighted average of 30 large US company stocks traded on the New York Stock Exchange and Nasdaq (e.g. Apple, Boeing, Chevron, Coca-Cola, McDonalds, Nike, Microsoft, Walmart, Verizon, etc.)
A company that has increased the dividend it pays to shareholders for at least 25 consecutive years. These companies are usually large and stable companies with great cash flow. They have been able to increase the dividend in both great and challenging economic conditions. A few well-known Dividend Aristocrats are Abbvie Inc, AT&T, Cardinal Health, Caterpillar Inc, Coca-Cola Co, McDonalds, Procter & Gamble, Walmart, just to name a few. Learn more.
The expense ratio tells you how much it costs a fund manager or investment company in expenses to operate a mutual fund or an exchanged traded fund. You can also look at it to mean the amount of money you pay in expenses to manage the fund. If you buy a mutual fund and the expense ratio is 0.15%, it means you can expect to pay $15 for every $10,000 you invest in that fund.
This refers to the securities (stocks, bonds, etc.) that the mutual contains. If mutual fund WXZY is composed of a combination of 2000 stocks and bonds, it means it has 2000 holdings.
A type of investment that tracks the returns of a broader market index, such as the S&P 500, Russell 2000 Index, NASDAQ Composite Index, etc.
A type of retirement account that allows individuals to save for retirement. Contributions made to an IRA are tax-deductible; they can reduce your tax bill. You pay taxes on that money only when you withdraw it during retirement. As of 2019, the maximum amount the IRS allows an individual to contribute to an IRA is $6000 or $7000 if you are 50 years or older. Learn more IRAs.
A type of investment that pools money from many different investors in order purchase other investments, such as stocks, bonds, etc. Think of a mutual fund as a basket holding tens, hundreds or thousands of stocks.
A stock market index that focuses on and tracks mainly technology companies stocks.
A term that refers to the amount of money you need to buy one share of a particular investment type (mutual fund, index fund, or exchange traded fund). For example, if the NAV of mutual fund WXYZ is $24.18 at the end of a trading day, it means you need exactly $24.18 to buy one share of mutual fund WXYZ.
A type of mutual fund whose goal is to track or match the returns of a broad market index (e.g. S&P 500, Dow Jones Industrial Average, etc.). Passively-managed mutual funds do not have a fund manager that does the buying and selling of securities (stocks, bonds, etc) for the fund. As a result, this type of mutual fund typically has lower fees and expense ratios relative to actively managed mutual funds.
A very important and detailed document that contains prized information about an investment (mutual fund, index fund, etc.). The prospectus of a mutual fund gives investors information about the fund's investment strategy, risks, expense ratios, holdings of the mutual fund, performance, among other things. You should always consider a fund's prospectus before investing in it.
A type of retirement account that allows individuals to save for retirement. Contributions made to a Roth IRA are not tax-deductible. However, you don't pay taxes on that money when you withdraw it at retirement; the IRS already took its fair share when you made your contributions. As of 2019, the maximum amount the IRS allows an individual to contribute to a Roth IRA is $6000 or $7000 if you are 50 years or older. Learn more about Roth IRAs.
A real estate investment trust or REIT (pronounced as "RIT") is a type of investment vehicle that allows anyone to invest in real estate and make money without owning physical properties. Think of REITs as companies that pool money from a group of investors to buy, invest in or finance real estate properties. By nature of their design, they can provide investors with serious income. Learn more about real estate investment trusts.
Stocks give you an opportunity to own a piece of a company. When you buy a company's stock, you essentially own a share of the company's assets and earnings; you become a shareholder.
A stock market index that tracks the stocks of 500 of the largest companies in the USA (e.g. Amazon, Apple, Chevron, CVS Health, Dollar General, Facebook, Johnson & Johnson, Microsoft, Target, etc.)
An investment term that simply refers to the collection of stocks, bonds, mutual funds, index funds, mutual funds in an investment portfolio.
A term that refers to the buying and selling of securities (stocks, bonds, mutual funds, etc.).