- What Are Preferred Dividends?
Preferred dividends are payments made to holders of preferred stock, a type of equity that combines features of both stocks and bonds. These dividends are typically fixed and paid out regularly, often on a quarterly basis. Unlike common stock dividends, preferred dividends must be paid before any dividends are issued to common stockholders, making them… read more…
- Differences Between Management Fees and Expense Ratios
When considering investment costs, the distinction between a management fee vs. expense ratio is important to comprehend. While these terms are sometimes used interchangeably, they refer to distinct components of the costs associated with managing and operating investment funds. The management fee is a charge paid to the fund manager for their expertise in managing… read more…
- What Is a Property Dividend?
A property dividend is a distribution of physical assets, rather than cash, given to shareholders of a corporation. This unique form of dividend can include real estate, inventory, or other tangible assets owned by the company. Unlike traditional cash or stock dividends, property dividends can sometimes be more valuable depending on market conditions. This method… read more…
- What Is a Gross Expense Ratio (GER)?
The gross expense ratio (GER) is a metric used by investors to assess the total annual cost of managing a mutual fund or exchange-traded fund (ETF). This ratio is expressed as a percentage of the fund’s average net assets, and includes management fees, administrative costs and other operational expenses. A financial advisor can help you… read more…
- What Makes a Dividend Qualified?
A qualified dividend meets specific IRS criteria, allowing it to be taxed at the lower capital gains tax rates instead of the higher ordinary income tax rates. For a dividend to be qualified, the investor must hold the underlying stock for a designated period, and the dividend must be paid by a U.S. corporation or… read more…
- What Is a Bond Fund?
A bond fund is an investment pool that primarily consists of bonds and other debt securities. Investors in bond funds are essentially lending their money to various entities such as governments, municipalities, or corporations, which in turn promise to pay back the principal along with interest. Unlike individual bonds, bond funds offer the advantage of… read more…
- What Is a Bond Yield Spread?
A bond yield spread represents the difference in yields between two different bonds, typically of varying credit qualities or maturities. This spread is an important indicator for investors, providing insights into the risks and returns of different bonds. For example, a wider spread often signals higher risk associated with a lower credit quality bond when… read more…
- 8 Benefits of Compound Interest in Your Investments
Compound interest is a transformative financial concept that can dramatically increase the growth potential of your investments. By earning interest on both your initial principal and the interest that accumulates over time, your money can grow at an accelerating rate. Compound interest, which often plays a pivotal role in building wealth, highlights the importance of… read more…
- What Is a Floating Rate Fund?
Floating rate funds primarily invest in financial instruments with variable interest rates, such as loans and bonds. Unlike fixed-rate investments, the interest rates of the assets in floating rate funds adjust periodically, typically in response to changes in market interest rates. This characteristic makes floating rate funds an attractive option for investors seeking to reduce… read more…
- What Is a Bond Yield?
Bond yield represents the return investors can expect from holding a bond. Essentially, the yield is the interest earned on a bond, expressed as an annual percentage of the bond’s face value. The yield is influenced by several factors, including the bond’s coupon rate, its price and the time remaining until maturity. A bond’s yield… read more…
- Major Differences of ETFs and Mutual Funds
Exchange-traded funds (ETFs) and mutual funds are both popular investment vehicles, but they differ significantly in structure and trading flexibility. ETFs can be traded on stock exchanges throughout the day, similar to individual stocks, allowing investors to buy and sell at market prices. This intraday trading capability provides greater liquidity and often lower expense ratios… read more…
- How to Start Investing in Stocks
Stocks represent ownership in a company, and their value can fluctuate based on the company’s performance and market conditions. Setting clear financial goals and determining your risk tolerance can help you pick investments for your portfolio. It’s also prudent to keep abreast of market trends and news, as these can impact stock prices. Consider the… read more…
- 10 Ways to Build Wealth as Fast as Possible
Building wealth quickly is a common goal, especially for those who may have delayed saving for retirement. While it can seem challenging, there are some practical steps you could take to accelerate your financial growth. Most investors will be drawn to focus on high-return investments, but it’s also important to build a strong foundation that… read more…
- What Are Multi-Strategy Hedge Funds?
Multi-strategy hedge funds are investment vehicles that employ a variety of strategies to generate returns, reducing risk by diversifying their approaches. Unlike traditional hedge funds that may focus on a single strategy, multi-strategy funds combine tactics such as long or short equity, arbitrage and global macro. This blend allows them to adapt to changing market… read more…
- How Bond Market Pricing Works
Understanding how bond market pricing works requires a grasp of several influencing factors. Bond prices fluctuate based on interest rates, credit quality and market demand. When interest rates rise, existing bond prices typically fall since new bonds offer higher yields. Conversely, when interest rates decrease, bond prices usually increase. Credit quality also plays a role:… read more…
- What Are the Risks of Investing in Bonds?
Investing in bonds, while generally considered safer than stocks, comes with its own set of risks. For example, interest rate risk is a primary concern; when interest rates rise, bond prices fall, which can erode the value of your investment. However, there are more risks that need to be considered to make sure that your… read more…
- Wealth Accumulation: Definition and Examples
Wealth accumulation is the process of increasing your assets and investments over time, with the goal of attaining financial security. For the average person, this often means preparing for financial emergencies as well as ensuring a comfortable retirement. But for many investors, wealth accumulation means buying their dream home or leaving a legacy for their… read more…
- Wealth vs. Income: What’s the Difference?
Wealth encompasses the total value of all of the assets you own, whereas income refers to money earned on a regular basis from sources like salaries, dividends and interest. Understanding the difference between wealth and income, as well as how each affects your overall financial situation and goals, can help you create a financial planning… read more…
- Wealth Creation Methods and Examples
Wealth creation methods can help the average investor achieve long-term financial stability. There are various methods and tools to create wealth, and anyone who wants to secure their financial future can use them. Each of the modern wealth creation methods below carries its own risks and rewards, which is why it’s important for investors to… read more…
- Wealth Creation: What It Is and Strategies to Use
Wealth creation is an important goal for many individuals looking to secure financial stability, long-term financial independence and a comfortable retirement. To do so, investors will often focus on accumulating assets and resources that can help increase their net worth and generate steady growth over the long term. Sometimes part of wealth creation means enlisting… read more…
- Pros and Cons of Investing in Green Bonds
Investing in green bonds can be an attractive option for those looking to support environmental projects while potentially earning returns. Green bonds are designed to fund projects like renewable energy, energy efficiency and other eco-friendly initiatives. However, like any investment, they come with both benefits and drawbacks. If you want to determine whether green bonds… read more…
- What Is an Investment Philosophy?
An investment philosophy is a set of guiding principles that shape an individual’s or institution’s approach to investing. It acts as a blueprint, helping investors make consistent, informed decisions aligned with their financial goals and risk tolerance. At its core, an investment philosophy includes beliefs about market behavior, investment strategies and risk management. If you… read more…
- Differences of Asset Allocation and Diversification
Asset allocation and diversification are cornerstone investing strategies designed to optimize the balance between risk and reward within an investor’s portfolio. Asset allocation involves strategically distributing investments across a variety of asset classes, while diversification entails spreading investments across different sectors or geographical regions to mitigate the risks associated with any single investment. If you… read more…
- What Bond Duration Risk Is and How to Prepare
Investing in bonds often seems like a safe bet, but understanding bond duration risk can help you better protect your portfolio. Bond duration risk refers to the sensitivity of a bond’s price to changes in interest rates. When interest rates rise, bond prices typically fall, and the longer the duration, the more significant the impact.… read more…
- Differences of Bond Duration vs. Maturity
If you’re looking to invest in bonds, it can be helpful to understand bond duration vs. maturity. Maturity is the time remaining until the bond’s principal is repaid. A bond with a 10-year maturity will return the principal to the investor in 10 years. Meanwhile, duration measures a bond’s sensitivity to interest rate changes, and… read more…