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Investing Archives - Page 4 of 17 - Wealthspire | Page: 4

Liquidity

Financial Dictionary
What is Liquidity? Liquidity is the ease and speed with which an asset or security can be bought or sold. What Does Liquidity Mean in Finance? Financial liquidity refers to how easily assets can be converted to ready cash without affecting its market price. Assets like stocks and bonds are very liquid and can be converted into cash within days. Larger assets and tangible items such as property and equipment are often not as liquid since they need to be sold before you can use and spend the cash that they are worth, which can take weeks or months. Cash…
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Beneficiary

Financial Dictionary
What Is a Beneficiary? A beneficiary is the person or entity who will receive benefits from a life insurance policy, qualified retirement plan, annuity, trust, or will upon the death of an individual. What Does it Mean When Someone Is the Beneficiary? The beneficiary of a life insurance policy, qualified retirement plan, annuity, trust, or a will is the person or charity that receives the death benefit. A beneficiary can be one person or two or more people or charities. Learn more about what to do if you inherit an IRA. Who Gets Money if There Is No Beneficiary? Generally,…
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Benchmark

Financial Dictionary
What Is a Benchmark in Finance? Financial benchmarking involves running financial analyses in order to compare business practices and the standards of a firm to other firms within the same industry. A benchmark is a standard, or a baseline, that’s used for comparative purposes when assessing a portfolio or mutual fund. What is a Benchmark in a Portfolio? Benchmarks are used to analyze and manage allocation, risk, and the given returns of a portfolio. They can also be used to assess how a portfolio is performing against different market segments. To track the performance of an asset group, companies use…
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Dividend

Financial Dictionary
Dividend Definition A dividend is a portion of a company’s profit paid to common and preferred shareholders. They provide an incentive to own stock in stable companies even if they are not experiencing much growth. Companies are not required to pay dividends. How do Dividends Work? Dividends are payments a company makes to its shareholders to share its earnings and can be thought of as rewards paid to shareholders for their investments. There are many reasons why companies pay dividends, including the intent to increase investors’ faith in the company and signal optimism about future growth and earnings. Dividends are…
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Yield Curve

Financial Dictionary
What Is a Yield Curve? A yield curve is the relationship between interest rates and time, and is determined by plotting the yields of bonds with equal credit quality against their maturities. What Does the Yield Curve Tell You? By looking at the yield curve of bonds having equal credit quality but differing maturity dates, the slope of the curve will give you a good idea of the future interest rate changes and economic activity. Yield curves can take the form of three shapes: normal (upward sloping curve), inverted (downward sloping curve), and flat. A normal yield curve shows yields…
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Mutual Funds

Financial Dictionary
What Is a Mutual Fund? A mutual fund is a fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, commodities, or money market securities. What Types of Mutual Funds Are There? Equity Fund Bond Fund Money Market Fund Balanced Funds Specialty Funds How Do Mutual Funds Work? Mutual funds use a pool of investors’ money to purchase a mix of stocks, bonds, other securities, etc. The value of the mutual fund depends on how well the purchased securities are performing. This means when you purchase a share of a mutual fund,…
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incentive stock options ISO

Stocks

Financial Dictionary
What Is a Stock? A stock is a long-term, growth-oriented investment representing ownership in a company; also known as ‘equity.’ How to Invest in Stocks When investing in stocks, you don’t necessarily need a lot of money to get started – you can invest with as little as $50. You can also decide whether to pick and choose stocks individually, have an expert to manage the process, or use your employer’s 401(k). Once you start to invest in stocks, you might want to open an IRA or a brokerage account. This allows you to have some options and determine what…
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Bonds

Financial Dictionary
What Is a Bond? A bond acts like a loan or an IOU that is issued by a corporation, municipality, or the U.S. government. The issuer promises to repay the full amount of the loan on a specific date and pay a specified rate of return for the use of the money to the investor at specific time intervals. How Do Bonds Work? When organizations want to raise money, they ask for a loan in the form of a bond, so when you buy a bond, you’re giving the organization part of that loan. In other words, once you purchase…
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Annualized Rate of Return

Financial Dictionary
What is Annualized Rate of Return? Annualized rate of return is the average annual return over a period of years, considering the effect of compounding (also called compound growth rate). Annualized Rate of Return Formula The Annualized Rate of Return is calculated on a time-weighted basis – this allows investors to compare asset returns over any period. Typically, the annualized rate of return is a 12-month period. Taking this into account, if one month’s rate of return is 0.21% and the next month’s is 0.29%, the change in the rate of return from one month to the next is 0.08%…
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Bear/Bull Market

Financial Dictionary
What is a Bear or Bull Market? A bear market is a prolonged period of falling stock prices, usually marked by a decline of 20% or more. The opposite is a bull market, in which prices are advancing in an upward trend. Are We in a Bull or Bear Market? Markets are relative rather than absolute, as the market changes every second, so whether we are in a bull or bear market will depend on the time frame being referenced. Investment strategies are dependent on the holding period for an investment, meaning day traders will try to profit from a…
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