Archive for the ‘Definitions’ Category
A portfolio is a collection of investments held by an institution or an individual. Investments in a portfolio could include stocks, bonds, options, warrants, gold certificates, real estate, futures contracts, production facilities, or any other item that is expected to retain or appreciate in value.
A portfolio could also be very specific and limited. For [...]
Prepayment is the act of fully or partially paying off the outstanding balance of a loan at any point during the term of the loan at a time earlier than set out in the contract.
Typically, the purpose of prepayment is to reduce the amount of interest that must otherwise be paid. Depending on your [...]
Real estate investment trusts, or REITs, are entities that invest in different kinds of real estate or real estate related assets — e.g., shopping centers, office buildings, hotels, and mortgages secured by real estate. There are basically three categories of REITS:
Equity REITs – This is the most common type of REITs. These REITs invest in [...]
The actual return earned on an investment after factoring in the rate of inflation. It is the real return which generates the increase in wealth of an investor over the long term.
Reinvestment is the process of using dividends, interest, or distribution earned in an investment (e.g., stock, mutual fund, ETF, etc.) to purchase additional shares, instead of receiving payments in cash.
This is a great way to increase your position in an investment without adding new money, or incurring trading expenses (since most financial institutions offer free [...]
Return on investment, or ROI, is the result expressed in a percentage compared to the capital invested. For example, if $1,000 invested in a marketing campaign resulted in $10,000 of sales, then the return on investment, or ROI, is 900% (i.e., ($10,000-$1,000) / $1,000).
In term of equity investment, if you invested $1,000 in a [...]
A stock is basically a share of ownership in a corporation. When you buy 1 share of Microsoft you own a tiny fraction of the company (approximately 1/9,310,000,000) — so I really meant it when I said tiny. In other words, to own 1% of Microsoft, you would have to own about 93 million [...]
Often, we speak of the stock market as if it’s a singular entity that exists somewhere. In fact, there are many physical stock markets, called stock exchanges. Two well-known stock exchanges in the United States are the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ).
Other major [...]
When you hear the newscaster report the “Dow Jones Industrial Average plunged 400 points,” he’s referring to what we call a stock market index. There are many stock indices, and the most famous ones in the United States are:
Dow Jones Industrial Average (DJIA) — This index consists of 30 of the largest and most widely [...]
Tax loss harvesting is a tax optimization method whereby investors sell their poor performing stocks and investments — i.e., they have gone down in price since they were purchased. Each year, the IRS allows investors to offset unlimited amount of capital losses against capital gains earned during the year.
