Seven Investment Terms Everyone OUGHT TO KNOW

For those who have never given their financial future another thought, the term “Financial Planning” could be a scary one. Investments can be a smart way to invest money for your future, but it can be confusing for those who haven’t any experience in the financial business. Before you consult a financial planner it is wise to become familiar with a few of the terminology that you are likely to listen to from him or her. Mutual Fund-An investment made out of money that is gathered by individuals with an investment goal at heart. The mutual fund is handled by a person known as the fund manager primarily.

Mutual funds are easy and cheap, since you are not responsible for choosing as to where you can invest the money. Asset Allocation Fund-A mutual fund that includes several types of investments such as stocks and shares, bonds, real estate, and foreign stocks. They are typically for the tiny investors who wish to invest in a variety of money in order to keep up a constant return. Risk-Return Trade-Off-This is the amount of money that you can stand to lose versus the money you are willing to invest.

Investments that are low-risk often have low payoffs, while investments that are risky usually have higher payoffs. When investing money you must determine the amount of money you can lose before identifying how much money you will make investments and where you will make investments it. Compounding-Money made from an investment that will be reinvested into the same or another investment to create its own profits. Bonds-Money that is loaned to an ongoing company or the government at a specific interest rate.

The company will usually give some kind of document that says the amount loaned and the arranged interest and the total amount that will be repaid at a particular time or “maturity date”. Stocks-Pieces of the ongoing company that are on the market. You might buy stocks from an organization at confirmed price hoping that the business would gain a significant sum of money and they would be able to sell the stocks at a higher price. Money Market Funds-Money invested in debt with a mutual fund. The goal is to obtain money from interest to your debt.

The Dow is by far one of the oldest stock indexes in the world. Its components are prices weighted and it includes only 30 large cover stocks (read Inside the Dow Jones Industrial Average ETF (DIA)). 214.back in June of 2006 96 million in its asset base since its inception. DDM is rebalanced on a daily basis and exposure of 2x the daily returns of the Dow Jones Industrial Average Index. It uses a variety of Index swaps to achieve its mentioned leverage.

  • At 8% compounded yearly, how long does it take $750 to increase
  • HSBC Premier
  • Money could work for you if you create passive income
  • How will price development occur

The ETF has an average daily level of about 518,000 stocks and charges 95 basis points in fees and expenditures. In June of 2006 Launched, the ProShares Ultra QQQ ETF (QLD) seeks to provide 2x the daily returns of the Nasdaq100 Index. The NASDAQ 100 index includes the largest non-financial companies from the U.S.

608.19 million and charges 0.95% as expense proportion. The ETF gets into swap agreements with different finance institutions to supply the leveraged exposure. QLD also offers an extremely high average daily level of around 3.72 million shares (see The Apple Effect and Nasdaq ETFs). Having talked about some of the top cap leveraged ETFs, let’s focus on a couple of small-cap ones now. The Direxion Daily Small Cap Bull 3X Shares (TNA) and ProShares Ultra Russell2000 (UWM) are two ETFs which provide a leveraged play on the Russell 2000 index. The Index steps the performance of the tiny cap segment of the U.S.

Russell 3000 index. The benchmark comprises 2000 stocks, which make up roughly 10% of the total market capitalization of the Russell 3000 index. TNA provides 3x leveraged publicity to UWM supply the daily results of the Russell 2000 index twice. With an average daily volume within striking distance of 11 million shares, TNA is by far the most heavily traded leveraged ETF available in the market.