What are Domestic Stock Funds?
Domestic equity funds invest in companies domiciled in the United States. Domestic Equity Funds, as the name suggests, invest primarily in stocks of U.S.-based companies. These come in many varieties: some invest in companies within a certain size range, some focus on specific sectors, some seek value or growth stocks within sectors, and so on. Domestic stocks funds usually represent the majority of the holdings in an average American citizen’s portfolio. Continue reading...
Should I buy IPOs for my portfolio?
You may find it difficult to find IPO shares to buy if you are not already a very active and wealthy investor, but if that is the case then you may be a good candidate for IPO shares. For investors who are less affluent and less experienced, you can still pick up a mutual fund or ETF that gives you IPO exposure, if it fits in with your portfolio. In the 1990s, there was a mad rush to buy IPOs: an IPO could be traded at $10 at the beginning of the day and at $100 at the end – you could be instantly rich if you were able to get your hands on an IPO for some of the many tech firms that sprouted up before the turn of the millennium. Continue reading...
What are the pros and cons of hedge fund investing?
Hedge funds are sometimes the highest-earning investment vehicles, and sometimes they do that much worse than everything else. They have a high buy-in, low transparency, and limited liquidity. There are also other advantages and disadvantages worth mentioning. A good hedge fund can provide you with an excellent diversification of your investable assets and give you exposure to the best and brightest money managers in the world. Continue reading...
What are My SIMPLE IRA Investment Options?
SIMPLE IRAs will have various kinds of investment options, depending on the trustee company that holds the plan assets. SIMPLE IRA investments are determined by the financial institution at which your SIMPLE IRA is established. When opening a SIMPLE IRA, be sure to check what investment options the financial institution offers as well as the fee structure. Standard ERISA rules apply, meaning that all employees must be offered the same thing. SIMPLE IRAs can only be held at trustee companies whose business model is on the IRS’s list of approved SIMPLE Trustees. Continue reading...
What is a Broker-Dealer?
A broker-dealer is an entity that engages in the trading of securities, and can act as both an agent and a principal. Brokerages, investment banks, commercial banks, and other financial institutions can act as a broker-dealer. Broker-dealers are important to the liquidity of the markets, since they hold inventories of securities for various amounts of time to help facilitate trading, short-selling, and margin accounts. Continue reading...
What is an Adjunct Account?
An adjunct account increases the valuation of a liability account. An adjunct account is commonly used when accounting for a bond issue sold at a premium. The par value of the bonds sold is included in one line as a credit to Bonds Payable, and the increased premium in placed in another line as a credit to Premium on Bonds payable. The technical term for the account into which a discounted bond’s discount is placed is a Contra Account. Continue reading...
What is Foreign Investment Funds (FIF) tax?
New Zealand and Australia, in particular, have instituted a tax regime for offshore investments that fall into the definition of Foreign Investment Funds (FIFs). FIFs will generally be mutual fund companies that are based overseas, but can also include cash value life insurance underwritten by a foreign company and some stock portfolios from overseas stock exchanges. The US has the PFIC tax, which is a passive foreign investment corporation tax. The PFIC category generally applies to mutual funds or pooled investment companies from foreign countries. Continue reading...
What are Utilities Stocks?
Utilities stocks are those who deal in services like water, electricity, gas, and other critical infrastructure. Recently, alternative energy has been added as a sub-sector due to its incremental rise in importance. Utilities are categorized as non-cyclical - even if the economy is in a recession, people still need water and electricity. For that reason, they are often treated as defensive stocks, which investors hope will outperform during more difficult economic times. There is little competition in the utilities sector, as the barrier to entry is generally extremely high for a new entrant, given the amount of infrastructure required. Continue reading...
What does it Mean to be "Listed"?
To be “listed” means a stock has been registered and approved for trading on an exchange. The most relevant companies will aim to be listed on a major exchange, such as the New York Stock Exchange (NYSE) or the NASDAQ. Who are Venture Capitalists? Should I Listen to Commentators on Financial News Programs? Continue reading...
What can I do to make my portfolio grow faster?
If your portfolio isn’t growing enough for your liking, you might need to take on more risk or change your active management company. The answer is surprisingly simple: find good managers, fill your portfolio with more risky assets, and rebalance it regularly. The last point has more of a long-term focus, since harvesting and redistributing the gains of successful investments may stunt the growth, but it could also prevent you from losing as much when the winners experience a corrective downturn. Continue reading...