What do ETFs Invest In?
ETFs invest in a wide array of securities, and which ones depends on the goal, strategy, or index that the ETF is built around. ETFs hold baskets of individual securities, of which investors can purchase an undivided interest in the form of ETF shares. ETFs can be a good option if you want quick diversification, and there is an increasingly diverse selection of ETFs on the market. Many investment companies have issued new ETFs in the last 10 years. One of the biggest issuers is Barclays - one of the largest investment banks in the world — through their ETF brand iShares. Continue reading...
What is FOREX?
Forex is the common name for the Foreign Exchange market, an international network of currency trading that is active 24/7. Forex is by far the most active and highest-volume market in the world, because it involves large trades between international institutions in an effort to diversify or consolidate their exposure to various currencies. Individual traders can also participate, usually by trading nano-lots, which are 100-unit increments of currency. Continue reading...
What does asset allocation mean?
At the highest level, Asset Allocation refers to an investor’s decision of what percentage to allocate to stocks, versus bonds, versus cash (and cash equivalents), versus any other asset class (commodities, alternatives, real estate, etc…). It is believed that the asset allocation decision is responsible for the majority of an investor’s returns. In other words, there is a direct correlation between an investor’s long-term return and how long - and to what percent - they owned stocks over their lifetime. Continue reading...
What are Household Expenses?
Household expenses are sometimes also called a family budget. In some cases this can be limited to items purchased such as food and clothing, and services paid for such as utility bills, which only have to do with the livability of the home and the health of the family. This can be extended to included all out of pocket expenses for a family, from health insurance to school tuition. Household expenses are things that people feel that they must pay for to maintain their standard of living, for themselves and their family. You may not have to pay for natural gas to get heat and hot water, but you most likely do, and this is a household expense. The same goes for food and other necessities. Continue reading...
What is an Investment Manager?
An investment manager’s job is to adhere to the guidelines set forth in a prospectus while directing the decision-making process for a pooled investment company such as a mutual fund. He must remain accountable to the shareholders and observe SEC regulations while attempting to generate the best returns possible. Investment managers direct the flow of assets and trading in an investment account, usually a pooled investment using the funds of various numbers of investors, while seeking to serve the best interests of the investors whom he serves. Continue reading...
What is a Mortgagee?
When a mortgage loan is made to a consumer, the bank or loan institution is the mortgagee, while the consumer is the mortgagor. Mortgages are long term loans secured by the real property of the individual borrowing the money, and they are generally used for homes, called home mortgages. The lending institution, which might be a bank or a mortgage company, is the mortgagee, lending money to the homebuyer, who is the mortgagor. Continue reading...
What is the Rising Flag (Bullish) Pattern?
The Rising Flag (or Bullish Flag) pattern looks like a flag with a mast. It forms when rising prices experience a consolidation period, and the price moves within a narrow range defined by the parallel lines through points (2, 4) and (3, 5). After the consolidation, the previous trend resumes. This type of formation happens when the price of a pair is expected to move in a rising trend line, but some volatility along the way creates a consolidation period. Continue reading...
What is the Glass-Steagall Act?
The Glass-Steagall Act was passed in 1933 to place a dividing wall between commercial banking and investment banking. It was in an effort to protect consumers and the economy from the risks of speculative investment banking. JP Morgan and other large institutions were targeted. The act was partially repealed and replaced in 1999 by the Gramm-Leach-Bliley Act. After 2008, some opined that the repeal of the original act contributed to the financial crises, and they instituted the Volcker Rule, which reinstated part of the original Glass-Steagall act. Continue reading...
What are Actively-Managed ETFs?
At their conception, ETFs only tracked indexes, but today there is also demand for actively-managed ETFs. ETFs tend to look a lot like passive index mutual funds, except that they can trade intra-day like stocks, while mutual funds only settle within 24 hours. In the last decade or so, there has been an increasing market for actively-managed ETFs as well. It is somewhat ironic that the popularity of actively-managed mutual funds has decreased while an abundance of actively-managed ETFs has appeared. The popularity of ETFs has grown enough for fund managers to attempt more and more things. Continue reading...
What is a Student Loan?
Expenses for tuition, room, and board at a secondary education institution can be loaned to a student and paid off over time in the form of a student loan. Tuition and other college expenses have inflated at a much faster rate than the rest of the consumer price index. These institutions can charge more and more as they experience student housing crunches and an ever-growing demand for college education. Continue reading...