In the U.S., the first mutual fund was created in 1924 when three investors in Boston pooled their money and formed the Massachusetts Investors’ Trust. The essence behind Mutual Funds today is the same – a pool of money is collected from a number of investors and then professionally managed.
The investors are distributed the gains or losses of a portfolio purchased with their capital. The fund might consist of individual stocks, bonds, and even other mutual funds. A mutual fund is technically a company whose only assets are the securities it holds, and investors who purchase shares of the mutual fund will participate in the gains and losses of the entire portfolio held by the mutual fund.
Gains and losses in a mutual fund portfolio must be passed on to the individual investors every year, since the mutual fund is a pass-through entity. Mutual Funds are often attractive because they provide more diversification than most investors are able to get on their own.
Most investors simply cannot purchase shares of 1,000 different stocks, especially if it is meant to gain exposure to a certain sector or asset class that takes expertise to navigate. Funds can accomplish this through active management or index investing that focuses on certain sectors, regions, and so on.
A loss refers to reduction in the value of an investment, or in business terms, to having expenses outweigh revenues
‘Buy to Cover’ is a term that applies when an investor buys shares of a security that they had previously sold short
Investing in a private placement opportunity is done off-exchange, and usually involves a small number of investors
Dollar cost averaging (DCA) is a method of hedging against the risk of investing a lump sum at high market prices
Net income is the amount of earnings left over once expenses have been deducted from sale. In short, it's net profit/loss
Operating expenses are the costs a company incurs as a part of everyday business operations
Account activity is any credit or debit activity in a checking or savings account, or dividends in an investment account
Also called net operating margin, return on sales can indicate how well a company makes use of its sales revenue
The Falling Flag (or Bearish Flag) pattern looks like a flag with the mast turned upside down (the mast points up)
Once you are age 59½, you may begin to make penalty-free withdrawals and only pay income taxes on the amount you withdraw