15 Financial Terms You Ought to Know

Finances

Defining the financial jargon you ought to know.

Prior to committing to any form of investment, it is common to come across some financial jargon that you may not be familiar with while doing your share of research. In order to ensure that your research is effective, it is essential to dig deeper and unravel what some of these commonly used financial terms actually mean before diving straight into the investment scene.

For first-time investors, investing may altogether seem like an intimidating feat. To reassure you that this is not at all the case, we have compiled a list of some of the most commonly used financial terms that every investor ought to know. Getting to know these financial buzzwords is probably the first step you need to take in order to conquer the financial jargon.

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Top 5 Ways to Invest with $5000

Investing

The myriad of investment possibilities that $5000 can offer.

The possibilities that $5000 can offer are boundless. While it may be considered as an easily exhaustible sum of money for some, to others, it can be a substantial amount that can greatly ease off their financial load. To determine the worth of $5000, it all eventually boils down to one’s personal objectives and goals.

The power of $5000 is definitely subjective. But when it comes to investing, what can $5000 actually offer? To many, investing may altogether seem like an intimidating issue that can easily burn out one’s finances. Based on the common assumption that huge lump sums of money are constantly expected for fueling all forms of investments, $5000 may even be considered as a meagre amount that can’t provide much growth for one’s portfolio.

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Exchange-Traded Funds – Mutual Funds 2.0

Investing

mutual funds

Are Exchange-Traded Funds the new and improved mutual funds?

As we have shared previously, mutual funds are a form of investment where numerous individual investors contribute to a pool of funds professionally managed by a fund manager. This collective amount will be used to fuel a portfolio of investments managed and diversified by the fund manager in hope of positive returns.

Similar in many aspects, an exchange-traded fund (ETF) is a form of investment fund that trades on stock exchanges. Just like mutual funds, buying ETFs grants you access to a portfolio of diversified assets including stocks, bonds, commodities, options, funds and currencies. ETFs however offer the ease of trading your shares throughout the day with no minimum deposit requirement. They are very much like stocks, but offer a more efficient package where you are allowed to dabble in virtually everything in the market without having to pay a hefty sum of amount otherwise required.

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Value Investing Versus Growth Investing

Investing

growth investing

Performance, Safety and Premiums don’t have to be mutually exclusive. 

The debate between both camps got kicked off a long time ago, ever since the “Father of Value Investing” and “Dean of Wall Street” Benjamin Graham author the books that formed the foundation of the theory. Security Analysis and The Intelligent Investor carved out the border between “Value” and “Growth” investments.

In it’s simplest form, investing for value means to purchase stocks and such at low prices, searching out mispriced stocks in the marketplace – companies going through periods of difficulty often have depressed stocks, and riding their recovery will reach price objectives faster. Whereas growth investors tend to look at companies or mutual funds that exhibit faster-than-average increases in prices, due to their latent and inherent potential.

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Back to the Basics – Mutual Funds

Investing

The Good, The Hype, The Bad, The Ugly.

The independent investment research firm Morningstar discovered not too long ago that: out of the 7,700 mutual funds it tracks, a mere 910 (12%) of them had a personal investment by one of their fund managers of at least $1 million. If this sum was considered far too big, only 50% of fund managers actually invest in their own fund. Why are the professionals shying away from their own cooking?

As more mutual funds of all shapes and sizes dabble in a dizzying range of markets and products, even the most experienced of investors should occasionally take a step back to take a long, hard look at the very basics. We tear it down to the bare basics to examine mutual funds, through the eyes of a newcomer.

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