How to Measure Your Risk Tolerance
What is risk tolerance? In general How do you feel about taking risks? Take this short quiz: Do you put on the car brake when the traffic light turns yellow, or do you step on the gas? If you put on the brake, give yourself one point. If you step
Setting and Targeting Investment Goals
Go out into your yard and dig a big hole. Every month, throw $50 into it, but don’t take any money out until you’re ready to buy a house, send your child to college, or retire. It sounds a little crazy, doesn’t it? But that’s what investing without setting clear-cut goals is like. If you’re
Types of Bond Mutual Funds
Introduction A bond mutual fund invests in debt instruments issued by governments and/or corporations. Most of these funds are designed to provide interest income for shareholders in the form of dividends that represent the total interest payments made by all bonds in the fund’s portfolio. Unlike the individual bonds within a
Back to Basics: Diversification and Asset Allocation
When investing, particularly for long-term goals, there are two concepts you will likely hear about over and over again — diversification and asset allocation. Diversification helps limit exposure to loss in any one investment or one type of investment, while asset allocation provides a blueprint to help guide your investment decisions.
Understanding Commodity Indexes
What is a commodity index? Many commodity-related investment vehicles use commodity indexes as a proxy for the price movements of the various commodities. A broad-based commodity index includes multiple commodities; others may focus on a single commodity. An index may be based either on the spot market value of a commodity
Evaluating Bonds: An Introduction
Bonds: knowing what to expect Evaluating a bond purchase is very different from researching an individual stock. However, there are just as many factors to consider. Many bond investors rely on the regular income that interest paid by bonds can provide. If you’re one of these investors, it’s especially important to
Types of Stocks
Introduction There are many ways to classify stock: by the type of ownership they represent, by where they’re sold, by when the stock is issued, by size, by style, by how they are affected by business cycles, and by the location of the issuing company. Companies that offer shares of common
The ABCs of Mutual Fund Share Classes
When investing in a mutual fund, you may have the opportunity to choose among several share classes, most commonly Class A, Class B, and Class C. This multi-class structure offers you the opportunity to select a share class that is best suited to your investment goals. The only differences among these
Basic Strategies with Exchange-Traded Funds
Investing in a sector rather than an individual stock In some cases, you may believe in the future of a specific industry, but have concerns about investing in a single stock in a rapidly evolving field. If you’re interested in a sector but don’t want to commit your entire investment to
Growth vs. Value: What’s the Difference?
With the wide variety of stocks in the market, figuring out which ones you want to invest in can be a challenging task. Many investors feel it’s useful to have a system for finding stocks that might be worth buying, deciding what price to pay, and identifying when a stock should