3/1/2024 0 Comments Basic stock lingoMargin is basically using borrowed money to invest. When you open a brokerage account to invest, you will have to choose whether you want a cash or margin account. The market cap can be calculated by multiplying the company’s current share price by the number of shares outstanding. You can open an IRA as soon as you turn 18, but you may not have access to every type of IRA immediately.Ī company’s market cap is the cumulative value of all of its outstanding shares. Since these types of funds are passively managed, the fees will be lower than investing in a typical mutual fund.Īn IRA is a type of retirement account that comes in various formats and offers a tax advantage for retirement savings. For example, if you are invested in a Nasdaq-100 index fund, and the Nasdaq-100 goes up, so will the value of your index fund. Some of the most well-known indexes include the Nasdaq-100, Nasdaq composite, S&P 500, and Dow Jones Industrial Average.Īn index fund is a mutual fund that is made up of assets in a way that mirrors a certain index. Unlike mutual funds, not everyone can invest in hedge funds to be considered, you generally need to earn a minimum annual paycheck of $200,000+.Īn index measures the performance of a group of assets, such as stocks, bonds, and more. The difference between mutual funds and hedge funds is that hedge fund portfolio managers are part of a firm (limited partnership or LLC) and raise money from investors, which they then manage and invest across different assets. But buying a share of an ETF gives you some ownership to a fund of different assets, while buying a share of stocks gives you some ownership to individual companies.Ī hedge fund, like a mutual fund, is an investment vehicle that uses pooled funds to generate returns. The metrics are believed to represent the company’s core earnings.Īs an investor, you can buy and sell shares of ETFs just as you do with stocks. “Earnings Before Interest & Taxes” (EBIT) and “Earnings Before Interest, Taxes, Depreciation & Amortization” (EBITDA) are two commonly-used metrics that represent a company’s profits excluding certain costs. Depending on the company, dividends may be a one-time payment, may be sent periodically (i.e., every month, quarter, half-year, or year), or may not be paid out at all. Some companies pay out a portion of their income to shareholders, which is called a dividend. A capital loss works in a similar way – if you bought a share of stock for $500 and sold at $200, your capital loss would be $300. For example, if you bought a share of a stock for $500, and then sold it at $900, you would have made a capital gain of $400. If you think the market is going to rise, you’d be considered a “bull.” If you believe an individual stock will go up, you’d be “bullish” on the stock.Ī capital gain is a profit or return on an investment. Additionally, they will pay interest periodically to the bond buyer based on a rate called the coupon rate.Ī bull market is one that is rising or trending higher. When they issue the bond, they promise to repay a principal amount, which is the amount of money they are borrowing, in the future on a maturity date. Generally speaking, the bond issuer or seller is a government body or a corporation. In the case of a bond, the buyer is the lender, and the seller is the borrower. If you think the market is going to drop, you’d be considered a “bear.” This description can also be applied to individual stocks you believe will fall, in which case you’d be “bearish” on the stock.Ī bond is similar to a loan with some key differences. This can happen during times of recession or public crisis and can last anywhere from weeks to years. The “Ask” is the lowest price a seller is willing to accept for an asset.Ī bear market is one that is falling or trending lower. The “Bid” represents the highest price a buyer is willing to offer and pay for an asset. Asset prices are sometimes given in a “Bid/Ask” format.
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