Welcome back to the third installment of our investment lexicon series. In part one, we delved into the concept of financial markets and their vast reach. Then, in part two, we dove into the intricate world of the U.S. stock market, from what it is to how to approach investing in it. Today, we’re going to explore the exciting world of stock market participation by discussing the creation and management of your investment portfolio.
Breaking Down a Portfolio:
Your investments need a home, and a portfolio is where they live. It’s the place where you house and manage your securities, including stocks, bonds, cash, real estate, commodities, mutual funds, ETFs, and more. Your portfolio is where you personalize your investments to fit your unique needs. It allows you to acquire, sell, and manage your assets, all customized to your financial comfort.
An Overview of Securities:
Securities represent something with financial value that is bought or sold. These include stocks, bonds, ETFs, and mutual funds – tools companies use to raise money. Speaking of which, securities fall into two categories: equity and debt. Equity securities give you ownership rights, while debt securities represent borrowed money.
What is Stock?
Stock is an investment that signifies ownership of a company. Think of it as purchasing a piece of that company in hopes of supporting its growth and eventually making a profit when the shares are sold.
What is a Bond?
A bond is a type of debt security that feels like a structured loan, in which you loan money to a corporation or government in exchange for the promise of repayment with interest.
What is a Mutual Fund?
Mutual funds are a great way for multiple investors to pool their money to invest in a mix of securities like stocks and bonds, while being managed by a professional.
What is an Index Fund?
An index fund is a type of mutual fund that accurately reflects larger market indices, providing broad market exposure while keeping costs low.
Fees to Learn:
Different types of investing usually come with associated fees, including expense ratios and other costs that impact your net returns.
The Bottom Line:
Empower your investment strategy by understanding the different elements of your portfolio. If you have questions or wish to tailor your strategy, don’t hesitate to reach out for assistance.
Disclosure: Abacus Wealth Partners, LLC (Abacus) is an SEC registered investment adviser with its principal place of business in the State of California. For full terms and conditions, visit our website.
This is not an offer to sell any type of security, and there is no investment currently available through Abacus. This article contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. Information was based on sources we deem to be reliable, but we make no representations as to its accuracy. Past performance is no guarantee of future results. Investing involves gains and losses and may not be suitable for all. Information presented herein is subject to change without notice. For additional information about Abacus, including fees and services, visit our website. Please read all information carefully before investing or sending money.
