- Stock and Bond Allocations by Age
Building a portfolio often involves adjusting stock and bond allocations by age to reflect changing financial goals and risk tolerance. While age is only one of several factors that drive asset allocation decisions, investors of a similar age frequently have portfolios that resemble each other in important ways. Younger investors typically hold a higher percentage… read more…
- Historical Annual Yield Comparison: Stock Index vs. Bonds
Historically, stocks have offered higher returns over the long term, but with greater volatility. Meanwhile, bonds have provided steadier, though typically lower, yields. Factors such as interest rates, inflation, economic growth and market sentiment all influence whether stocks or bonds outperform in a given year. Knowing how these variables have played out historically — especially… read more…
- Tracking Stock: What It Is, Pros and Cons, Examples
Tracking stock is a class of shares issued by a parent company to reflect the financial performance of a specific division or subsidiary, rather than the company as a whole. Unlike traditional common stock, which represents ownership in an entire corporation, tracking stocks allow investors to focus on particular business segments within the company. These… read more…
- Equities vs. Stocks: Is There a Difference?
The terms “equities” and “stocks” are often used interchangeably, but they carry slightly different meanings depending on the context. Stocks typically refer to shares of individual companies. Equities is a broader term that includes all types of ownership interest in publicly traded companies. These may also include ownership through mutual funds and exchange-traded funds (ETFs),… read more…
- Small-Cap Stocks vs. Large-Cap Stocks: Differences to Know
When building your investment portfolio, understanding the differences between small-cap stocks and large-cap stocks is essential. Market capitalization, or the total value of a company’s outstanding shares, separates small-cap from large-cap investments. Large-cap companies typically have market values exceeding $10 billion and include household names like Apple and Microsoft. Small-cap stocks, meanwhile refer to companies… read more…
- Class A Stock vs. Class B Stock: Differences and Examples
The distinction between Class A stock and Class B stock lies primarily in voting rights and ownership structure. Companies may issue multiple share classes to raise capital while keeping control. Each class can carry different privileges and influence. In many cases, class A shares carry more voting power than class B shares, but may be… read more…
- Bear vs. Bull in the Stock Market: What to Know
The terms “bear” and “bull” in the stock market describe two distinct trends that influence investor sentiment and market movement. A bull market is when stock prices are rising, often driven by optimism and strong economic indicators. In contrast, a bear market signals declining prices and widespread caution among investors. Recognizing the differences between these… read more…
- Paid-In Capital: Definition, Calculation and Where to Find
When companies issue stock to raise money, the funds they receive form part of their financial structure, categorized as paid-in capital. This is the total amount investors have contributed in exchange for equity. Unlike retained earnings, which accumulate from business operations over time, paid-in capital specifically tracks the money that shareholders have invested in the… read more…
- What Is a Quoted Price and What Does It Tell Investors?
A quoted price is the current market value at which a security, commodity or financial instrument can be bought or sold in real time. For investors, this figure acts as a snapshot of supply and demand dynamics, reflecting what buyers are willing to pay (bid price) and what sellers are asking (ask price) at any… read more…
- Should You Invest $100k in Stocks or Real Estate?
Choosing between investing $100,000 in stocks or real estate requires considering your priorities. Stocks provide liquidity, allowing quick access to funds. They also historically average around 10.5% annual returns, though they’re subject to market swings. Real estate offers tangible assets with potential rental income and tax advantages, but requires active management and time to sell.… read more…
- Net Tangible Assets: How to Calculate, Formula, Examples
Net tangible assets represent a company’s physical assets minus its liabilities and intangible assets. For investors, lenders and business owners, net tangible assets can offer a clearer picture of a company’s core value — namely, what would be left if all debts were paid and only tangible, sellable items remained. This can be helpful when… read more…
- Exchange Ratio: Formula and How to Calculate
When two companies undergo a merger or acquisition, shareholders of the acquired company often receive shares of the acquiring company instead of cash. The number of new shares is determined by the exchange ratio, a straightforward formula that compares the price offered per share of the target company to the current share price of the… read more…
- 14 Investing Strategies for High-Net-Worth Individuals
High-net-worth investing strategies are tailored for individuals with liquid assets typically exceeding $1 million. Financial advisors tend to handle these high-net-worth individuals (HNWIs) somewhat differently than other clients. Such investors may pursue opportunities like private equity, hedge funds, direct real estate and tax-advantaged municipal bonds, among others. They may receive more personalized services and may… read more…
- Tangible vs. Intangible Assets: Definition and Examples
Tangible and intangible assets represent two types of property that businesses and individuals own. Tangible assets have a physical presence and include real estate, machinery, or inventory. Their value is often tied to their condition and market demand. Intangible assets, on the other hand, lack a physical form but hold financial value. Examples of intangible… read more…
- Risk Capacity: What Is It and How Is It Measured?
Risk capacity refers to an individual’s financial ability to absorb investment losses without disrupting long-term goals. Objective factors, including income, assets, time horizon and liabilities, determine risk capacity. To measure your risk capacity, analyze key aspects of your finances to determine how much risk you can afford. A financial advisor can help you evaluate your… read more…
- Risk Capacity vs. Risk Tolerance: What’s the Difference?
The terms risk capacity and risk tolerance may appear similar at first. However, they reflect different aspects of an investor’s financial profile. Risk capacity refers to the objective ability to absorb losses based on income, assets, time horizon and financial goals. Risk tolerance, by contrast, measures a person’s subjective comfort level with market volatility and… read more…
- Trailing Stop Order: How to Use Them, Pros and Cons, Examples
A trailing stop order is a type of trade that helps you lock in profits or limit losses as a stock’s price moves. Unlike a traditional stop-loss orders, a trailing stop moves with the price, adjusting automatically if the stock goes up. If the price drops by a set amount or percentage, the order triggers… read more…
- How a Good ‘Til Cancelled (GTC) Order Works
A good ’til cancelled (GTC) order allows traders to buy or sell a security at a specified price, even if it takes days, weeks or months for the specified price to be reached. Unlike day orders that expire if unfilled by the end of a trading session, a GTC order typically remains active until executed… read more…
- Stop Loss Order: How It Works, Pros and Cons, Examples
A stop loss order is a trading tool that automatically sells a security if its price falls to a set level, helping investors limit losses without constantly monitoring the market. While it can protect against sudden drops, execution prices may vary in fast-moving markets. Different types of stop loss orders provide varying control over trade… read more…
- What Happens in a Short Run and How Can It Affect Investors?
The short run in economics refers to a period when at least one factor of production remains fixed, limiting a business’s ability to fully adjust to changes in demand or costs. For example, a factory may not be able to quickly increase machinery to boost production. While often discussed in relation to individual businesses, short-run… read more…
- Parent’s Guide on How to Invest in Stocks for a Teenager
Teaching your teen about investing in stocks helps build financial literacy and encourages smart money management. Learning these skills early can help them make informed decisions about spending and saving for the future. A financial advisor can provide guidance on beginner-friendly investment options and strategies to help teens develop good financial habits. Why Early Investing… read more…
- What Is Short Interest Ratio and How Do Investors Use It?
The short interest ratio helps traders and analysts understand market sentiment and potential price moves. It compares the number of shares sold short to the average daily trading volume. A high ratio means more investors are betting against the stock, which may push prices down or lead to a short squeeze if buying demand rises.… read more…
- How a Naked Call Options Strategy Works in Investing
A naked call is an advanced strategy where an investor sells call options without owning the asset. It can be profitable if the stock stays below the strike price but carries unlimited risk when the price rises. Given the complexity of options trading, consulting with a financial advisor can help you develop a strategy based… read more…
- Taxes on REITs vs. Dividend Stocks: What’s the Difference?
Investors seeking passive income often choose between real estate investment trusts (REITs) and dividend stocks, both of which provide regular payouts. However, their tax treatment differs and can impact overall returns. A financial advisor can explain the tax differences between REITs and dividend stocks and help you choose an option for your portfolio. Taxes on… read more…
- Which Investments Have the Least Liquidity?
Liquidity refers to how quickly and easily an asset can be converted into cash without significantly affecting its market price. While some investments, like stocks and bonds, are known for their high liquidity, others are not as easily tradable. Understanding which investments have the least liquidity is essential for making informed financial decisions, especially for… read more…