How Are Mutual Funds Taxed? Many people have heard the Benjamin Franklin quote, “In this world nothing is certain but death and taxes.” Mutual fund taxes can be onerous. However, if you understand the complexities of mutual fund taxes and are prepared when tax season comes around, you may be able to lessen the blow.
What Is Stock? Most people know something about the stock market, but many investors who see stock as a way to get rich quick might not understand exactly what stock is and how it works. Before jumping feet-first into investing in stocks, it is important to understand some of the basics and the risks involved
Zero-Coupon Bonds Zero-coupon bonds (“zeros”) represent a type of bond that does not pay interest during the life of the bond. Instead, investors buy these bonds at a steep discount from the “face value” (the amount a bond will be worth when it matures). When the bond matures, investors will receive single payments equal to
What Is Diversification? Virtually every investment has some type of risk associated with it. The stock market rises and falls. An increase in interest rates can cause a decline in the bond market. No matter what you decide to invest in, risk is something you must consider. One key to successful investing is managing risk
What Types of Bonds Are Available? Bonds are issued by federal, state, and local governments; agencies of the U.S. government; and corporations. There are three basic types of bonds: U.S. Treasury, municipal, and corporate. Treasury Securities Bonds, bills, and note issued by the U.S. government are generally called “Treasuries” and are the highest-quality securities available.
What Is a Bond? When you invest in bonds, you are investing in the debt of a government entity or a corporation. A bond is simply evidence of a debt and represents a long-term IOU. Bonds are issued by federal, state, and local governments; agencies of the U.S. government; and corporations. By selling debt with
What Do Bond Ratings Mean? Bond ratings gauge a bond issuer’s financial ability to repay its promised principal and interest payments. Ratings are based on an analysis of the issuer’s financial condition and creditworthiness. In essence, the higher the rating, the more likely it is that a bondholder will receive his or her principal again
What Is a Stock Index? In 1884, Charles Henry Dow averaged the closing prices of 11 stocks he considered representative of the strength of the U.S. economy in a paper that preceded The Wall Street Journal. By 1896, The Wall Street Journal was publishing this average on a regular basis, and the most famous indicator
How Do Mutual Funds and Stocks Differ? Whether you’re a first-time stock investor or a seasoned veteran, you should understand what differentiates single stock investments from mutual fund investing. First, Some Working Definitions Picture a collection of stocks, bonds, or other securities that are purchased by a group of investors and then managed by an
What Is a Mutual Fund? Since the creation of the first modern-day mutual fund, the Massachusetts Investors Trust, in 1924, there has been a steady growth of mutual funds. Today there are about 7,800 mutual funds.1 Because of their convenience and flexibility, you might want to consider including mutual funds in your investment portfolio. A
