Q: What is a financial planner?

A: An investment professional who helps people set and achieve their goals. Goals may be life and financial in nature. Areas such as investing, tax planning, retirement planning, risk management, and portfolio asset allocation are evaluated during the financial-planning process..

 

 

Q: What is a Registered Investment Adviser (RIA)?

A: A financial advisor who is registered directly with the SEC or a state regulatory office. RIAs are the only advisers that have a legal obligation—a fiduciary obligation—to place their client's interests first.

 

 

Q: What is a registered representative?

A: An individual licensed to sell securities who usually works for a brokerage firm, often as an account executive. He or she does not have a fiduciary obligation to clients.

Q: What is a mutual fund?

A: A company that invests money for investors. Investors purchase shares in the fund and the manager of the fund invests the money according to the objectives set forth in the fund's prospectus.

 

 

Q: What is a no-load fund?

A: A mutual fund that does not charge a commission to purchase or sell shares.

 

 

Q: What is a balanced fund?

A: A mutual fund that buys both stocks and bonds. This type of fund provides both growth and income; it should also be less volatile in terms of share price than a pure growth fund.

 

 

Q: What is a growth fund?

A: A mutual fund that invests almost entirely in stocks. This type of fund aims for rapid capital appreciation; however, it is more volatile than many other types of investments.

 

 

Q: What is a value fund?

A: A mutual fund that invests in companies whose stocks are presumably undervalued. With its slower-growing, dividend-paying, lower-P/E-ratio stocks, its share price tends to be less volatile than growth funds.

Q: What is the Dow Jones Average?

A: Made up of 30 large industrial companies, this index is the most recognized stock index. It is a price-weighted average, meaning expensive stocks have more influence on the rise and fall of the index. There are actually 4 Dow indexes, but the industrial average is the most often quoted index.

 

 

Q: What is the S&P 500 Index?

A: The Standard and Poor's 500 is an index based on 500 of the largest stocks traded on Wall Street. The index is market-cap weighted (stock price multiplied by number of shares) and represents about 70% of the value of all U.S. equities. It is therefore more representative of the market than the Dow.

 

 

Q: What is the NASDAQ?

A: The NASDAQ is an electronic exchange that does not have a physical trading floor. It has about 3200 companies and trades more shares than any other exchange.

Q: What is the bond market?

A: It is the market for all types of bonds. Bonds are debt instruments, basically an instrument-paying loan that mature at a certain future date. The entire amount is repaid on the maturity date.

 

 

Q: What are high-yield bonds?

A: They are bonds that pay a high rate of interestbecause the company has a lower credit rating. Since their ability to make interest payments is based on the health of the company that issued it, their prices react more like stocks than other bonds. They're sometimes called junk bonds, depending on their ranking by credit agencies.

 

 

Q: What are TIPS?

A: Treasury inflation-protected securities are issued by the U.S. Treasury. They are similar to treasury bonds but have the additional feature of a coupon payment that adjusts their principal for inflation (up or down).