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..
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 obligationa
fiduciary obligationto place their client's interests first.
is a registered representative?
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.
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.
is a no-load fund?
A: A mutual
fund that does not charge a commission to purchase or sell shares.
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.
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.
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.
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
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
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
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.
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.
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).
If a man does not know to what port
he is steering,
...no wind is favorable.
Lucius Annaeus Seneca
a.k.a. Seneca the Younger, 4 B.C. - 65 A.D.
Roman statesman, philosopher, and writer