Managed Funds
Managed funds, or mutual funds as they are also called, are a great way for everyday people to get involved in the stock market. When you invest your money in a particular fund, you are pooling your money with that of other investors who otherwise would not have been able to invest directly in the stock market. There are fees with these funds that pay for the services of the fund manager.
Diversification
This is when you allocate your money to minimize risk rather than putting too many eggs in a few baskets. During the 2008 GFC there were stories of investors losing their life savings when a finance company went bankrupt. These people invested all their money in one company instead of spreading their money across different assets and types of investments, which is known as diversification.
Volatility
Volatility refers to the up and down movement of the markets; it is also applicable to investing in gold and cryptocurrencies.
Seasoned investors know that markets can be volatile during periods of uncertainty. Investors need to develop the right mindset during these times because the markets will take even the most savvy investor on a roller coaster ride.
risk profile
This relates to the amount of risk you are willing to accept before you start to get nervous about your investments. It’s easy to be a growth fund investor when markets are rising, but as experienced investors know, the stock market is volatile, so you should invest according to the amount of volatility you can tolerate.
average
Averaging is that strategy where you buy a small lot of shares regularly instead of a lump sum. This is possible with Internet trading applications. The upside is that with stock values going up and down, you’ve at least bought some shares at the lower price. Then find the average amount you paid for the stock, add up the total amount paid for the stock, and divide that number by the total number of transactions. This will give you the average amount per share. The average can also be used in the purchase of Bitcoin.
dividend
Companies pay dividends to shareholders. The dividend comes out of the company’s profits. Many investors like to reinvest the money they receive from dividends; others prefer to receive it as income. It all depends on whether one invests for income or long-term capital gains.
active
An asset is something that produces income for you. Examples of an asset are interest-bearing accounts, stocks, mutual/managed funds, property, etc.
Passive
A liability is something that costs you money. If you are paying for something, it is a liability. Items purchased from HP, a credit card, or a finance company are liabilities because they cost you money. Astute money managers have few responsibilities because they know that the interest to be paid on borrowed money is “dead money” because they don’t get anything tangible for their money.
Capital gains
Captain earnings are the increase in value of an investment, whether it be stocks, mutual/managed funds, property, gold, or cryptocurrencies.