Posts Tagged ‘investing terms’

Fund Vocabulary. Demystifying important investing terms

Posted October 11, 2008 by Bernz

Now that you’re familiar with mutual funds, you’ll want to get comfortable with some of the common terms used when dealing with them.

As a reminder, a mutual fund is a large compilation of individual stocks.

Stocks – Shares a company sells to fund future business growth. When you purchase a share of stock, you own a fraction of the company.

Diversification – Different kinds of stocks: growth and value, as well as stock representing large, small, and mid caps.

Money manager/portfolio manager – A person or team of people who decide what stock to purchase, sell, and hold.

Index funds –Funds not managed by a financial professional. Instead these funds track existing marketing indexes such as the Dow Jones Industrial Average and Standard & Poors 500 Stock Index. Note: Index funds traditionally out-perform managed mutual funds because investors don’t have to pay fees and other costs that reduce earnings.

The Dow Jones Index – An index composed of thirty stocks.

Standard & Poors Index – is made up of 500 stocks of big companies

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