An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock or bond, is a security. It is also a binding contract with strictly defined terms and properties.When you buy an option, you have a right but not an obligation to do something. You can always let the expiration date go by, (more…)
Money-market funds resemble savings accounts. For every dollar you put in, you get a dollar back, plus the interest your money earns from the investments the fund makes. Since these funds are usually price-stable, some investors prefer them to stock or bond funds. But the interest the funds pay is low when interest rates are low. In some cases, money-market funds let investors write checks against their accounts. There’s usually no charge for check-writing although there may be a per-check minimum.
Like bonds, open-end bond funds produce regular income. Unlike bonds, however, these funds have no maturity date and no guaranteed repayment of the amount invested. On the plus side though, the earnings can be reinvested in the fund to increase the principal. And buyers can invest a much smaller amount of money than they would need to buy a bond on their own and get a diversified portfolio to boot. For example, (more…)
Stock funds invest primarily in stocks. But stock fund portfolios vary, depending on the fund’s investment objectives. For example, some stock funds invest in well-established companies that pay regular dividends. Others invest in young, high-technology firms or companies that have been operating below expectation for several years.
Like individual investors, funds may buy blue-chip stocks for income and safety, growth stocks for future gains, value stocks for stability and growth, and cyclical stocks to take advantage of economic booms. For investors, the major difference in buying a fund rther than individual stocks is the diversity they can achieve for the same amount of money.
Mutual funds fall into three types or categories: they are the stock or equity funds, Bond funds and money-market funds.
A typical stock fund may own shares in 100 or more companies that provide a range of different products and services. A government-bond fund may own issues of dif different terms, paying varied rates. And a money-market fund stays liquid or cash rich, by owning very short-term debt.
Mutual funds are created by investments companies, brokerage houses, banks and other financial institutions. Here in the Philippines, banks called it UITF or unit-investment trust fund or formerly known as common trust fund. A company frequently offers a range of funds. In some cases, companies offer funds in more than one market or establish legal bases in more than one country to (more…)
If you want to earn higher than banks and bonds could offer but you’re not yet ready to take a plunge in the stock market, you might want to try investing in MUTUAL FUNDS. Most investment professionals agree that its smarter to own a variety of stocks and bonds than to gamble on the success of a few. But diversifying can be tough because buying a portfolio of individual stocks and bonds may be expensive. (more…)
