Month: July 2014

What Are Certificates of Deposit (CDs)?

A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years, and in exchange, the issuing bank pays interest. When you cash in or redeem your CD, you receive the money you originally invested plus […]
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What Are Bonds?

A bond is a debt security, similar to an IOU. Borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time. When you buy a bond, you are lending to the issuer, which may be a government, municipality, or corporation. In return, the issuer promises to pay […]
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What Are Exchange-Traded Funds (ETFs)?

What are Exchange-Traded Funds (ETFs)? This summary discusses only Exchange-Traded Funds (ETFs) that are registered as open-end investment companies or unit investment trusts under the Investment Company Act of 1940 (the “1940 Act”).  It does not address other types of exchange-traded products that are not registered under the 1940 Act, such as exchange-traded commodity funds or exchange-traded […]
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What are Real Estate Investment Trusts? (REITs)

What are Real Estate Investment Trusts (REITs)? Real estate investment trusts (REITs) allow individuals to invest in large-scale, income-producing real estate. A REIT is a company that owns and typically operates income-producing real estate or related assets. These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans. Unlike other […]
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What Are Money Market Funds?

Money market funds are a type of mutual fund developed in the 1970s as an option for investors to purchase a pool of securities that generally provided higher returns than interest-bearing bank accounts. They have since grown significantly and currently hold more than $2.9 trillion in assets, the majority of which is in institutional funds. […]
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What Are Mutual Funds?

A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio. Investors buy shares in mutual funds. Each share represents an investor’s part ownership in the fund and the […]
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What Are Stocks?

What are stocks? Stocks are a type of security that gives stockholders a share of ownership in a company. Stocks also are called “equities.” Why do people buy stocks? Investors buy stocks for various reasons. Here are some of them: Capital appreciation, which occurs when a stock rises in price Dividend payments, which come when […]
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