Transfer In Cash

by ABC editor

If you have your investments with a financial institution and you want to transfer it to another financial institution then you need to ask the new institution to transfer your investments from the old company to the new company.  An example of this is moving from one online brokerage to another online brokerage that has […]

One of the key points to being a successful investor is to create an investment strategy (no matter how simple it might be) and stick to it.  Your strategy could involve something complicated like trading options or something simple like putting $100 into an index fund every month.  It can be difficult to stick to […]

I thought it would be nice to have a pleasant, non-investing-related theme today since normally this blog is all about investing – more specifically it’s a learn to invest blog for learning the basics of investing.  If this is your first time here then feel free to poke around – all the articles are nice […]

Dividend Yield

by ABC editor

Photo Credit mag3737 Check out the introductory post on dividends if you haven’t already done so. The term “dividend yield” or even just “yield” is commonly used when referring to the dividend of a stock or a stock index.  The dividend yield is the percentage which you get by dividing the annual dividend payments (total […]

Online brokerages are companies that allow you to set up an investment account with them and buy and sell investments.  The purpose of setting up one of these accounts is for someone who is a “do-it-yourself” investor and can buy investments without the help of an advisor.  An investor can have an advisor and still […]

The traditional IRA investment account is a retirement savings account which is fairly similar to the 401(k) plan in that all contributions are tax-deductible.  In other words, if you contribute money to a traditional IRA that you have already paid tax on, then the contribution will generate a tax rebate for you. Any earnings of […]


by ABC editor

Inflation is a measure of average price changes of goods and services over a period of time expressed as a percentage.  The statement “inflation was 3% last year” means that cost of living for the average person increased by 3% for that year. How is it measured? Inflation is usually measured using the [consumer price […]

The consumer price index is a measure of the average price of various goods and services consumed by households in America.  It is intended to represent the spending by the average city-dwelling American on a typical basket of goods and services. The CPI is similar to a stock market index in that the actual number […]

If you want to buy an ETF (exchange traded fund) or a stock online,  it is important to learn about market orders.  Unlike mutual funds, ETFs change their price throughout the day so you have to “trade” ETFs and place an order which will get the best price available at that time. Market order This […]

The taxable status of an investment account refers to the whether any income earned in the account is taxable at the time of earning.  For example if you have a 401k (non-taxable) and your investment earns an interest payment or dividend payment then there will be no taxes paid on that payment.  On the other […]

Certificates of deposit (CDs) are a guaranteed investment where you pay a set amount for the CD and the bank will guarantee you will get your original money (principal) back when the CD matures plus a fixed interest rate which will never change.  Because you are agreeing to leave the money with the bank for […]

Roth IRA accounts are a very useful retirement savings plan.  All contributions to these accounts are made with money that you have already paid income tax on. No tax benefit is generated from the contribution, but the withdrawals can be tax-free. All earnings of any type are not taxed within the account.  This means that […]

Check out the introductory post on dividends if you haven’t already done so. If you own a stock that pays a dividend then you want the dividend to increase over time.  A $4 dividend now will not be worth much in 15 years because of inflation, so ideally the dividend increases should at least match […]

Stock and ETF Symbols

by ABC editor

Stock symbols or ticker symbols are the codes you need to buy and sell stocks or exchange traded funds (ETFs).  If you want to make a purchase of an ETF or stock you would need to follow these steps.  This is assuming you already have a trading account and know the approximate name of the […]


by ABC editor

A recession is when your neighbor loses his job. A depression is when you lose your job. The technical definition of a recession is when the GDP (gross domestic product) of a country contracts for 2 or more consecutive quarters (3 month periods).  What this means is that general economic activity is decreasing.  Less people […]

The gross domestic product or GDP of a country is a measure of the amount of economic activity in that country. Economists study the GDP numbers which are calculated quarterly to determine  the state of the country’s economy.  If the economy is doing well then the GDP should increase.  If the economy is not doing […]

Chasing investment returns refers to the activity of switching from a poorly performing (or average performing) investment into one that has an excellent recent return.  There are a few problems with this investment strategy: “Hot” investments don’t usually stay hot.  In fact they usually come crashing back to earth shortly after you buy them. Investments […]

Treasury Inflation-Protected Securities (TIPS) are a type of government bond that provides protection against inflation along with twice a year interest payments. How do Treasury Inflation-Protected Securities (TIPS) work? Regular bonds pay interest on the principal amount of the bond which provides income for the bond owner.  TIPS are different in two ways: The principal […]

If you have kids then future educational expenses are something that should be planned for.  One investment tool for educational saving is called the 529 plan.  In this article we are only looking at the 529 savings account (not the pre-paid plan). 529 plans are investment accounts which have tax advantages if used for educational […]

Stock Exchanges

by ABC editor

A stock exchange is an institution where the shares of publicly traded companies listed on that  particular exchange are bought and sold between members (or brokers) belonging to the exchange. The biggest stock exchange in the world is the New York Stock Exchange (NYSE) which has a lot of the world’s largest publicly-traded companies such […]

An annuity is financial contract in which an investor pays a lump sum of money to an insurance company in return for a series of future payments.  These investments also enjoy some tax-deferred benefits. Fixed Annuities This is the more traditional type of annuity – the insurance guarantees a specific interest rate that you will […]

One of the first steps to financial planning is to set financial goals.  Goals are financial targets that you would like to achieve sometime in the future.  You can still improve your finances by saving money and investing carefully without any specific targets but it is a good idea to have a least some general […]

This post is the second post on asset allocation – feel free to read the introductory post on asset allocation to brush up. Non-correlation If you own investments that all go up or down in price at the same time (ie they are correlated), then you will experience large increases and decreases in your portfolio […]

Dollar cost averaging refers to making investment purchases at regular intervals of time.  The purpose is to average out the price (cost) of the investment by buying investment shares at different prices over time.  This strategy reduces the risk of making a large lump sum investment and then watching the market fall shortly after, which […]

Index Funds vs ETFs

by ABC editor

One question that often comes up when deciding on how to invest is the choice of investment vehicles.  If you want to buy low cost investments then index funds and exchange traded funds (ETFs) are the best choices. Most investors are better off with index funds for a number of reasons – however it really […]

Portfolio Rebalancing

by ABC editor

An important part of investing is to occasionally rebalance your investment portfolio.  In a previous post we talked about portfolio asset allocation.  Your portfolio will be made up of different asset classes such as stocks, bonds, cash etc and the amount of each is your asset allocation. Portfolio rebalancing is accomplished by occasionally resetting the […]

Many investments can pay dividends – stocks, mutual funds, index funds, exchange traded funds to name a few.  Owners of these investments have to make a choice as to what will happen to the dividends.  Dividends can be taken in cash or reinvested. Cash dividend option Dividends can be taken in cash which leads to […]

Market Capitalization

by ABC editor

Does a “market cap” sound like fashion wear to you?  If so, then make sure you read this post to the very end! Market capitalization or “Market cap” refers to the total market value of all the publicly traded shares of that company.  Basically you take the number of shares available for a company, multiply […]

Investment Time Horizon

by ABC editor

Your investment time horizon is the length of time until you need to sell your investment. This is an important concept when trying to decide what kind of investments you should have in your portfolio. An investor who doesn’t need their money for decades can own a riskier portfolio compared to someone who needs the […]

A bull market is basically a stock market index that is trending upwards for a decent length of time.  There is no exact definition for how much the market has to go up or how long the upward movement should last for a bull market to occur but usually when most investors are feeling “happy” […]

Timing The Market

by ABC editor

Timing the market or market timing occurs when an investor or fund manager makes a decision to buy or sell an investment in anticipation of that investment going up or down in value.  This can occur on a broad scale where a fund manager might alter the ratio of stocks to bonds in his fund […]

Investment diversification means that an investor should buy investments that are not concentrated into one company, industry, country or even asset class. You have undoubtedly heard the saying “Don’t put all your eggs in one basket”?  The same principle applies to investing – put your investments into different baskets.  If some of the baskets should […]

Asset Allocation

by ABC editor

Asset allocation refers to how much of any given asset class you have in your portfolio. An older investor might have a retirement asset allocation of mostly fixed income investments whereas a more aggressive investor might have most of their investments in stocks.  The basic asset classes of stocks, fixed income and good old hard […]

Investment Asset Classes

by ABC editor

An asset class is a grouping of similar investments whose prices tend to move together.  Asset classes can be defined on a very general level, such as stocks or on a more specific level, such as American silver producing companies. The concept of asset classes is important because one of the goals when building an […]

401(k) Retirement Plan

by ABC editor

A 401(k) plan is an investment account type designed to help you invest money for your retirement planning.  These plans are setup through your employer and the contributions will be deducted from your pay check. Any money you contribute to a 401(k) will not have income tax deducted from it, so the money inside a […]


by ABC editor

Investing is when you buy securities which will hopefully provide future income.  This income could be in the form of interest payments, stock dividends or capital gains (when you sell a security for more than you paid for it). These securities can take many forms: stocks, bonds, certificate of deposit (CDs), high interest savings accounts […]