Equities

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Equities

Equity investing is what most people think of when it comes to investing. It’s referred to as such, because when you are purchasing a share of stock, you are buying into the ownership of that company. Common stocks entitle shareholders a share in the company’s profits, which are paid out as dividends, and are usually given voting rights. They trade on national exchanges, the largest being the New York Stock Exchange and can be traded anytime the markets are open. Common stock investing typically yields higher returns in long-term investment strategies and is suitable for many investment portfolios.

Mutual Funds

With their ease of access and wide array of investment objectives, mutual funds can be a good place to start investing. Whether you would like to invest in the biggest U.S. companies, technology, real estate, or bonds, there’s a mutual fund to fit your investment interest. A mutual fund is a pool of money from investors that purchases stocks or bonds compatible with the fund’s investment objective. These securities are the fund’s portfolio, which is what a mutual fund buyer is purchasing. The fund’s portfolio is priced at the market close, when the value of securities is priced, and the Net Asset Value (NAV) is calculated. The investment objective is outlined in the fund’s prospectus, along with the different share class, and any fees or loads associated with the fund, and should be reviewed before investing.

Exchange Traded Funds

Much like mutual funds, Exchange Traded Funds (ETFs) are a managed pool of assets, but an EFT is designed to track the performance of a specific index, like the S&P 500; or a sector such as Healthcare or Energy. ETFs trade on a national exchange, so you can trade any time the market is open, just as any other publicly traded stock. One of the biggest differences, is how the funds are managed. While both are professionally managed, mutual funds are actively managed by a fund manager. An ETF is passively managed, since its goal is to track a specific index, this typically results in lower fund expenses. There are also no minimum investment levels, which creates an easier entry point for every investor.