Investment Funds

Question 1

Investment funds

Answer 1

pools of money from groups of investors invested in a variety of different stocks and bonds that make up each fund.
An investment fund is a supply of capital belonging to numerous investors used to collectively purchase securities while each investor retains ownership and control of his own shares.
An investment fund provides a broader selection of investment opportunities, greater management expertise, and lower investment fees than investors might be able to obtain on their own.
Types of investment funds include mutual funds, exchange-traded funds, money market funds, and hedge funds.

Question 2

Mutual Funds

Answer 2

Mutual funds are baskets of stocks or bonds. They come in all different shapes and sizes, from covering broad stock market indexes to focusing on specific sectors. Typically managed by a funds manager associated with a brokerage firm.
A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets.
Mutual funds are operated by professional money managers, who allocate the fund’s assets and attempt to produce capital gains or income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus.

Question 3

Mutual Funds Manager

Answer 3

Their job is to make decisions for the fund and set the fund objective. With a main goal of making money for the funds investor.

Question 4

Index Funds:

Answer 4

An index fund is a portfolio of stocks or bonds designed to mimic the composition and performance of a financial market index.
Index funds have lower expenses and fees than actively managed funds.

Index funds follow a passive investment strategy.

Index funds seek to match the risk and return of the market, on the theory that in the long-term, the market will outperform any single investment.
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An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor’s 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets.

Question 5

Total market index fund

Answer 5

invests your money in equal ratios across the entire stock market based on a total market index like the Wilshire 5000
total stock market index fund is a mutual fund or exchange-traded fund (ETF) that tracks an equity index such as the Russell 3000 Index, the S&P 500, or the Wilshire 5000 Total Market Index, as its benchmark. By investing in stocks linked to a given index, a total market index fund’s performance aims to mirror that of the index in question.

Question 6

Bond Fund

Answer 6

A bond fund, also referred to as a debt fund, invests primarily in bonds (government, corporate, municipal, convertible) and other debt instruments, like mortgage-backed securities (MBS), with the primary goal of generating monthly income for investors.

Bond funds provide instant diversification for investors for a low required minimum investment.

Due to the inverse relationship between interest rates and bond prices, a long-term bond has greater interest rate risk than a short-term bond.

Question 7

Exchange rated funds etfs

Answer 7

An exchange traded fund (ETF) is a basket of securities that trade on an exchange, just like a stock.
ETF share prices fluctuate all day as the ETF is bought and sold; this is different from mutual funds that only trade once a day after the market closes.2


ETFs can contain all types of investments including stocks, commodities, or bonds; some offer U.S. only holdings, while others are international.
ETFs offer low expense ratios and fewer broker commissions than buying the stocks individually.

work similarly to index funds, usually passively managed, set up to mimic a particular index,

unlike index funds and mutual funds that traded at the end of the day at the markets closing price. They are traded like individual stocks, they can be actively traded, throughout the day at whatever the current market price is.
For experienced this can be advantageous to take advantage of the price changes throughout the day. Potential of high short term gains, high risk involved, lower expense ratios. Brokerage may charge fees, some are doing away with

Question 8

REITS

Answer 8

Real estate investment trusts, companies that invest in real estates. Invest in income producing real estate across different sector like, shopping malls, retail spaces, hotels, industrial, resorts, technology and data centers, hospitals, storage facilities, farms…

Way to invest in real estate without having to physically purchase property or deal with property management. I

Investors can earn a share of income made from the real estate investments in the form of dividends.

Real estate investment trusts (REITs) are companies that own and operate real estate to produce and generate income.
Investors can purchase shares in REITs—which represent ownership of an individual real estate company—just like regular stocks.
The individual performance of REITs can vary widely.

Many REITs are traded on major stock exchanges, but there are also a number of private and non-publicly traded REITs.

Question 9

ETFS, index funds , are almost always cheaper and

Answer 9

ETFS, index funds , are almost always cheaper and more tax efficient than managed mutual funds. Recommend index and etfs, depending on investment goals.

Question 10

Vanguard total stock market index fund= vtsax

Answer 10

highly diversified and provides investors exposure across the entire us stock market over 3500 stocks. Expenses, 0.04 percent, 4 dollars for ever 10,000 invested in 2019. Average return since 2001 7.17 per as of 2019.

Question 11

Vanguard 500 index fund: =vfiax,

Answer 11

invests in stocks in the s&p 500 index100 index a large cap index it represents 500 of the largest U.S. companies and is considered a good gauge of overall U.S. stock returns expenses are 0.04% that is $4 for every $10,000 invested as of 2019 its average annual return since inception in 2010 is 6.73 sent as of 2019.

Question 12

Vanguard real estate index fund symbol VGSLX

Answer 12

this fund invests in real estate investment trusts reit’s companies that purchase office buildings hotels and other real estate property expenses are 0.12% that is $12.00 for every $10,000 invested as of 2019, its average annual return since inception in 2001 is 10.65% as of 2019

Question 13

Fidelity 0 total market index fund symbol SCROX

Answer 13

this fund is highly diversified and provides investors exposure across the entire U.S. stock market. Expenses are 0% as a 2019, its average annual return since inception in 2018 is 11.05% As of 2019

Question 14

Fidelity S&P 500 index fund symbol FXAIX

Answer 14

this fund invests in stocks S&P 500 index large cap expenses are 0.015% that is $1.15 for every $10,000 invested as of 2019 its average annual return since inception in 2018 is 10.50% as of 2019

Question 15

Fidelity real estate index fund symbol FSRNX

Answer 15

this fund invests in a variety of reads across various real estate sectors expenses are 0.07% that is $7.00 for every $10,000 invested as of 2019 its average annual return since inception in 2018 is 9.93% as of 2019

Question 16

Schwab total stock index market fund symbol SWTSX

Answer 16

this fund is highly diversified and provides investors exposure across the entire U.S. stock market expenses are 0.03% that is $3 for every $10,000 invested as of 2019 its average annual return since inception in 2011 is 6.97% as of 2019

Question 17

Schwab S&P 500 index fund symbol SWPP X

Answer 17

this fund invests in stocks in the S&P 500 index large cap it represents 500 of the largest U.S. companies and is considered a good gauge of overall U.S. stock returns expenses are 0.02% that is $2.00 for every $10,000 invested as of 2019 its average annual return since inception in 1997 is 8.1% as of 2019

Question 18

Before you decide to make an investment, here are five key things you should be looking for that will help you get a good sense of the level of risk associated with each investment and help you make good investing decisions based on your goals and comfort level

Answer 18

1. the company or funds financial situation and plans
2. the company or funds historical performance
3. the company or fund’s main objectives and future projections are performance
4. any associated expenses and or fees
5. other considerations like the companies or funds leadership track records and media mentions.

Question 19

1. the company or funds financial situation and plans

Answer 19

the company or fund’s financial situation and plans any company that issues publicly traded stock is required to issue an annual report to its shareholders.

these reports include information on the company’s financial state such as its balance sheet details of its assets liabilities profits losses and available capital, it’s revenue and expenses, it’s short and long term objectives and plans for growth, its strategy for navigating competition, and more firms are also required to provide an annual report to their shareholders that discloses how the fund is being operated its main goals, and its financial state these annual reports are available publicly and can be found in the company or funds website or with a quick Google search.
The us Securities and Exchange Commission website sec.gov also allows you to access the annual report filings for pretty much any company that’s publicly available reviewing a company or funds annual reports.

Question 20

2. the company or funds historical performance

Answer 20

the company or funds historical local performance looking at historical trends can provide you with important information on how a stock or fund has performed year over year
essentially you want to make sure the investment is consistently performing well on average while taking historically economic climates into consideration
for example the 2008 stock market crash had a hard impact on almost all investments but some fared better than others.

Question 21

3. the company or fund’s main objectives and future projections are performance

Answer 21

the company are funds main objectives and future projections of performance.

As mentioned, annual reports are usually available in the company or funds website

some key things to lookout for when viewing an annual report in terms of future projections are what their plans for growth are

for example the new product’s expanding to new markets acquisitions how their plans will make them profitable how they’re managing competition.

Question 22

4. any associated expenses and or fees

Answer 22

expenses and fees, before you invest

it’s important to understand what fees are associated with the investment that’s because fees can eat into your overall returns especially if the fees are based on the percentage of your investment.
Vanguard index funds are some of the most popular in the investing world because of their low fees essentially mean more profits for you as an investor in today’s world with high competition among brokerages and new age investing avenues through robbo advisors and the like many brokerages are no longer charging certain fees on many of their investment offering.

Question 23

5. other considerations like the companies or funds leadership track records and media mentions.

Answer 23

other considerations for example leadership track records and media mentions. When you do your research it could also help to consider things like track records and media mentions looking at the track record of a company CEO or the track record of a mutual fund manager can provide you with additional insights a quick Google search or LinkedIn profile visit can tell you about their educational background an investment experience which is very important given that they are managing millions and even billions of dollars of other people’s hard earned money yours included you also want to keep an eye on what’s being mentioned in the news when it comes to the company or fund you are interested in and this could also provide you with valuable insights as you make your investment decisions.

Question 24

Brokerage account fees

Answer 24

this fee type includes things like annual fees to maintain your accounts and subscriptions for premium account features
A brokerage fee is a fee charged by a broker to execute transactions or provide specialized services.
Brokerage fees are based on a percentage of the transaction, as a flat fee, or a hybrid of the two and vary according to the industry and type of broker.
The three main types of financial securities industry brokers that charge brokerage fees are full-service, discount, and online.

Question 25

Trade commissions

Answer 25

this is the Commission charged when you buy or sell certain investments like stocks or bonds.

Question 26

Mutual fund transaction

Answer 26

fees this fee is charged when you buy and or sell some mutual funds
Expense ratios this is an annual fee charged by different fund types not applicable to stocks which is a percentage of your investment in the fund. Index funds and ETF’s usually have the lowest expense ratios.
A mutual fund will classify expenses into either annual operating fees or shareholder fees. Annual fund operating fees are an annual percentage of the funds under management, usually ranging from 1–3%. Annual operating fees are collectively known as the expense ratio. A fund’s expense ratio is the summation of the advisory or management fee and its administrative costs.

Question 27

Sales fund

Answer 27

this is a sales charge or Commission and some mutual funds paid to the broker or salesperson who sold the fund

Question 28

Management or advisory

Answer 28

fees typically a percentage of your investment that is paid to financial advisor or robo advisor 401K 43B and 459 B fees these are administrative fees to maintain your retirement accounts often passed on to the plan participants by the employer

Question 29

Earnings per share

Answer 29

EPS is one way to trap growth overtime it measures a company’s profit divided by the number of shares available for trading basically EPS tells you how profitable each year of a company is.

Question 30

Price to earnings ratio PE ratio

Answer 30

is it the ratio of a company’s stock price of the company’s earnings per share the ratio is used in valuing companies this divides the stock share price by the amount of earnings it has distributed in the last 12 months per share a high price earnings ratio indicates that investors are expecting more growth in the future because different industries have different prospects for growth this indicator is mainly useful when comparing companies within the same industry

Question 31

Price book ratio

Answer 31

this is a financial ratio used to computer companies current market price to its value as entered in the companies books this racial divides the stock share price by the total value of all the companies assets minus liabilities per share if the price book ratio is low the shares may be undervalued

Question 32

52 week high low

Answer 32

this represents the highest and lowest prices at which the stock has traded in the past year.

Question 33

Full Service Broker

Answer 33

A full-service broker is a licensed financial broker-dealer firm that provides a large variety of services to its clients, including research and advice, retirement planning, tax tips, and much more.

Of course, this all comes at a price, as commissions at full-service brokerages are much higher than those at discount brokers.

Additional services can include portfolio analysis and construction, estate planning, tax advice, access to IPO shares, access to foreign markets, and so on.

Question 34

Stockbroker

Answer 34

Stockbrokers are licensed professionals who manage client investments and administer financial advice to clients, and they are required to pass the Series 7, Series 63 and Series 65 exams to attain licensing.

Brokers working at financial firms also need to be registered with the Financial Industry Regulatory Authority (FINRA). Licensed stock brokers are expected to be fluent in stocks, bonds, and options.

Question 35

Stockbroker vs Financial Advisor

Answer 35

Stockbrokers are more geared towards providing securities products and transaction-based services, whereas financial advisors cover a broader range of services that include estate planning, financial planning and budgeting, insurance products and even tax advice.

Question 36

Discount Broker

Answer 36

A discount broker is a stockbroker who carries out buy and sell orders at reduced commission rates compared a full-service broker.
However, a discount broker does not provide investment advice or perform analysis on a client’s behalf, unlike a full-service broker. Before the emergence of better communications technology, only the wealthy could afford a broker and access to the stock market.Discount brokers carry out orders at less cost, but they typically just execute orders for their clients. These brokers do not offer personal consultations, advice, research, tax planning, and estate planning services for customers.

Question 37

Robo Advisor

Answer 37

In 2014, Betterment launched the world’s first robo-advisor with the aim of serving ordinary individuals who did not have enough assets to interest a skilled financial advisor, many of whom still require an account minimum of five- to six-figures and who charge 1% or more each year in assets under management (AUM). Robo-advisors are able to automate investing strategies that optimize the ideal asset class weights in a portfolio for a given risk preference.

Financial advisors are often more than investment managers—they are communicators, educators, planners, and coaches to their clients.

Some traditional advisors are now offering robo-advisors-as-a-service as part of the portfolio construction and investment monitoring side of a more holistic financial planning practice
On the technology side, the use of algorithmic trading, mobile apps, and digital signatures meant that the account-opening process no longer required reams of paperwork to be signed and that computers could execute trades without error and monitor portfolios continuously—something that financial advisors could never be able to do for more than a handful of accounts at a time.