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ETFs & Portfolio
Funds, diversification, allocation, income and rebalancing.
- AlphaA fund's return above what its level of risk would explain.
- Asset allocationHow a portfolio is divided between stocks, bonds, cash and other assets.
- BetaHow much a stock tends to move compared with the overall market.
- CompoundingEarning returns on your earlier returns, so growth speeds up over time.
- DiversificationSpreading money across different assets so no single holding can sink the portfolio.
- DividendA payment a company makes to shareholders out of its profits.
- Dividend aristocratA company in the S&P 500 that has raised its dividend every year for at least 25 years.
- Dividend yieldThe annual dividend divided by the share price.
- Dollar-cost averaging (DCA)Investing a fixed amount at regular intervals, regardless of price.
- DRIP (Dividend Reinvestment Plan)A plan that automatically uses dividends to buy more shares of the same stock.
- ETF (Exchange-Traded Fund)A fund that holds a basket of assets and trades on an exchange like a stock.
- Ex-dividend dateThe first day a stock trades without its upcoming dividend attached.
- Expense ratioThe yearly fee a fund charges, as a percentage of your investment.
- Index fundA fund that tracks a market index instead of trying to beat it.
- Inverse ETFA fund designed to move opposite to an index, usually over a single day.
- Leveraged ETFA fund that aims to deliver a multiple, such as 2x or 3x, of an index's daily return.
- Mutual fundA pooled fund priced once per day after the market closes.
- NAV (Net Asset Value)The per-share value of a fund's holdings.
- RebalancingAdjusting a portfolio back to its target mix after market moves have shifted it.
- REIT (Real Estate Investment Trust)A company that owns income-producing real estate and pays most of its income to shareholders.
- Risk toleranceHow much loss you can accept, financially and emotionally, without abandoning your plan.
- Total returnThe full gain on an investment: price change plus dividends or interest.
- Wash sale rule (US)A US tax rule that disallows a loss if you buy the same or a substantially identical security within 30 days before or after the sale.
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