Author: ArtErnst

What is gold (really)? You’ve probably seen or heard commercials hawking gold as if it is better or safer than money. It is not. In the distant past, gold had special importance when it was a universal medium of exchange and later…

What is meant by “chasing winners”? Chasing winners means buying securities with good recent performance. If a company’s stock price rose of late, you might believe demand for its products will continue to rise. If a mutual fund has outperformed its peers,…

What is back-testing? Back-testing is an analytical process in which historical data is used to determine the success or failure of a strategy. If a tested strategy generated good past results, one assumes it will do well in the future. For example,…

What is age-based asset allocation? Age-based asset allocation is an investment strategy in which your age determines your mix of stocks and bonds. When approaching and then entering retirement, you will supposedly need more income to offset lost wages and less future…

What is real estate? We’re familiar with houses, condominiums and other abodes as living options. As investments, you can buy other properties same as you’d buy a home, with deeds, mortgages, closing costs; the whole nine yards. You can also invest in…

What is a private placement? A privately placed security is one that does not get offered to the public when first issued. Private issues of stocks and bonds are usually offered to a limited number of large investors such as mutual funds…

What is an option? An option is a contract between two investors wherein one pays money to the other in exchange for the right to buy or sell something at a given price before a set date. A call option grants the…

What is a mutual fund wrap program? A mutual fund wrap program is a platform through which investors pay fees to gain easy access to a plethora of mutual funds. Not to be confused with a mutual fund platform providing free access…

What is a target date mutual fund? A target date mutual fund is an asset allocation fund in which the allocation changes over time. The date cited in the fund name refers to the time of the event for which you are…

What is a managed mutual fund? A managed mutual fund is one in which a decision-making process determines security selection. While index funds seek to mimic the returns of a particular index such as the Standard & Poor’s 500, a managed mutual…