Think of the NYSE (New York Stock Exchange) as a marketplace where stocks are traded. The Dow Jones Industrial Average (sometimes referred to as the Dow or DJIA) is one of many stock market indexes that are used to track the performance of the stock market.
Within the thousands of stocks that are actively traded and tracked, the Dow tracks 30 specific large U.S. company stocks on a daily basis. It was originally established in 1896 and has been providing …
Fixed annuities are similar to bank certificates of deposit (CDs) in that they earn a guaranteed interest rate for a set period of time. Two major differences are that fixed annuities are tax deferred and often provide a higher return than bank CDs. Yes, you can roll over or exchange a fixed annuity for a new annuity. Check to make sure that surrender charges don’t apply, however. Typically, a minimum deposit of at least $5,000 will be required. Investment experts …
IRAs were established by legislation passed in 1974. Traditional individual retirement accounts (IRAs) first became available in 1975. Anyone with earned income can make the maximum traditional IRA contribution as long as they had at least that much income in a given year. A non-working spouse can establish his/her own traditional IRA if the earned income of the working spouse equals or exceeds the total contributions to both partners’ IRAs.
IRA maximum contribution limits have increased over the years. They …
There are two basic ways to invest money. You can lend it to pay for a company’s or the government’s debt (“loanership” investment), or you can own the investment yourself (“ownership” investment).
When you pay for benefits such as health insurance with pre-tax (also called before-tax) dollars, the deductions are taken off your gross income before income taxes are paid. Taxes are then calculated on the reduced salary amount. Having pre-tax dollar deductions results in less income tax paid than would otherwise be the case.
Examples of items that can be paid with pre-tax dollars include medical and dental insurance and employee parking fees. By way of contrast, after-tax dollar deductions are …
Three words are commonly used to describe the objectives of mutual funds: growth (also known as capital appreciation), income, and preservation of capital. Investors should always read about a mutual fund’s objective in its prospectus to make sure that it is a good fit with their personal investment objectives.
Mutual funds with a growth objective hold a portfolio of company stocks with an expectation that they will grow in value over time.
Funds with an income objective select securities such …
Below is a description of several common growth-oriented investments:
• Real estate investment trusts (REITs) and real estate limited partnerships provide indirect ownership of real estate, as opposed to direct ownership of land or property. REITs trade like stock on major stock market exchanges and are diversified, professionally managed portfolios of real estate investments (e.g., office buildings, shopping centers, and apartment complexes). Real estate limited partnerships are available through brokers. A general partner oversees the partnership’s real estate assets, and …
Risk—and how well you handle it—should help determine your investment decisions. For a personalized risk tolerance score, visit the Rutgers Cooperative Extension “Investment Risk Tolerance Quiz” Web site at: http://njaes.rutgers.edu/money/riskquiz/.
Below are three categories of investors and some characteristics that describe them:
Conservative Investor
• I want my money safe at all times, and I don’t want to lose any of it.
• Any decline in the value of an investment that I own concerns me.
• I’m uncomfortable …
Effective May 1, 2005, the interest rate on new Series EE bonds is fixed for the life of the bond. Existing Series EE bonds purchased before May 1, 2005, were not affected and continue to earn interest based on 90% of the average market yield of five-year Treasury securities.
Series EE bonds have used this variable interest rate method of crediting interest since 1982. Interest rates on previously issued U.S. savings bonds will continue to change every six months on …
The Rule of 72 is useful for understanding compound interest because it shows the approximate time or interest rate required to double a sum of money (e.g., $2,500 to $5,000).
To apply the Rule of 72 to your own personal investments, you need to know or assume their expected rate of return. For example, you may own a bond that you know will regularly pay 6% interest until maturity or assume that the average annual return on your stocks is …
