LIST OF INVESTMENT
INSTRUMENTS
Note:
Please click on the link to direct you directly to the investment site
A debt
instrument issued for a period of more than one year with the purpose of
raising capital by borrowing. The Federal government, states, cities,
corporations, and many other types of institutions sell bonds. Generally, a
bond is a promise to repay the principal along with interest (coupons) on a
specified date (maturity). Some bonds do not pay interest, but all bonds
require a repayment of principal. When an investor buys a bond, he/she becomes
a creditor of the issuer. However, the buyer does not gain any kind of
ownership rights to the issuer, unlike in the case of equities. On the hand, a
bond holder has a greater claim on an issuer's income than a shareholder in the
case of financial distress (this is true for all creditors). Bonds are often
divided into different categories based on tax status, credit quality, issuer
type, maturity and secured/unsecured (and there are several other ways to
classify bonds as well). U.S. Treasury bonds are generally considered the
safest unsecured bonds, since the possibility of the Treasury defaulting on
payments yield from a bond is made up of three components: coupon interest,
capital gains and interest on interest (if a bond pays no coupon interest, the
only yield will be capital gains). A bond might be sold at above or below par
(the amount paid out at maturity), but the market price will approach par value
as the bond approaches maturity. A riskier bond has to provide a higher payout
to compensate for that additional risk. Some bonds are tax-exempt, and these are
typically issued by municipal, county or state governments, whose interest
payments are not subject to federal income tax, and sometimes also state or
local income tax. Is almost zero. (From Investor Words)
An
instrument that signifies an ownership position (called equity) in a
corporation, and represents a claim on its proportional share in the
corporation's assets and profits. Ownership in the company is determined by the
number of shares a person owns divided by the total number of shares
outstanding. For example, if a company has 1000 shares of stock outstanding and
a person owns 50 of them, then he/she owns 5% of the company. Most stock also
provides voting rights, which give shareholders a proportional vote in certain
corporate decisions. Only a certain type of company called a corporation has
stock; other types of companies such as sole proprietorships and limited
partnerships do not issue stock. Also called equity or equity securities or
corporate stock (From Investor Words).
Highly
liquid, very safe investments which can be easily converted into cash, such as
Treasury Bills and money market funds (From Investor Words).
Is a life
insurance plan that combines investment and protection? The premiums that you
pay provide you not only with life insurance cover but part of the premiums will
also be invested in specific investment funds of your choice. As a policy
holder, you can choose how to allocate your insurance premiums towards
protection and investment. The insurance coverage provided would include death
benefit, disability and critical illness (From .docstoc)
An
SEC-registered investment company which purchases a fixed, unmanaged portfolio
of income-producing securities and then sells shares in the trust to investors.
The major difference between a Unit Trust and a mutual fund is that a mutual
fund is actively managed, while a unit investment trust is not managed at all.
Capital gains, interest and dividend payments from the trust are passed on to
shareholders at regular periods. If the trust is one that invests only in
tax-free securities, then the income from the trust is also tax-free. A unit
investment trust is generally considered a low-risk, low-return investment.
Some investors prefer Unit Trusts to mutual funds because Unit Trusts typically
incur lower annual operating expenses (since they are not buying and selling
shares); however, Unit Trusts often have sales charges and entrance/exit fees.
also called fixed investment trust or participating trust or Unit Investment
Trust (UIT) (From Investor Words).
An
open-ended fund operated by an investment company which raises money from
shareholders and invests group of assets, in accordance with a stated set of
objectives. mutual funds raise money by selling shares of the fund to the
public, much like any other type of company can sell stock in itself to the
public. Mutual funds then take the money they receive from the sale of their
shares (along with any money made from previous investments) and use it to
purchase various investment vehicles, such as stocks, bonds and money market
instruments. In return for the money they give to the fund when purchasing
shares, shareholders receive an equity position in the fund and, in effect, in
each of its underlying securities. For most mutual funds, shareholders are free
to sell their shares at any time, although the price of a share in a mutual
fund will fluctuate daily, depending upon the performance of the securities held
by the fund. Benefits of mutual funds include diversification and professional
money management. Mutual funds offer choice, liquidity, and convenience, but
charge fees and often require a minimum investment. A closed-end fund is often
incorrectly referred to as a mutual fund, but is actually an investment trust.
There are many types of mutual funds, including aggressive growth fund, asset
allocation fund, balanced fund, blend fund, bond fund, capital appreciation
fund, clone fund, closed fund, crossover fund, equity fund, fund of funds,
global fund, growth fund, growth and income fund, hedge fund, income fund,
index fund, international fund, money market fund, municipal bond fund, prime
rate fund, regional fund, sector fund, specialty fund, stock fund, and tax-free
bond fund (From Investor Words).
There is
no central marketplace for currency exchange, rather, trade is conducted
over-the-counter. The forex market is open 24 hours a day, five days a week,
with currencies being traded worldwide among the major financial centers of
London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and
Sydney - spanning most time zones. The forex is the largest market in the world
in terms of the total cash value traded, and any person, firm, or country may
participate in this market (From Answers.com).
Is
actually a mutual fund, in which shares are sold without any commission? Asset
management fund client’s investment. This fund is specifically made for clients
to provide some special privileges like access to an array of products. These
special facilities are not for average investors. Normally the financial
establishments invest on behalf of its clients (From Economy Watch).
A
precious metal that has functioned as a currency or served as a long- standing
investment since the early days of civilization. Gold is a safe haven
investment, which means that investors will put their money in gold during
times of extreme uncertainty such as war, terrorist attacks, or financial uncertainty
such as a sell-off in the stock market, or during times of high inflation.
Investors can invest in gold by purchasing gold bullion, which is a precious
metal that is in a tradable form, typically a bar or wafer. Gold coins also are
minted by governments or by a private company as an investment piece. Popular
gold coins issued by governments include the American Eagle, the Canadian Maple
Leaf, the South African Krugerrand, the Isle of Man Gold Cat, the Australian
Kangaroo, and the China Mint Panda Bear.Gold future and options also provide a
way to invest in gold. They trade on Comex, a division of the New York
Mercantile Exchange. They trade in a unit that is based on 100 troy ounces.
Price quotations are in dollars, such as $360.70. Trade occurs from 8:20 a.m.
ET until 1:30 p.m. ET. Trade after hours occurs on NYMEX’s Internet-based
electronic trading platform, ACCESS. Gold futures and options also are traded
on other exchanges throughout the world (From Invest.yourdictionary.com).
Because
it trades like a stock, an ETF does not have its net asset value (NAV)
calculated every day like a mutual fund does. By owning an ETF, you get the
diversification of an index fund as well as the ability to sell short, buy on
margin and purchase as little as one share. Another advantage is that the
expense ratios for most ETFs are lower than those of the average mutual fund.
When buying and selling ETFs, you have to pay the same commission to your
broker that you'd pay on any regular order. One of the most widely known ETFs
is called the Spider (SPDR), which tracks the S&P 500 index and trades
under the symbol SPY (From Investopedia).
Is a life
insurance contract designed to pay a lump sum after a specified term (on its
'maturity') or on earlier death. Typical maturities are ten, fifteen or twenty
years up to a certain age limit. Some policies also pay out in the case of
critical illness. Policies are typically traditional with-profits or
unit-linked (including those with unitized with-profits funds). Endowments can
be cashed in early (or 'surrendered') and the holder then receives the
surrender value which is determined by the insurance company depending on how
long the policy has been running and how much has been paid in to it (From
Wikipedia).
Is a
legal term (in some jurisdictions, such as the United Kingdom, Canada,
Australia, USA and The Bahamas) that encompasses land along with improvements
to the land, such as buildings, fences, wells and other site improvements that
are fixed in location—immovable. Real estate law is the body of regulations and
legal codes which pertain to such matters under a particular jurisdiction and
include things such as commercial and residential real property transactions.
Real estate is often considered synonymous with real property (sometimes called
realty), in contrast with personal property (sometimes called chattel or
personality under chattel law or personal property law). However, in some
situations the term "real estate" refers to the land and fixtures
together, as distinguished from "real property," referring to
ownership of land and appurtenances, including anything of a permanent nature
such as structures, trees, minerals, and the interest, benefits, and inherent
rights thereof. property Immovable The terms real estate and real property are
used primarily in common law, while civil law jurisdictions refer instead to
immovable property (From Wikipedia).
Special
type of time deposit. A CD is an investment instrument available at financial
institutions generally offering a fixed rate of return for a specified period
(such as three months, six months, one year, or longer). The depositor agrees
not to withdraw funds for the time period of the CD. If the funds are
withdrawn, a significant penalty is charged. The fixed rate of return nominally
increases with the amount or the term of the investment (From allbusiness.com).
