Bonds do go up and down in price. One reason can be because of changes in interest rates. Let’s return to Kristi’s Ranger Cookie Food Truck. You’ve bought a $5,000 bond from me that matures in 5 years. My business is going well and I’m paying your 5% interest every year as promised. But, let’s…
Remember a few weeks ago I introduced the business of Kristi’s Ranger Cookie Food Truck? Let’s go back and visit that business to get a better understanding of how the bond market works. As we said before, a bond is simply a loan between two parties. The buyer of the bonds is the loaner and…
Last week, I wrote about choosing mutual funds based first on the area of the investment market where they specialize, not just based on returns. But how do you know if the fund you are researching is in the area of your portfolio that you are looking to fill? There is a well-known tool called…
Most of us are pretty good consumers. We use coupons, look for deals online, and buy on sale. Somehow, those good habits go out the window when we shop for investments. Avoidable Mistake #1: We buy when prices are high. Most people get into an investment based on its one year return that looks fantastic.…
Last week, we talked about the different ways that mutual fund sellers get paid. There are funds with loads, called A or B shares, that charge up-front or back-end commissions. There are also no-load funds that are sold directly from mutual fund companies or through discount brokers such as Fidelity, Schwab, TD Ameritrade, Vanguard, or E-trade.…
It shouldn’t surprise you that people in the business of investing money like to make money themselves. And that’s fine! As a consumer you should understand how your investments charge you and whether the price is reasonable. Today I’ll discuss two common ways that mutual fund companies make money: Loads and Expense Ratios. Loads…
Last week we talked about the difference between stocks and bonds. Today, we will talk about how we can use mutual funds to buy stocks and bonds. You’ve probably been told that it’s a good idea to have a diversified portfolio. This means that you shouldn’t invest all of your money in one company. …
Let’s start with the basics. What’s the difference between a stock and a bond? I will explain this concept by starting a hypothetical company, Kristi’s Ranger Cookie Food Truck. Ask any member of my family, neighbors, cat sitter, or school bus drivers, I make the best Ranger Cookies on the planet. Stay tuned for bonus…
Ladies and gentleman, watch carefully as I perform a magic trick. Before your very eyes, I will unmask for you the confusing and veiled language used in the financial services industry. These words make sense to a very few in who work in this business. This can lead to unsuspecting purchases of financial products that…
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