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Investing 101 Archive

  • After 40 mostly unexciting years, the Securities and Exchange Commission (SEC) has recently taken steps to tighten oversight of the $2.6 trillion dollar business of money market funds. This move comes after several regulatory shortfalls became apparent following the collapse of Lehman Brothers in 2008 and had consumer groups calling for change.

    For this installment of Investing 101, we take a closer look at the size and scope of money market funds, their history, and what lies ahead if the new rules are adopted.

    1) What is a money market fund?

    "They were developed in the 1970s to help investors get a better return than they could get on bank deposits," says Phil DeMuth, managing director at Conservative Wealth Management. "It's the life blood of the economy. It is where big and small investors keep their cash."

    In fact, according to the Investment Company Institute (ICI), there are currently more than 7,600 money market funds in operation, which account for about 22% of all mutual fund assets. By design, they invest in very short-term debt securities with the aim of delivering a slightly higher return than could be earned in a regular savings account — without taking on much risk or foregoing the ability to withdraw your money whenever you want.

    But as DeMuth says, "Ultimately they involve putting together two things that don't go together very well." He goes on to explain that "a fixed $1 net asset value [the price each share is worth] that never varies, on the one hand, is tied to an ultra-short-term bond fund that does vary, on the other."

    Read More »from What Money Market Changes Mean for You
  • They are notoriously secretive yet still get tons of press coverage. They flaunt their success but often won't allow you to play in their game. They are also elusive and lucrative and, not surprisingly, experiencing rapid growth.

    I'm talking about the $2.4 trillion hedge fund industry, an exclusive corner of the professional investment community that is little more than a mystery to most market watchers. In this installment of Investing 101 we take a closer look at the workings of these high stakes portfolio players and brought in Reuters hedge fund correspondent Katya Wachtel to walk us through some basics.

    1. What is a hedge fund?

    "On a very basic level, it's a private investment vehicle," Wachtel states in the attached video, referring to hedge funds as a "pooled group of capital" from very rich people, pensions and endowments. Unlike a traditional mutual fund, she says hedge funds tend to be more aggressive and take more risk in pursuit of high returns.

    "You have to accept the

    Read More »from Hedge Funds: More Than Just a Cool Name
  • For anyone over 30 the amount of information available online is overwhelming. Access to analyst research once required opening a brokerage account or having a well-placed source for leaks. Rumors were slowly disseminated and all but impossible to fact check. Flash crashes took days to develop.

    For teenagers like actress and editor of FoxonStocks.com Rachel Fox, when information is anything less than immediate, it is glacial. Her generation is built for speed in an age where the only filters are those on Instagram ("Insty").

    All she has to do now is figure out which of the infinite sites are value adding. In the attached clip, Fox shares three places she goes to help guide her as she teaches herself to invest and trade.

    Read More »from Investing 101: Learning to Trade and Invest in an Online World

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ABOUT INVESTING 101

Breakout’s Investing 101 helps you gain insight on money management and trading. Whether you’re managing your own retirement account, just beginning, or an advanced investor in need of a good refresher, Investing 101 will help you learn, grow, and keep you informed of the basic steps to effectively manage your money. Expect investing tips that focus on trading strategies, asset allocation, and portfolio management.





Investing 101

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