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Most of you know that I am both an investment advisor and an educator. I truly enjoy the teaching and learning process and being able to employ those skills in both of my professional roles. One of the most common questions I get is about the "language" of finance. To help with that I would like to provide a basic Top Ten Investing Terms list.

Feel free to read through the terms, and then take the 5-question quiz I have posted to https://qz.app.do/basic-investing-terms. The first five people to score 100% on the quiz will receive a $5 Starbucks gift card in the mail! When you are on Facebook, be sure to check out the post for this topic on my page where you can ask questions about other terms that may be of interest to you.

  1. Asset allocation:
    A fancy phrase for different types of investments, including things like stocks, bonds, real estate, and cash. Controlling the weights of those assets so that you have the optimal mix can help diversify your portfolio and attain the desired investment goals based on your age and investment strategy.
  2. Bear market:
    A market where prices are generally falling. While bear markets are not usually desired, savvy investors know they are inevitable and look to take advantage of the opportunities downturns present.
  3. Bull market:
    The opposite of a bear market, a market where prices are generally rising. Also, if you are "bullish" on the market or a particular stock, you think it will rise.
  4. Bond:
    Considered a somewhat safer investment than stocks, bonds represent a loan that you give to a company or government entity. You earn a return on bonds primarily from the interest the borrower pays.
  5. Stock:
    If you are a stockholder, you own a piece of a company (you will also hear stock referred to as "equity" - both terms are used interchangeably in investing).There are two reasons people buy stock: a) to receive income in the form of dividends paid to stockholders and b) to make a profit from selling the stock later at a higher price (neither of which are guaranteed).
  6. Yield:
    The return you receive on your investment, similar to the interest rate you earn in a savings account.
  7. Diversification:
    Choosing different types of investments (see "asset allocation") in different sectors, industries, or geographic locations. The "only free lunch in investing" is gained by not putting all your eggs in one basket. You know you are properly diversified when you always dislike at least one thing in your portfolio. That means your investments are not all moving together – some are up while others are down.
  8. Dow Jones Industrial Average:
    An index, or stock market subset, of 30 blue-chip stocks (nationally recognized, well-established) in a wide array of industries. The Dow is often used as a gauge of the health of the stock market even though the 30 companies make up a very small part.
  9. S&P 500:
    The Standard & Poor's 500 is an index, or stock market subset, similar to the Dow (see "Dow Jones Industrial Average") except that it tracks the value of 500 of the largest companies across 11 different sectors in the United States.
  10. ETF:
    Exchange-traded funds are similar to mutual funds in that they offer professionally managed, diversified portfolios that you can invest in even with a small initial investment. They offer many advantages including trading flexibility, portfolio diversification, risk management, lower costs, and tax benefits. These are several of the reasons we primarily use ETFs when investing your portfolio.
As always, I am here to help you achieve your investment goals and hopefully learn about investing along the way. Good luck on the quiz. Class dismissed.

If you have questions or if you would like to discuss investment terminology further with me, you can e-mail me at mhaertzen@wtwealthmanagement.com or call (520) 204-1058.

Sincerely,

Matt Haertzen
Matt Haertzen, CFA, CFP



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Any opinions expressed on this website are the opinions of WT Wealth Management and its associates only. Material listed on this website is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. You should always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETF’s carry certain specific risks and part or all of your account value can be lost.

At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

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WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale, Sedona and Tucson, AZ along with Jackson Hole, WY and Las Vegas, NV. WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives – thus making the account “separate” and distinct from all others we manage. An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost. In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax. Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon. WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly. WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

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