Bear Funds

Funds that utilize short-selling methods to quickly makeprofits during a bear or declining market. These funds are usually made up of hedge funds and mutual funds. They are actively managed, and short individual stocks or inverse-index funds that short entire indexes. Bear funds revolve around the idea of playing with both sides of the market so that gains in the bear fund offset losses elsewhere in aninvestor’s portfolio. Bear funds are considered tacticalinvestments, but usually end up being lousy long-terminvestments for investors.

Equity mutual funds

An open-ended fund operated by an investment companywhich raises money from shareholders and invests in agroup of assets, in accordance with a stated set ofobjectives. 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 takethe money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various stocks. 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 fluctuatedaily, depending upon the performance of the securitiesheld by the fund. Benefits of mutual funds includediversification and professional money management. Mutual funds offer choice, liquidity, and convenience, but chargefees 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, 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, regional fund, sector fund,specialty fund, and stock fund.

Equity mutual funds

An open-ended fund operated by an investment companywhich raises money from shareholders and invests in agroup of assets, in accordance with a stated set ofobjectives. 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 takethe money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various stocks. 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 fluctuatedaily, depending upon the performance of the securitiesheld by the fund. Benefits of mutual funds includediversification and professional money management. Mutual funds offer choice, liquidity, and convenience, but chargefees 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, 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, regional fund, sector fund,specialty fund, and stock fund.

Dividends

A taxable payment declared by a company’s board of directors and given to its shareholders out of the company’scurrent or retained earnings, usually quarterly. Dividends are usually given as cash (cash dividend), but they can alsotake the form of stock (stock dividend) or other property. Dividends provide an incentive to own stock in stablecompanies even if they are not experiencing much growth. Companies are not required to pay dividends. The companies that offer dividends are most often companies that have progressed beyond the growth phase, and no longer benefit sufficiently by reinvesting their profits, so they usually choose to pay them out to their shareholders.also called payout.

Common Stocks

Securities representing equity ownership in a corporation, providing voting rights, and entitling the holder to a share of the company’s success throughdividends and/or capital appreciation. In the event of liquidation, common shareholders have rights to a company’s assets only afterbondholders, other debt holders, and preferred shareholdershave been satisfied. Typically, common shareholders receiveone vote per share to elect the company’s board of directors(although the number of votes is not always directlyproportional to the number of shares owned). The board ofdirectors is the group of individuals that represents theowners of the corporation and oversees major decisions for the company. Common shareholders also receive voting rights regarding other company matters such as stock splitsand company objectives. In addition to voting rights, common shareholders sometimes enjoy what are called “preemptive rights”. Preemptive rights allow common shareholders>to maintain their proportional ownership in the company in the event that the company issues anotheroffering of stock. This means that common shareholders with preemptive rights have the right but not the obligationto purchase as many new shares of the stock as it wouldtake to maintain their proportional ownership in the company. also called junior equity or common stock.