Portfolio Literacy is dedicated to transparency and promoting free financial literacy for everyone. Here are Portfolio Literacy’s latest blog posts. If you are looking for specific topics, the categories are at the bottom of this page.
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What is Behavioral Risk and How Can You Avoid It?
Behavioral risk in personal finance refers to the potential for irrational decision-making influenced by psychological biases. Behavioral risk is the risk you make choices that are not in your best financial interest, such as panic selling during a market dip or ignoring long-term plans. Understanding and recognizing these biases can help you make more rational…
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What Was the Yen Carry Trade that Unwound on August 5th?
The Yen Carry Trade was a popular investment strategy that took advantage of Japan’s low interest rates. Investors borrowed money in Japanese Yen at very low rates and then invested that money in assets with higher returns in other countries. This strategy allowed investors to profit from the difference in interest rates between Japan and…
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The 5 Most Popular Portfolio Allocation Models
Investing your money wisely is key to building wealth over time. Portfolio allocation is an important part of investing, it is deciding how to split your capital between different types of assets. The below portfolio allocation models are incredibly common and are good bases for how you may want to allocate your capital. However, your…
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What Are Municipal Bonds?
If you’re looking into investment options, you’ve likely come across municipal bonds. Municipal bonds are debt securities issued by state and local governments to finance public projects like roads, schools, and hospitals. They are appealing to many investors because of their tax advantages; interest earned on these bonds is often exempt from federal income tax…
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How Do Target Date Retirement Funds Work?
Target date retirement funds are designed to simplify your portfolio savings by automatically adjusting your investment mix as you approach retirement age. These funds typically start with a higher allocation to stocks and gradually shift towards more conservative investments like bonds and cash equivalents. This automatic adjustment helps manage risk and aligns with your changing…
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Do I Bonds Fit Into Your Portfolio in 2024? Assessing Inflation-Linked Savings Bonds
Check out our 2025 I Bond post for more insight on inflation and if I Bonds are something you should consider. Assessing the role of I Bonds in your investment portfolio in 2024 is a significant consideration, particularly in an economic climate characterized by uncertainty. These bonds are specifically designed to protect against inflation, which…
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What Are Defensive Investments That I Can Add to My Portfolio?
When market volatility is high, it’s crucial to know how to protect your portfolio. Defensive investments can help you achieve this goal by reducing overall risk. These investment types aim to provide steady returns or reduced volatility even during uncertain times. Defensive investments often include stocks from well-established companies, treasury bonds, ETFs focusing on stability,…
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What is Interest Rate Risk and Why is it Important?
Interest rate risk is the possibility that changes in interest rates will negatively affect the value of your assets or portfolio. This risk can impact both borrowers and investors, leading to losses when unexpected fluctuations occur. Imagine you have investments in bonds; if interest rates rise, the value of your bonds might decrease, as newer…
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How Do Zero-Coupon Bonds Work?
A zero-coupon bond is unique because it doesn’t pay periodic interest. Instead, you buy the bond at a discount and receive its full, face value at maturity. This difference between the purchase price and the face value represents your profit. This makes zero-coupon bonds an attractive option for investors looking for long-term growth without worrying…
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5 Things to Know About Private Equity Before You Invest
Investing in private equity can be an appealing opportunity for many investors looking to gain exposure to private markets and diversify their portfolio. This type of investment involves committing capital to PE firms that buy and sell privately held companies or purchase public companies and take them private. Understanding the key aspects of private equity…
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Are Expense Ratios Calculated Annually?
Expense ratios are an essential part of the investment world, affecting mutual funds, ETFs, and other financial products. Yes, expense ratios are typically calculated annually. Knowing how these ratios work, and their impact can significantly influence your investment decisions. Understanding expense ratios is crucial whether you are an experienced investor or just starting. These ratios…
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What is a Dividend Reinvestment Plan (DRIP)?
A Dividend Reinvestment Plan, often called a DRIP, allows you to reinvest your cash dividends by purchasing additional shares of the company’s stock. Instead of keeping your dividends in cash, you buy more stock, helping you grow your investment over time. By automatically reinvesting dividends, you can potentially see your portfolio increase faster due to…
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What is Tail Risk and Why is it Important?
Tail risk in finance refers to the risk of an investment moving beyond a certain point in the tail ends of a probability distribution. This kind of risk happens when there are extreme events that have significant negative impacts on portfolios. In finance, understanding tail risk is vital because it involves potential losses that are…
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What You Should Know When Dividend Investing?
Dividend investing is a popular strategy for those seeking a stable and reliable source of income from their investments. To maximize the benefits and minimize risks of dividend investing, it’s essential to be well-informed about key financial metrics that indicate the health and sustainability of a company’s dividend payouts. Financial Metrics for Dividend Investors When…
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Why Do Dividend Investors Love Dividend Aristocrats?
Dividend Aristocrats are companies that have a 25-year track record of increasing their dividend payouts to shareholders and are included in the S&P 500. These companies are part of an elite group that not only delivers regular dividends but also shows strong financial health and stability. Investing in dividend aristocrats can be an excellent strategy…