Author: PortfolioLiteracy
I am a CPA Candidate sharing my experience building my portfolio while in my 20s. During this process of sharing information online I hope to increase free financial literacy access for all.
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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…
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What is Dividend Investing and Does Your Portfolio Need It?
Dividend investing is a popular strategy where investors buy stocks that return capital back to investors. Dividends are regular profit-sharing payments made by companies to their shareholders. Dividend investing can provide a steady stream of income, making it appealing for investors looking to live off their portfolio of investments. You might wonder why companies pay…
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What Is Systematic Risk for Investors?
When investing, you may often hear the terms “market risk” or “systematic risk.” These refer to the potential for an investor to experience losses due to factors impacting the entire market rather than just a specific company or sector. Understanding systematic risk is crucial because it can’t be avoided through diversification alone. Systematic risk, also…
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What is Idiosyncratic Risk and Why is it Important?
Understanding the different types of risk is crucial for anyone investing in the stock market. One type of risk that often confounds new investors is idiosyncratic risk. Idiosyncratic risk refers to the risk specific to a single company or industry, which can be diversified away, different from the overall market risk. For example, a sudden…