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Frequently asked questions
What is the meaning of the expression 'shares'?
Shares are a kind of investment. In the online share trading context, they represent part ownership of a company or business. Moreover, traders purchase and sell shares on the share or stock market. They perform this activity through a brokerage service or a broker.
How do you explain index funds, ETFs, and mutual funds?
When we speak of an ETF, this acronym pertains to an Exchange Traded Fund. This kind of investment comprises a significant number of shares and other types of investments. Similar to shares, traders swap ETFs on an exchange. However, ETFs offer investors more substantial exposure to the stock market, compared to a single share.
Meanwhile, an index fund is a type of mutual fund or exchange-traded fund. It tracks a particular index, which is a benchmark gauging a specific market’s performance. Also, index funds attempt to replicate the market index’s performance, instead of trying to outperform or beat it, like plenty of active investors do. It will help if you keep in mind that management fees are typically much lower since there is less involvement in the supervision of index funds.
Finally, the type of investment that pools funds from plenty of investors to invest in various assets, including shares, is a mutual fund. Portfolio managers operate mutual funds. On behalf of investors, they decide to pour the money on specific kinds of assets. Plus, portfolio managers monitor the assets’ performances. Mutual funds are dissimilar to ETFs because they get traded merely once per day, and not on an exchange.
What is the concept of 'bonds'?
Governments and firms issue bonds. If you invest in these fixed income instruments, you are lending your funds to the company or the government. You perform this measure with the anticipation that, at maturity, these entities will repay their loan amount and pay you interest at regular intervals.