Asset Allocation
Bond

Capital Gains
Unrealized Capital Gains
Realized Capital Gains
Short- and Long- Term
Bond Coupon Rate
Bond Fund & "Income Fund"
Common Stock
Corporate Bond

Discount
Exchange Traded Funds
Front-End Load
Index Fund
Investment Policy Statement
Management Fees
Maturity Date
Money Market Account
Multi-Strategy Account
Municipal Bond
Mutual Fund
No-Load Fund
Par Value
Preferred Stock
Premium
Professional Portfolio Management
Reallocation
Separately Managed Account (SMA)
Stock
Wealth Management
Investment Advisory Accounts

Asset Allocation
The allocation of a client's portfolio between cash, bonds and stocks. The asset allocation mix should match the client's investment goals and tolerance for bearing market value fluctuations.

Bond
A debt security which a government or a company issues as an "I.O.U." In return for the loan, the entity issuing the bond agrees to pay interest at a fixed rate during the life of the bond, and also to return the principle when the bond reaches maturity

Capital Gains

Unrealized Capital Gains
When a stock increases in value, the unrealized capital gains is the difference between the purchase price and the stock's current value. Unrealized capital gains are not taxable events until the stock is sold.

Realized Capital Gains
When a stock increases in value and is sold for a higher price than the original purchase price. The difference between the original purchased price and the sold price is a realized capital gain and is taxable if the stock was held in a taxable account.

Short- and Long-Term Capital Gains
Capital gains which are realized 12 months or less from the date the investment was purchased are considered short-term gains and are taxed as ordinary income. Capital gains that occur more than 12 months from the time the investment is purchased are considered long-term gains, and are taxed at a more favorable rate.

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Bond Coupon Rate
The interest rate stated on the bond. A $100,000 bond with a Coupon of 5% will pay $5,000 per year as long as the bond is outstanding. Most bonds pay interest every six months.

Bond Fund and "Income Fund"
A mutual fund that invests primarily in bonds or other types of debt securities. Depending on its investment objectives and policies, a bond fund may concentrate its investments in a particular type of bond-such as government bonds, municipal bonds, corporate bonds, convertible bonds, mortgage-backed securities, zero-coupon bonds-or a mixture of types.

Common Stock
A security that represents ownership in a corporation usually entitles the owner the right to vote at shareholder meetings and to receive dividends that the company has declared.

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Corporate Bond
A debt security issued by a private or public company. Companies issue bonds for a variety of reasons including to purchase new equipment and to grow operations.

Discount
The difference in the price of a bond when it is bought or sold at a price lower than its par value. This can happen if interest rates have risen and an old bond paying a lower interest rate loses its value.

Exchange Traded Funds (ETFs)
Blocks of specific, unmanaged stocks that can be bought and sold in the market place just like an individual stock. Exchange traded funds can be used to obtain broad market exposure in specific investment sectors, such as real estate, biotech or high tech, without having to buy individual stocks.

 

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Front-End Load
The mutual fund industry's term for a sales charge that you pay when you buy shares of a fund. This fee usually compensates an investment professional for his or her services, especially for the advice he or she provides in selecting a fund to meet your investment goals.

Index Fund
A type of mutual fund whose investment objective is to achieve the same return as a particular market index, such as the S&P 500 Composite Stock Price Index, the Russell 2000 Index, or the Wilshire 5000 Total Market Index.

Investment Policy Statement
A clearly defined statement, signed by the client, outlining the goals and needs that are to be achieved from the managed portfolio. The statement may include such items as income needs, time horizons, tax issues and special circumstances. A statement helps ensure that there is a clear understanding between the client and the portfolio manager as to how the client's goals are going to be met.

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Management Fees
Fees that are paid out of fund assets to the fund's investment advisor for investment portfolio management.

Maturity Date
The date a bond will mature and the principal borrowed will be repaid to the current owner of the bond.

Money Market Account
A short-term investment that pays interest and can be liquidated at any time. Money Market funds seek to preserve the value of your investment at $1.00 per share.

Multi-Strategy Account
A variation on a separately managed account (SMA), that uses the investment strategies of multiple managers to run an investor's portfolio.

Municipal Bond
A debt security issued by states or political subdivisions such as city governments, state governments, and counties. Bonds are issued to raise money for a variety of public works projects. An important feature of a municipal bond is that the earnings are exempt from federal income taxes.

Mutual Fund
A type of investment that pools money from many investors and invests the money in stocks, bonds, short-term moneymarket instruments, or other securities. Legally known as an "open-end company."

You should consider a mutual fund's investment objectives, risks, and charges and expenses carefully before investing. Contact your Financial Advisor to request a prospectus, which contains this and other information about a specific mutual fund. Read it carefully before you invest. Past performance is no guarantee of future results. Investment return and principal value of a mutual fund will fluctuate, causing shares, when redeemed, to be worth more or less than their original cost.

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No-Load Fund
A mutual fund that does not have upfront sales charges. Although a no-load fund does not charge a fee to buy, sell, or exchange shares, no-load funds may have a distribution or service fee of up to 0.25 percent of average net assets each year to compensate sales professionals for providing ongoing services.

Par Value
The original value of a bond. This amount will be repaid when the bond matures.

Preferred Stock
A stock that generally does not have voting rights, but has a higher claim on assets and earnings than the common shares.

Premium
If a bond is sold or bought in the bond market for a price higher than its par value, then a Premium has been paid.

Professional Portfolio Management
The management of a client's assets by full-time, non-commissioned money managers, where an annual asset-based fee is paid for the manager's services.

Reallocation
The rebalancing of a client's portfolio over time, to maintain their desired asset allocation mix. Reallocation prevents one asset class from becoming over weighted in a portfolio as investments change in value.

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Advisory Account
An individually-managed portfolio that is entirely owned by the individual investor - that is, assets are not commingled with those of other investors as they are in mutual funds.

Stock
A type of security also sometimes known as "equity" that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.

Wealth Management
The coordination of a client's investment, tax and estate plans into a comprehensive financial plan to achieve their personal goals.

Investment Advisory Account
An investment account in which an investment representative helps an investor find a money manager in exchange for a quarterly or annual fee, which covers all administrative and management expenses.

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The information provided here is not intended to be a comprehensive treatment of the subject matter. The answers are for general information only and are not intended to provide specific legal, financial or accounting advice or recommendations. Please consult with qualified professionals to discuss your situation.

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Sandy Spring Wealth Management

*Not FDIC Insured *No Bank Guarantee
*Not a Bank Deposit
*Not Insured by any Federal Government Agency
*May Lose Value*

Securities, advisory services, and insurance products are offered through LPL Financial, a Registered Investment Advisor, member FINRA / SIPC. Sandy Spring Bank and Sandy Spring Wealth Management are not registered broker/dealers and not affiliated with LPL Financial.
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