Asset allocation is a strategic approach involving the distribution of investments among various asset classes to optimize returns while minimizing risk. Asset proportions can be adjusted based on market conditions.
Book depreciation, also known as accounting depreciation, refers to the allocation of the cost of tangible assets over their useful lives, reflecting the wear and tear, deterioration, or obsolescence of these assets.
A distribution in kind refers to the transfer of property other than money from an organization to an individual, often in a corporate context where non-cash assets, like automobiles, are distributed to shareholders.
A family of funds refers to a group of mutual funds managed by the same investment management company, each with different investment objectives and the ability to switch investments among the funds.
A financial pyramid is a risk structure many investors aim for, distributing their investments among low-, medium-, and high-risk vehicles. It is designed to minimize risk while maximizing potential returns.
Formula investing is an investment technique grounded in a predetermined timing or asset allocation model that eliminates emotional decisions from the investment process. By following a systematic, rule-based strategy, formula investing aims to mitigate the influence of market sentiment and human emotions in making investment decisions. The approach often involves specific triggers or conditions under which investments are adjusted, rebalanced, or reallocated.
In-kind distribution refers to the distribution of assets or property directly to beneficiaries, rather than converting those assets to cash and distributing the proceeds.
An investment portfolio is a collection of various assets such as stocks, bonds, real estate, and other investment instruments owned by an individual or an organization to achieve financial goals.
An investment strategy is a plan to allocate assets among various investment choices such as stocks, bonds, cash equivalents, commodities, and real estate. An effective investment strategy considers factors like interest rates, inflation, economic growth, the investor's age, risk tolerance, available capital, and future capital needs.
An investor is a party who allocates capital to purchase an asset with the expectation of financial returns. Generally, investors are more diligent and conservative compared to speculators.
The concept of ring-fencing is used in finance and corporate restructuring to isolate a certain portion of assets, liabilities, or operations to protect the rest of the company or to dedicate specific funds for particular purposes.
Risk vs. Reward is a financial concept that attempts to compare the potential fluctuations, especially the downside, with potential benefits to determine whether the proposed investment or cost is worthwhile.
Switching refers to the process of moving assets from one mutual fund to another. This movement can occur either within a family of funds or between different fund families.
Telephone switching in the context of finance refers to the process of shifting assets from one mutual fund to another via a phone call. This can take place within the various types of funds (stock, bond, money market) of a single family of funds or across different families of funds.
