As an independent advisor, Rena Noe and PathKeeper Financial can choose investments products from a wide range of sponsor companies. This is very advantageous for clients because investment choices are made specifically tailored to an individual or family's needs and goals. Investment allocation strategies can include mutual funds, exchange traded funds (ETF) and/or individual stocks.
What is a stock?
Stocks are also referred to as "shares" or "equity" and represent ownership in a company by an investor. When an investor buys stock in a company, they are claiming part of the company's assets and earnings. There are two main types of stock: common stock and preferred stock. Common stock owners usually have a right to vote in shareholders' meetings and also receive dividends. Preferred stock owners generally do not have voting rights but they have a higher claim on assets and earnings than common stockholders in the event of bankruptcy.
What is a mutual fund?
A mutual fund is an investment vehicle that is comprised of a pool of money from many investors that is used to invest in securities such as stocks, bonds, money market instruments, etc. These funds are professionally managed by money managers that allocate funds to generate capitals gains or income, depending on the objective listed in the prospectus.
What is an ETF?
An exchange-traded fund(ETF) is a marketable security that is similar to a mutual fund. The main difference is that ETFs trade like common stock on an exchange throughout trading hours. The largest ETFs typically have higher average daily volume and lower fees than mutual fund shares which makes them an attractive alternative for individual investors. While most ETFs track stock indexes, there are also ETFs that invest in commodity markets, currencies, bonds, and other asset classes.
Stock and mutual fund investing involves risk, including possible loss of principal. An investment in ETFs involves additional risks such as not diversified, price volatility, competitive industry pressure, international political and economic developments, possible trading halts, and index tracking errors.