What is a business cycle

What is a business cycle

A business cycle is a cycle of fluctuations of the economic activity measured by the gross domestic product, or GDP, of a country. From its trough to peak, it is divided into 5 important stages, as defined by Calverley, and shown below. The first stage 

Why do I need a diversified portfolio

Why do I need a diversified portfolio

A diversified portfolio will minimize your portfolio risk and to do so you will have to invest in different types of assets instead of concentrating your bet in a single asset class. The picture below shows the annual performance of different asset classes from 2008 

Investment decision process

Investment decision process

The investment decision process should be very similar to the shopping process you follow for goods and services, such as clothes, or electronics. While shopping for any product, you try to evaluate how much that product is worth to you, is it good value for 

Market Index

Market Index

“The Dow hits an all time high”. “US Market Indexes start the week with gains”. “Nasdaq exits bear market as stocks rally”. You may have read similar headlines in the newspapers and heard them on evening news. But what exactly is a market index? A 

Types of Investments

Types of Investments

As an investor, you have a variety of vehicles to invest in. Each type of investment comes with its own risk-return profile. What that means is generally higher returns on a type of investment is associated with a higher level of risk. Here are some 

What is the stock market

What is the stock market

S&P, Dow Jones, Nikkei, FTSE, Russell have become part of our everyday experience. Television and radio broadcasts over the world have hundreds of reports daily with experts analyzing every move of the stock market. Daily newspapers have reports from analysts linking events across the globe 

Yield curve

Yield curve

When markets get insecure, everyone talks about the yield curve. Inversion of the yield curve is often seen as a sign of an impending recession. But what exactly is a yield curve? To understand a yield curve, you have to understand bonds. A bond is 

Target-date funds

Target-date funds

Target-date funds are designed to provide a simpler investment solution for portfolios with a set investment horizon, for example, a college savings plan or an individual retirement account (IRA). These funds start aggressive, and as the target date approaches, the fund mix becomes more conservative. 

What is a 401k

What is a 401k

There are several options available to save for retirement. Broadly speaking, retirement savings can be categorized into defined-contribution plans such as 401k and IRAs and defined-benefit plans. Both categories are exactly what they sound like. A pension plan is a defined-benefit plan, where your employer 

Investment Policy Statement

Investment Policy Statement

So, what are your investment objectives? If you say, “to make a lot of money”, that won’t be an appropriate goal. It is too open-ended to provide realistic guidance for specific investments and time horizons. A goal that is specific and quantifiable can help periodically