What is Passive Income? Passive income is any money earned in a manner that does not require too much effort. There are several passive income-generating ideas that require a lot of work to begin with, like developing a blog or leasing property, but eventually, they earn money even when the owner is asleep. Reasons for…
What is Coattail Investing? Coattail investing refers to an investment strategy where an investor replicates the investment style of well-known successful investors. Individual investors use information published on the Securities Exchange Commission (SEC) website to know what companies a specific investor invested in. Coattail investing works well when the institution or investor being mimicked invests…
Pessimist vs. Optimist Investors Differentiating between pessimist vs. optimist investors is best defined by the saying, “A pessimist is an optimist with experience.” An optimist is hopeful and confident that things will turn out for the better. On the other hand, a pessimist always keeps in mind the possibility of the worst outcome. An optimist’s…
What is Hot Money? Hot money is the investment of funds between varying vehicles or assets in order to increase capital gains. In other words, a hot money strategy can be defined as the practice of actively using funds in various investments rather than just letting a single investment appreciate over time. The investments are…
What are Bonds? Bonds are fixed-income securities that are issued by corporations and governments to raise capital. The bond issuer borrows capital from the bondholder and makes fixed payments to them at a fixed (or variable) interest rate for a specified period. What is an Indenture? An indenture is a binding contract between an…
What is a Celebrity Bond? A celebrity bond is a type of asset-backed security issued by a holder of fame-based intellectual property rights. Issuers of celebrity bonds receive money upfront from investors in exchange for proceeds from future royalties from the works of art, which are covered by intellectual property rights listed in the security. Celebrity…
What is Momentum Investing? Momentum investing is an investment strategy aimed at purchasing securities that have been showing an upward price trend or short-selling securities that have been showing a downward trend. The main rationale behind momentum investing is that once a trend is well-established, it likely to continue. There is no consensus among economists…
What is a Coupon Bond? A coupon bond is a type of bond that includes attached coupons and pays periodic (typically annual or semi-annual) interest payments during its lifetime and its par value at maturity. These bonds come with a coupon rate, which refers to the bond’s yield at the date of issuance. Bonds that have…
What are Bond Ratings? Bond ratings are representations of the creditworthiness of corporate or government bonds. The ratings are published by credit rating agencies and provide evaluations of a bond issuer’s financial strength and capacity to repay the bond’s principal and interest according to the contract. The three private independent rating agencies – S&P, Moody’s,…
What is Over-the-Counter? Over-the-counter (OTC) is the trading of securities between two counterparties executed outside of formal exchanges and without the supervision of an exchange regulator. OTC trading is done in over-the-counter markets (a decentralized place with no physical location), through dealer networks. Contrary to trading on formal exchanges, over-the-counter trading does not require the…
