What is a hedge fund? A hedge fund is a type of investment vehicle that allows investors to pool their money together and invest in various assets. These funds are usually used by high-net-worth individuals and institutional investors and can be quite complex. The way hedge funds work is that the fund manager will use …
What is the annual depreciation allowance? Not all real estate investors know this, but you can deduct the amount it cost you to purchase and renovate a property from your tax return. The result? You can reduce your tax liability and potentially save thousands of dollars. It’s called depreciation—the process of deducting costs associated with …
What is company equity? In business, equity is the value of an ownership interest in a company, which represents the residual interest in the company’s assets after deducting all liabilities. Equity is often synonymous with ownership or stake. When you buy shares in a company, you’re buying a piece of that company and becoming an …
What is an ETF? ETF stands for “exchange-traded fund”. It’s an investment vehicle that contains a variety of assets, such as bonds, stocks, and real estate. The value of an ETF fluctuates throughout the day as investors buy and sell. This makes ETFs different from mutual funds, which only change prices when the market closes. …
What is a HELOC? Did you know that a home equity line of credit (HELOC) is a type of finance that can help investors improve the value of a property or purchase a new real estate asset? It’s a revolving line of credit, which means your lender might offer you additional credit if you make …
What Is an IRA? IRA stands for “Individual Retirement Account.” There are several types of IRAs, but all of them offer some tax advantages to help you fund your retirement years. IRAs can be invested in a broad range of assets, including mutual funds, stocks, bonds, and ETFs (exchange-traded funds). Some—but not all—IRAs can even …
What is an alternative investment? An alternative investment is an asset or strategy that falls outside the traditional stock, bond and cash markets. These investments can enhance portfolio diversification and risk management and generate additional returns. There are various alternative investments, including hedge funds, private equity, venture capital, real estate, commodities and derivatives. Each has …
What is market capitalization? Have you ever wanted to know the total amount of all the shares of stock a company owns? Market capitalization—or “market cap”—tells you exactly that. It’s one of the best ways to estimate a company’s financial value. Calculating the market cap is simple. Just multiply a company’s number of outstanding shares …
In real estate, the anchoring effect refers to subconsciously using irrelevant information or “anchor points” to make purchasing or investment decisions. In addition, the anchored meaning has to do with cognitive bias that occurs when making judgments about the quality, value, or worth of a specific property. What is the anchoring effect? When it comes …
Equity multiple essentially lets investors know how much money they stand to make on their upfront investment. What is equity multiple? Equity multiple is a commercial real estate term that refers to the total cash return an investment produces, divided by the total equity that was initially invested. If an investor uses the equity multiple …
