If you’re a novice to investing, mutual funds and 401(k) accounts, you may be confused by some of the terminology. Diversification is one of the more misunderstood terms. In basic terms, diversification means investing in a variety of different assets so that if one drops, the whole portfolio won’t plummet. But it doesn’t always work that way, depending upon market forces. Here are some of the most common myths about diversification, designed to help give the neophyte investor a better understanding.
Myths about diversification No. 1 – Owning many mutual funds
When you sign up for a 401(k) plan through your employer, [...]
Many people are hazy on the concept of personal net worth. They see houses, cars and clothing and mistake such signs of wealth for high net worth. As Wise Bread reminds us, however, net worth deals with two key columns on the financial ledger: assets and debt. Just because a person appears to have all the trappings of success doesn’t mean their debts aren’t keeping their net worth down. Knowing how to calculate net worth can provide you with some of the answers to financial success.
Net worth: Discovering your magic number
Net worth is an accounting of what you own (assets) [...]