Library
Our latest content
Our latest content
Our latest content
" To the “Hewett Wealth Team”, I thought to take this opportunity to quickly express my sincere gratitude to all of you, but especially Peter, for sorting out our finances. By no means an easy task, the insightful and valuable advice we received, coupled with decisive action has ensured that I now fully believe we are back on track and in a far better space than ever before. Despite not being one of your wealthier clients, I really appreciated being treated as if I was. The attention to detail, the invaluable guidance and advice has seen us take some significant steps to improving our family’s financial security, the result of which is a far rosier outlook and a great measure of relief. To now also be receiving regular updates and reviews of how we are doing is incredible and most welcome. I find these sessions both interesting and empowering. Once again, thank you for all you have done and continue to do for us."
-Robert Schipholt
"Peter and his team put a personal touch to their comprehensive and well-informed service to make you feel not only that you are in good hands but also that you are dealing with people who genuinely have your interests at heart"
-Peter van Ryneveld
"Ek is ‘n klein sakeman en bedryf my finansies al die jare soos ek goeddink. Ek het 120 maande gelede besluit om finansiële advies van Peter Hewett van Hewett Wealth te kry. Peter het my van raad voorsien rakende my persoonlike finansies, versekering, testament en ook i.v.m die herstrukturering van my besigheid. Peter skroom nie om my na kundiges te verwys wat my die beste raad en bystand verleen rakende sake wat hy nodig ag nie. Ek is veral besig om na my aftrede te kyk en is vol vertroue dat ek eendag die nodige voorsiening gemaak sal hê, op grond van Peter se advies. Peter en sy span kundiges tree professioneel op en dis ‘n voorreg om Hewett Wealth aan my kant te hê."
-Danie Bruwer
"Having retired at the age of fifty-two years with a relatively moderate pension, we are now in our mid-seventies and do not lose a moments sleep about our financial future with the Hewett Wealth team looking after our affairs. There is always a friendly and helpful voice on the other side of the phone!"
-Wibo and Sue Schipholt
"We have known Peter Hewett for more than10 years now, firstly as a family friend and later as our financial advisor. Prior to working with Peter, we had a number of financial advisors who only seemed to sell their products to gain personal financial value and who did not have our best financial interest at heart. We have a strong respect for Peter, who always handled our financial matters in a very professional manner. He always ensures that we are fully aware of the choices available and advises on the best way to invest our money and provide for our future. Notwithstanding huge financial instabilities in South Africa Peter has structured and consolidated our finances with a systematic and comprehensive approach. This assisted us to make our transition to retirement financially affordable and fairly easy. Peter and his team are extremely professional in their approach to financial planning. We appreciate your professional assistance in educating us on financial decisions and assisting us to take informed decisions with risks that we understand. We now feel confident that our financial plan is healthy and secure. We have no hesitance in highly recommending Hewett Wealth to family, friends and business acquaintances. We only wish that we had utilised the services of Hewitt Wealth earlier in our lives. We will, however, stick with them as they offer a very high level of service, financial education and advice."
-Fred and Karin Adams
"Dear Peter, just been going through my offshore portfolio and other investments managed by your company and thought it would be nice to send a mail to express my appreciation to you and your competent staff. Having known you and your family for decades and been aware of your success at top managerial level in the corporate world, I was pleased to hear that you had decided to form your own financial services company and grateful that you agreed to accept me as a client. As a mid-seventies businessman wishing for a peaceful and financially secure retirement I can now honestly say that after two years with Hewett wealth, I am immensely impressed, not only with the huge growth in value in my offshore portfolio, but also the communication, ongoing quarterly reviews on a one to one personal meeting basis and immediate attention to matters arising therefrom and the attention to detail regarding things like my Will and general estate planning. The past two years have been a pleasure, well financially speaking anyhow. Now if only the Bokke could beat the All Blacks. Very many thanks Peter, may your company and clients continue to prosper."
-Ron Coburn
"Ek het in vroeg 2014 afgetree en gou besef my huidige finansiële kundige het nie die nodige kennis gehad om ingeligte langtermyn besluite te neem rondom ons finansiële behoeftes nie. Ek het ons boekhouer geskakel en hy het ons verwys na Peter Hewett van Hewett Wealth. Ons het ‘n e-pos met ‘n lys van behoeftes aan hom gestuur, waarna hy gereël het vir ‘n besoek wat ons sou pas. Wat ons veral beïndruk het, is die deeglikheid waarmee hy alles ontleed het, en vir ons terugvoer en aanbevelings gemaak het. Die sake wat ter sprake was, is lewende-annuïteite, disresionêre beleggings, aandele portefeuljes, koop om te verhuur eiendomme, testamente, mediese fondse en nog ‘n paar ander. Hy het dit vir ons geprioritiseer, en sy kundigheid, geduld, en bereidwilligheid om iets te verduidelik tot ons dit begryp het, het vertroue ingeboesem. Ons sal met groot gerustheid aanbeveel dat enige iemand van hulle kundige vriendelike dienste gebruik maak."
-Muller Schoeman
"My kennis met Peter Hewett het begin in Junie 2012 toe hy vir my ‘n beleggingsvoorstel voorberei het. Op daardie stadium was ek maande van aftrede af, en was ek opsoek na ‘n finansiële adviseur om my by te staan en met raad te bedien om my finansies en persoonlike sake te bestuur en in orde te kry. Die beleggingsvoorstel wat ek ontvang het was die mees professionele dokument wat ek ontvang het. As gevolg van die dokument en Peter Hewett se aangename persoonlikheid en uitsonderlike integriteit het ek hom verkies as finansiële adviseur. Ek was nog nie ‘n dag spyt sedert ek die besluit geneem het nie. Die portefeulje wat Peter Hewett vir my saamgestel het getuig van ‘n indiepte kennis van die mark en die wetgewing wat hiermee verband hou. Die voorstelle wat hy maak is hy bereid om te bespreek en te verduidelik wat die agtergrond vir die voorstel is. Hewett Wealth is altyd op die uitkyk vir besondere geleenthede in die mark wat tot voordeel vir sy kliënte sal wees. Sedert Hewett Wealth my portefeulje bestuur het dit gegroei en toegeneem, na verwagting en verseker dit dat ek gerus my aftrede kan geniet aangesien dit in bekwame hande is. Peter is altyd beskikbaar om raad en hulp te gee waar nodig en dit sluit die nabye familie in. Op ‘n gereelde basis reël hy persoonlike vergaderings om my op hoogte te hou oor sake wat op my betrekking het. Die Hewett Wealth span volg Peter se voorbeeld en lewer uitstaande diens. Hulle is vriendelik en professioneel en altyd bereid om behulpsaam te wees. Die diens wat ek ontvang is van hoogstaande gehalte. As gevolg van die diens en die professionele raad wat ek kry het ek Hewett Wealth al by my familie en vriende aanbeveel. Ek sal dus Hewett Wealth sonder enige huiwering aanbeveel."
-Danie Oosthuizen
"Dear Peter, Jean and Matthys. As a customer of Hewett Wealth, it has been a pleasure dealing with you over the last year. Your team has been especially a great support with numerous requests whilst I made my move to New Zealand. Without this support my move would have been a lot more stressful. Thank you again and I am looking forward to dealing with Hewett Wealth over the years to come."
-Andries Els
"Dit was n hartseer dag to Peter Hewett my vertel het dat hy besluit het om sy eie “ding” te doen. Peter was een van my kollegas en n ware steurnpilaar, en sy weggaan sou beslis n leemte gelaat het. Maar daar was geen twyfel, Hewett Wealth gaan n groot sukses wees want hoe kan dit anders met Peter aan die stuur? Vandag is Hewett Wealth, soos gewag, n reuse sukses. En, al is ek en Peter nie meer direkte sakevennote nie, sal ek en hy altyd vriende bly."
-Dawie Roodt
"We have known Pete since 2012 and have always had the highest regard for his professionalism and knowledge of holistic financial planning. Pete and his team of financial planners embody what it means to be professionals and we can recommend the practice to anybody that are serious about their financial planning. They put your financial needs and dreams first and provide an exceptional service while working towards making it a reality."
-Claude and Sherma Malan
"In my opinion, “Service” and “great people” remain the pillar to business growth. The industry which you find yourself in remains competitive and you always seem to find someone who professes to be better than the previous incumbent. I would like to thank Hewett Wealth for the absolute professional way in which they handled my portfolio and the professionalism they have shown to date. It is very seldom that the sales pitch is what is actually experienced and that the client is put first above the profitability of the business. Looking forward to a lasting relationship."
-Tony Jenkins
"More than a year ago I switched all my private and family trust investments and accounting portfolios to Hewett Wealth. It was an excellent decision because of the dedication and professional way that they treat their clients. Good luck to Peter and his well trained supporting staff."
-Johann Koorts
"We joined Hewett Wealth because of the following: 1) Quality financial advice, we have terrible experience with at least three other financial advisers, their main objective was to make quick buck for themselves e.g. converting RA’s into living high cost annuities in a time when we worked, and our marginal tax was high. 2) Knowledge of financial instruments available in market space; other advisers just selling the same old investments with guaranteed low performance. 3) Lower cost of financial advice. 4) Communication and reporting: HW employees are professional and always available to respond to our concerns; bi-monthly reports provide status of our portfolio. 5) One stop service: HW provides wide range of financial services: tax assistance, investment advice, shares trading ,wills etc.. All the above resulted that we make more money out of our retirement savings and pay less tax."
-Stan & Anke Brodziak
"A big thank you to Peter and his team, for their dedication and care towards me and my family during the past one and a half years. In October 2016, my husband was diagnosed with ALS (Motor Neuron Disease), a fatal and incurable disease. Peter spent many, many patient hours with my husband and myself, drawing up new wills, negotiating with Legatus Trust, and placing different financial situations and plans before us. We had never anticipated a dreaded disease and that death would end our 24 year marriage, neither had we financially planned accordingly. Sadly, my husband passed away in June 2017, leaving me and our 3 financially dependent children. Hewett Wealth took so much off my shoulders. Step by step, Peter and his team, guided me through each process, giving me and my children time to grieve. From setting up a family budget, investing the Employment death benefit pay-out through Hewett Wealth, how school fees should be paid, which cars to trade in, which cars to purchase, etc, etc, Peter was always just a phone call away. In less than a year, the estate was finalized. Thank you, Pete and team, for your efficient and honest service, your compassion, and the time you took (and still do) to answer all my endless questions. May you go from strength to strength. I have the assurance that my family’s finances are in good hands."
-Angela Bender
"A one stop shop for expert advice. A professional outfit with dedicated professionals, with a focus on you, the client. Help you make smart financial decisions. Help balance your best interests. They work very hard to try bring you more balanced and varied views, not just what they get paid the most for offering, by this I mean fees from Institutions they recommend."
-Carol and Anthony Searra
"I was introduced to Pete on the recommendation of my supervising partner at the law firm I practiced at. At the time, I had come into a significant amount of funds that I needed to be managed and invested for both long term and short term needs with a degree of flexibility and accessibility, if required. Being part of an extremely demanding practice and planning a wedding at the time meant that I did not have time to acquire knowledge to skillfully manage and discern between investment vehicles in my individual capacity. I required an expert who could not only understand my needs but advise me comprehensively. I had, in the past had some investment exposure, which I now know was rudimentary, at best, and my experience of insurance based investments was poor. At my introductory meeting with Pete I outlined my needs and immediate and medium term plans. Pete and his team set up relevant accounts for my funds to be invested until allocation and the entire process was seamless. I was assured of meeting with Pete every quarter, as I have, and have witnessed my investments increase in value whilst still having access to funds and improving my retirement planning. I am always advised of major events in the political, investment and exchange areas and the impact of this on my investments are addressed directly. I value the personal touch that Pete has ensured both my husband and I receive in his advice which makes the relationship more than just business. Pete is my financial advisor and a reliable confidant who I run my major financial decisions by. Over time I have also come to rely on the service of Jean and trust that my matters are adequately overseen on all levels. I have open lines of communication with Pete and would recommended his advice to anyone, novice or expert, for class leading service excellence. Thank you Pete and Jean!"
-Verana Peters
"As a former employee and ongoing mentee of Peter Hewett, the Managing Director of Hewett Wealth, I can honestly say that there is not an individual that takes financial planning and therefore the financial well-being of his clients more serious than Mr Hewett himself. The in-depth knowledge of all factors in financial planning which culminates in Hewett Wealth as a company, will bring you the utmost of ease when it comes to your finances as an individual. There is simply no one better!"
-Steph Le Roux
"Dear Ryan & Peter. Before consulting with Hewett Wealth, our investments were in different structures and on various platforms with no holistic thought given to future planning. Ryan, thank you for taking the time and effort to restructure and simplify our investments and help us set goals for financial growth and plan for retirement. Quarterly reviews of our investment portfolio discussed on a personal basis by Ryan, who makes the trip to Somerset East from Cape Town, where we take a holistic view on the investments and discuss any changes that should be made to maximise the performance. Investments, both local and offshore, have been producing positive results for us, even in an environment where growth has been minimal. Not only have you helped with investment advice, you have also helped us with advice on estate planning and wills, reducing estate duties and whereby we will be able to transfer the wealth to the next generation. The advice you gave us with our future move we really appreciate too - advice on selling some properties and valuing our business so that when we do want to make our final move on retirement, we have been adequately informed. Additionally, your short-term insurance advice has given us the confidence that we have been insured adequately at the best value. It is reassuring to know that if something does go wrong we are able to get assistance on a 24hour basis. With confidence we can recommend Hewett Wealth – give them an opportunity to review your portfolio and to advice on long- and short-term financial wellbeing. You will not be disappointed"
-Kevin & Kerry McCaughey
"For a non-financial person negotiating the multitude of financial instruments on offer and evaluating robustness of financial planning for future retirement is a daunting task! My experience with the PH Wealth team has been one of utmost professional service, advising on the full spectrum of personal financial planning, including taxation. Their attention to detail and sound advice has helped simplify my finances and delivered results. In addition Peter’s regular personal feedback provides me with the peace of mind that my financial planning is in good hands."
-Johann Breytenbach
"Peter Hewett en sy span by Hewett Wealth het my gehelp om al my beleggings te konsolideer nadat ek ophou werk het. Dis gedoen met in ag genome die twee belangrikste komponente naamlik ‘n optimale belasting struktuur en ‘n maandelikse uitbetaling. Ek slaap gerus met die wete dat my aftree beplanning gereeld hersien word en aangepas word soos die mark verander. ‘n Aangename ondervinding om met kundige en professionele mense te werk. Baie dankie!"
-Cecilia Coetzee
"Ek het Peter in 2015 ontmoet en na sy uiters professionele voorlegging hom toevertrou om my finansiële sake te bestuur. Die Hewett span is gedrewe om innoverende lae koste produkte te skep wat aan al die kliënt se behoeftes voldoen , en oorskry. Peter, Jean en hul span is altyd beskikbaar om hulle kliënte by te staan met vriendelike en ‘n effektiewe diens. Ons beskou Peter as ‘n familie vriend wat alreeds na drie geslagte van ons familie se finansiële belange omsien."
-Jaco & Tilana Oosthuizen
Investment Glossary
Alpha - The amount of return expected from an investment from its inherent value.
Annualized rate of return - The average annual return over a period of years, taking into account the effect of compounding. Annualized rate of return also can be called compound growth rate.
Appreciation - The increase in value of a financial asset.
Asset allocation - The process of dividing investments among cash, income and growth buckets to optimize the balance between risk and reward based on investment needs.
Asset class - Securities with similar features. The most common asset classes are stocks, bonds and cash equivalents.
Association for Savings and Investment SA (ASISA) - ASISA represents the majority of South Africa’s asset managers, collective investment scheme management companies, linked investment service providers, multi-managers, and life insurance companies and their investors. The primary aim of the Association is to facilitate the development and growth of the industry, through its dealings with the authorities and regular communication with the media and investing public. Working on behalf of its members, the Association acts as the custodian of codes of practice and standards throughout the industry, and is the forum for identifying and fulfilling common goals.
Bear market - A bear market is a prolonged period of falling stock prices, usually marked by a decline of 20% or more. A market in which prices decline sharply against a background of widespread pessimism, growing unemployment or business recession. The opposite of a bull market.
Benchmark - A standard, usually an unmanaged index, used for comparative purposes in assessing performance of a portfolio or collective investment scheme.
Beta - A measurement of volatility where 1 is neutral; above 1 is more volatile; and less than 1 is less volatile.
Bonds - A bond is an interest-bearing debt instrument, traditionally issued by governments as part of their budget funding sources, and now also issued by local authorities (municipalities), parastatals (Eskom) and companies. Bonds issued by the central government are often called “gilts”. Bond issuers pay interest (called the “coupon”) to the bondholder every 6 months. The price/value of a bond has an inverse relationship to the prevailing interest rate, so if the interest rate goes up, the value goes down, and vice versa. Bonds/gilts generally have a lower risk than shares because the holder of a gilt has the security of knowing that the gilt will be repaid in full by government or semi-government authorities at a specific time in the future. An investment in this type of asset should be viewed with a 3 to 6 year horizon.
Bull market - Any market in which prices are advancing in an upward trend. In general, someone is bullish if they believe the value of a security or market will rise. The opposite of a bear market.
Capital - The funds invested in a company on a long-term basis and obtained by issuing preferred or common stock, by retaining a portion of the company's earnings from date of incorporation and by long-term borrowing.
Capital gain - The difference between a security's purchase price and its selling price, when the difference is positive.
Capital loss - The amount by which the proceeds from a sale of a security are less than its purchase price.
Cash equivalent - A short-term money-market instrument, such as a Treasury bill or repurchase agreement, of such high liquidity and safety that it is easily converted into cash.
Collective Investments - Collective Investments are investments in which investors’ funds are pooled and managed by professional managers. Investing in shares has traditionally yielded unrivalled returns, offering investors the opportunity to build real wealth. Yet, the large amounts of money required to purchase these shares is often out of reach of smaller investors. The pooling of investors’ funds makes Collective Investments the ideal option, providing cost effective access to the world’s stock markets. This is why investing in Collective Investments has become so popular the world over and is considered a sound financial move by most investors.
Compound Interest - Compound interest refers to the interest earned on interest that was earned earlier and credited to the capital amount. For example, if you deposit R1 000 in a bank account at 10% and interest is calculated annually, your balance will be R1 100 at the end of the first year and R1 210 at the end of the second year. That extra R10, which was earned on the interest from the first year, is the result of compound interest (“interest on interest”). Interest can also be compounded on a monthly, quarterly, half-yearly or other basis.
Custodian - A bank that holds a mutual fund's assets, settles all portfolio trades and collects most of the valuation data required to calculate a fund's net asset value (NAV).
Cut-off time - The time of day when a transaction can no longer be accepted for that trading day.
Diversification - The process of owning different investments that tend to perform well at different times in order to reduce the effects of volatility in a portfolio, and also increase the potential for increasing returns.
Dividend - A dividend is a portion of a company's profit paid to common and preferred shareholders. Dividends provide an incentive to own stock in stable companies even if they are not experiencing much growth. Companies are not required to pay dividends.
Dividend yield - Annual percentage of return earned by a mutual fund. The yield is determined by dividing the amount of the annual dividends per share by the current net asset value or public offering price.
Dow Jones Industrial Average (Dow) - The most commonly used indicator of stock market performance, based on prices of 30 actively traded blue chip stocks, primarily major industrial companies. The Average is the sum of the current market price of 30 major industrial companies' stocks divided by a number that has been adjusted to take into account stocks splits and changes in stock composition.
EPS - The portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability.
Equities - A share represents an institution/individual’s ownership in a listed company and is the vehicle through which they are able to “share” in the profits made by that company. As the company grows, and the expectation of improved profits increases, the market price of the share will increase and this translates into a capital gain for the shareholder. Similarly, negative sentiment about the company will result in the share price falling. Shares/equities are usually considered to have the potential for the highest return of all the investment classes, but with a higher level of risk i.e. share investments have the most volatile returns over the short term. An investment in this type of asset should be viewed with a 7 to 10 year horizon.
Expense ratio - The ratio between a mutual fund's operating expenses for the year and the average value of its net assets.
Federal Funds Rate (Fed Funds Rate) - The interest rate charged by banks with excess reserves at a Federal Reserve district bank to banks needing overnight loans to meet reserve requirements. The most sensitive indicator of the direction of interest rates, since it is set daily by the market, unlike the prime rate and the discount rate, which are periodically changed by banks and by the Federal Reserve Board.
Federal Reserve Board (The Fed) - The governing board of the Federal Reserve System, it regulates the nation's money supply by setting the discount rate, tightening or easing the availability of credit in the economy.
Financial Sector Conduct Authority (FSCA) - The Financial Services Board (FSB) has officially taken up its new mandate as the FSCA, effective 1 April 2018. This marks the formal implementation of the Twin Peaks model of financial sector regulation, as envisaged in the Financial Sector Regulation Act 2017 (FSRA). Finance Minister Nhlanhla Nene, has now signed the Commencement Notice for the FSRA, formally establishing both the FSCA and its sister organization, the Prudential Authority (PA). The FSCA’s key objectives will be to:1) protect financial customers by promoting their fair treatment by financial institutions, providing financial education programs, and promoting financial literacy, 2) enhance and support the efficiency and integrity of financial markets, 3) assist in maintaining financial stability, 4) support the overall policy objectives of financial inclusion and transformation of the financial sector.
Growth investing - Investment strategy that focuses on stocks of companies and stock funds where earnings are growing rapidly and are expected to continue growing.
Growth stock - Typically a well-known, successful company that is experiencing rapid growth in earnings and revenue, and usually pays little or no dividend.
Growth-style funds - Growth funds focus on future gains. A growth fund manager will typically invest in stocks with earnings that outperform the current market. The manager attempts to achieve success by focusing on rapidly growing sectors of the economy and investing in leading companies with consistent earnings growth. The fund grows primarily as individual share prices climb.
Index - An investment index tracks the performance of many investments as a way of measuring the overall performance of a particular investment type or category. The S&P 500 is widely considered the benchmark for large-stock investors. It tracks the performance of 500 large U.S. company stocks.
Inflation - A rise in the prices of goods and services, often equated with loss of purchasing power.
Interest rate - The fixed amount of money that an issuer agrees to pay the bondholders. It is most often a percentage of the face value of the bond. Interest rates constitute one of the self-regulating mechanisms of the market, falling in response to economic weakness and rising on strength.
Interest-rate risk - The possibility of a reduction in the value of a security, especially a bond, resulting from a rise in interest rates.
Investment objective - The goal of a mutual fund and its shareholders, e.g. growth, growth and income, income and tax-free income.
Junk bond - A lower-rated, usually higher-yielding bond, with a credit rating of BB or lower.
JSE Securities Exchange - The primary role of the JSE Securities Exchange is to provide a market where securities can be freely traded under regulated procedures.
Linked Investment Service Provider (LISP) - In layman’s terms a Linked Investment Service Provider is a financial institution which packages, distributes and administers a broad range of unit trust-based investments spanning voluntary to retirement planning products. Any investment made through these products provides a client a single entry into a selection of investment elements wherein a financial adviser assists in designing a suitable investment plan.
Liquidity - The ability to have ready access to invested money. Unit Trust (CIS) funds are liquid because their shares can be redeemed for current value (which may be more or less than the original cost) on any business day.
Long-term investment strategy - A strategy that looks past the day-to-day fluctuations of the stock and bond markets and responds to fundamental changes in the financial markets or the economy.
Market price - The current price of an asset.
Market risk - The possibility that an investment will not achieve its target.
Market timing - A risky investment strategy that calls for buying and selling securities in anticipation of market conditions.
Maturity - The date specified in a note or bond on which the debt is due and payable.
Morningstar ratings - System for rating open- and closed-end mutual funds and annuities by Morningstar Inc. of Chicago. The system rates funds from one to five stars, using a risk-adjusted performance rating in which performance equals total return of the fund.
NASDAQ - National Association of Securities Dealers Automated Quotations system, which is owned and operated by the National Association of Securities Dealers. NASDAQ is a computerized system that provides brokers and dealers with price quotations for securities traded over-the-counter as well as for many New York Stock Exchange listed securities.
Net Asset Value per share (NAV) - The current dollar value of a single mutual fund share; also known as share price. The fund's NAV is calculated daily by taking the fund's total assets, subtracting the fund's liabilities, and dividing by the number of shares outstanding. The NAV does not include the sales charge. The process of calculating the NAV is called pricing.
P/B Ratio - The price per share of a stock divided by its book value (net worth) per share. For a stock portfolio, the ratio is the weighted average price-to-book ratio of the stocks it holds.
Portfolio allocation - Amount of assets in a portfolio specifically designated for a certain type of investment.
Portfolio holdings - Investments included in a portfolio.
Portfolio manager - The person or entity responsible for making investment decisions of the portfolio to meet the specific investment objective or goal of the portfolio.
Preferred stock - A class of stock with a fixed dividend that has preference over a company's common stock in the payment of dividends and the liquidation of assets. There are several kinds of preferred stock, among them adjustable-rate and convertible.
Premium - The amount by which a bond or stock sells above its par value.
Price-to-book - The price per share of a stock divided by its book value (net worth) per share. For a stock portfolio, the ratio is the weighted average price-to-book ratio of the stocks it holds.
Price-to-earnings (P/E) Ratio - A stock's price divided by its earnings per share, which indicates how much investors are paying for a company's earning power.
P/E Ratio (1 yr trailing) (long position) - Price of a stock divided by its earnings from the latest year.
P/E Ratio (1 yr forecast) - Price of a stock divided by its projected earnings for the coming year.
Ratings - Evaluations of the credit quality of bonds usually made by independent rating services. Ratings generally measure the probability of timely repayment of principal and interest on debt securities.
Recession - A downturn in economic activity, defined by many economists as at least two consecutive quarters of decline in a country's gross domestic product.
Reinvestment option - Refers to an arrangement under which a mutual fund will apply dividends or capital gains distributions for its shareholders toward the purchase of additional shares.
Risk tolerance - The degree to which you can tolerate volatility in your investment values.
Sector - A group of similar securities, such as equities in a specific industry.
Share - A unit of ownership in an investment, such as a share of a stock or a mutual fund.
Sharpe Ratio - A risk-adjusted measure that measures reward per unit of risk. The higher the sharpe ratio, the better. The numerator is the difference between the Fund's annualized return and the annualized return of the risk-free instrument (T-Bills).
Short-term investment - Asset purchased with an investment life of less than a year.
Standard & Poor's Index - Broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks commonly known as the Standard & Poor's 500 or S&P 500.
Standard Deviation - A statistical measure of the degree to which an individual value in a probability distribution tends to vary from the mean of the distribution.
Strategic Asset Allocation - The portfolio is managed with a long-term view with no, or limited deviation from the chosen asset allocation.
Time horizon - The amount of time that you expect to stay invested in an asset or security.
Total return - Accounts for all of the dividends and interest earned before deductions for fees and expenses, in addition to any changes in the value of the principal, including share price, assuming the funds' dividends and capital gains are reinvested. Often, this percentage is presented in a specified period of time (one, five, ten years and/or life of fund). Also, a method of calculating an investment's return that takes share price changes and dividends into account.
Tracking Error - The active risk of the portfolio. It determines the annualized standard deviation of the excess returns between the portfolio and the benchmark.
Turnover Ratio - Percentage of holdings in a mutual fund that are sold in a specified period.
Valuation - An estimate of the value or worth of a company; the price investors assign to an individual stock.
Value investing - A strategy whereby investors purchase equity securities that they believe are selling below estimated true value. The investor can profit by buying these securities then selling them once they appreciate to their real value.
Value stock - Typically an overlooked or under-priced company that is growing at slower rates.
Volatility - The amount and frequency with which an investment fluctuates in value.
YTD total return - Year-to-date return on an investment including appreciation and dividends or interest.
YTD - Year-to-date return on an investment including appreciation and dividends or interest.
Yield - Annual percentage rate of return on capital. The dividend or interest paid by a company expressed as a percentage of the current price.
Yield to maturity - Concept used to determine the rate of return an investor will receive if a long-term, interest-bearing investment, such as a bond, is held to its maturity date.