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Wealth & Personal Investing terms
Advisors, robo-advice, funds and the tools retail investors use.
Asset allocation The decision of how to split an investment portfolio across asset classes such as stocks, bonds, and cash. Benchmark index A market index used as the reference point for judging whether a portfolio or fund's performance and risk are competitive. Dollar-cost averaging (DCA) Investing a fixed amount at regular intervals regardless of price, buying more shares when prices are low and fewer when high. Expense ratio The annual percentage of fund assets deducted to cover a fund's operating costs, charged regardless of performance. Money-weighted return (MWR) A return measure that accounts for the size and timing of an investor's own deposits and withdrawals, like an internal rate of return. Portfolio rebalancing Buying and selling holdings to bring a portfolio's asset weights back to its target allocation after they drift. Risk profiling Assessing an investor's ability and willingness to tolerate investment losses, used to guide asset allocation decisions. Tax-loss harvesting Selling an investment at a loss to offset taxable gains elsewhere, then reinvesting in a similar but not identical asset. Time-weighted return (TWR) A return measure that removes the effect of cash flows into or out of a portfolio, isolating the manager's investment performance. Tracking error The standard deviation of the difference between a portfolio's returns and its benchmark's returns.