At Ignite Financial, we take financial planning seriously, but we also believe a sense of humor can make learning a bit more fun. Hover over each term to see our tongue-in-cheek take on these common financial concepts.
A 12b-1 fee is an annual marketing or distribution fee charged by some mutual funds, usually as part of their expense ratio. It is meant to cover advertising, broker commissions, and other costs related to selling the fund, typically ranging from 0.25% to 1% of assets under management.
A magical little charge that lets mutual funds bill you extra for the privilege of marketing themselves to new suckers—uh, investors. Ostensibly meant to cover distribution costs, but in reality, just another way to siphon money from your returns while making Wall Street richer.
Active Management
A strategy where fund managers try to outperform the market by picking stocks, timing trades, and making investment decisions based on research, forecasts, and analysis. It often comes with higher fees and the promise (but not the guarantee) of beating passive index funds.
A costly, time-consuming effort by highly paid professionals to outperform the market—by trading frequently, charging hefty fees, and usually underperforming a simple index fund. A brilliant strategy for making sure they get rich, even if you don’t.
12b-1 Fee
A 12b-1 fee is an annual marketing or distribution fee charged by some mutual funds, usually as part of their expense ratio. It is meant to cover advertising, broker commissions, and other costs related to selling the fund, typically ranging from 0.25% to 1% of assets under management.
A magical little charge that lets mutual funds bill you extra for the privilege of marketing themselves to new suckers—uh, investors. Ostensibly meant to cover distribution costs, but in reality, just another way to siphon money from your returns while making Wall Street richer.
Active Management
A strategy where fund managers try to outperform the market by picking stocks, timing trades, and making investment decisions based on research, forecasts, and analysis. It often comes with higher fees and the promise (but not the guarantee) of beating passive index funds.
A costly, time-consuming effort by highly paid professionals to outperform the market—by trading frequently, charging hefty fees, and usually underperforming a simple index fund. A brilliant strategy for making sure they get rich, even if you don’t.
Bond
A bond is a loan you give to a government or company in exchange for periodic interest payments and the return of your money at a set date. It's considered a safer investment than stocks but still carries risks, like inflation eating away at its value or the issuer failing to pay you back.
A fancy IOU in which you give your money to a government or corporation, and in return, they promise to pay you back—eventually—after making you sweat through interest rate hikes, inflation, and the occasional default. Often described as a "safe investment," which is true, unless you count the risk of losing to inflation, issuer bankruptcy, or just plain boredom.
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At Benchmark Financial, we aim to educate as much as advise. Here is our database of recommended books, videos, and terms to further educate yourself.
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At Benchmark Financial, we aim to educate as much as advise. Here is our database of recommended books, videos, and terms to further educate yourself.
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