Home Resource Center Advanced Investing

Monte Carlo Methods

Monte Carlo methods, also called Monte Carlo simulations, are a category of mathematical algorithms usually run by computers due to the significant amount of math involved. In finance, these methods are often used to simulate reality in order to calculate the likelihood of risk and returns. Monte Carlo algorithms are designed to use repeated random samplings … Continued

Modern Portfolio Theory and The Efficient Frontier

Harry Markowitz wrote an article titled Portfolio Selection that was published in 1952 and is the basis of Modern Portfolio Theory. In that paper, he laid out his mathematical arguments in favor of portfolio diversification. Markowitz shared the Nobel Prize in Economics in 1990 with two other scholars “for their pioneering work in the theory of financial economics.” … Continued

Income Investing

Income investing is an investment strategy wherein the goal is to buy investments that will pay an ongoing income. Though the concept is simple, achieving success can be trickier because the strategy requires a lot of research to find the most consistent, reliable, high-paying income investments. As with most other investing strategies, income investing will be … Continued

Option Contracts

In the financial industry, an option is a contract that can be bought and sold on exchanges – the majority of securities option contracts are traded on the NYSE or the NASDAQ. For the most commonly traded options, the underlying investments are securities. An option contract entitles the owner to buy or sell 100 shares of a … Continued

Exchange-Traded Funds (EFTS)

Mutual funds and company stock are the traditional offerings in most employer-sponsored retirement plans. Some plans also offer the option to invest in exchange-traded funds, also known as ETFs. Investors who have a self-directed brokerage option through their 401(k) also could have the ability to select ETFs. What is an ETF? An ETF is an … Continued

Longevity Risk

Longevity risk is an odd concept because it refers to the “risk” that a person will live longer than expected and outlive their assets. Since most people want to live longer, the real risk is that an investor will not save enough money to cover a lifespan. For example: George estimated that he would live to … Continued

Tax Loss Harvesting

What is Tax Loss Harvesting? If an investor has incurred or will incur capital gains, tax loss harvesting may be an option for reducing the tax burden of the gains. Tax loss harvesting is the practice of selling securities at a loss to offset capital gains. Loss harvesting is typically used to offset short-term capital gains, since … Continued

Capital Gains

Anytime an investment (like stocks, bonds, commodities, precious metals, futures or options) increases in value, the earnings are called capital gains. Below is a simple illustration of the capital gains concept: Susan purchased 100 shares of Company ABC stock at $10 per share (a total investment of $1,000). The Company ABC share price rose to … Continued