foundations of investing
Educational articles in this subcategory.
Compound Interest: Taxable vs Tax-Advantaged Accounts
**You contribute $7,000 to an IRA and a taxable brokerage account annually for 30 years at 8% returns**—the IRA reaches $817,000 while the taxable acc...
How Economic Cycles Affect Investment Outcomes
**Your portfolio's performance depends less on stock picking than on which phase of the economic cycle you're invested in**. Stocks average **+20% ann...
Inflation-Protected vs Traditional Savings: TIPS and I Bonds Explained
**Cash in a typical savings account loses ~2.2% real purchasing power annually** when inflation runs at 2.7% and your account pays 0.5% interest. Over...
Behavioral Pitfalls Every New Investor Should Recognize
**New investors consistently sell winners too early and hold losers too long**—a pattern called the disposition effect that costs ~1-2% annually in un...
Essential Checklist Before Opening Your First Brokerage Account
**Opening a brokerage account before establishing emergency savings forces you to sell investments at losses when unexpected expenses hit**—which dest...
How US Brokerages Are Regulated
When you hand $50,000 to a brokerage firm, **you're trusting that firm won't disappear with your money**. The US regulatory system creates a three-lay...
Reading Financial News with a Critical Eye
**Financial media earns revenue from your attention, not your portfolio returns.** A headline screaming "MARKET CRASHES!!" for a -1.5% day generates m...
Glossary of Foundational Investing Terms
Financial terminology creates barriers for new investors. **This glossary defines 25 foundational terms you'll encounter when building portfolios, rea...
Building a Simple Efficient Frontier
Most investors pick portfolios based on gut feeling about how much stock exposure feels right. **The efficient frontier eliminates guesswork** by show...
Dollar-Cost Averaging vs Lump Sum: What History Shows
You receive a $50,000 windfall—inheritance, bonus, house sale proceeds—and face the immediate question: invest it all today (lump sum) or spread purch...
The Opportunity Cost of Holding Excess Cash
Cash feels safe. It doesn't fluctuate, doesn't "lose" value on your statement, and provides comfort during market volatility. But **holding cash beyon...
Understanding Real vs Nominal Returns
**Your portfolio returned 10% last year and you celebrated a $10,000 gain on your $100,000 balance**—but inflation ran 3%, meaning your purchasing pow...
Risk Premiums Across US Asset Classes
**You allocate your portfolio 60% stocks and 40% bonds instead of 100% bonds, accepting higher volatility (18% standard deviation vs 6%) in exchange f...
Why Investing Matters for US Households
Households holding excess cash beyond emergency funds watch purchasing power erode while **missing the single most reliable wealth-building mechanism ...
How Inflation Eats US Savings
You check your savings account and see $50,000 (same balance as five years ago). You feel prudent. **You're losing purchasing power at 2-3% annually w...
Time Value of Money (Treasury Examples)
You're offered $1,000 today or $1,000 in five years. **Every rational investor takes the immediate payment** (because money available now can be inves...
Diversification Basics: Why Stocks + Bonds Outperform Stocks Alone
A **100% stock portfolio** returned **10.38% annually** from 1926-2025 with **18% volatility** (wild annual swings from **-37% to +54%**, Source: S&P ...
Volatility and Standard Deviation: Measuring Investment Risk
The S&P 500 averaged **10.38% annual returns** (1926-2025) with **18% standard deviation** (volatility, Source: historical market data). That means in...
Correlation 101: How Asset Relationships Shape Portfolio Risk
Stocks and bonds had **-0.3 to -0.5 correlation** during 2000-2020 (moved in opposite directions, Source: Russell Investments correlation analysis), w...
How Federal Reserve Rate Decisions Move Your Portfolio
The Federal Reserve controls the federal funds rate—currently **3.50-3.75%** (down from a **5.33% peak** in 2023, Source: Federal Reserve FOMC Decembe...