How to educate yourself about business finance

In the world of business there are some investments that you should be aware of. Investing your money can help ensure your financial success and future. It is best to have a clear understanding of the investment before investing your hard earned money. Some of the investments worth knowing, even if you do not plan on investing in them today, include:

1. American Depository Receipt (ADR): This is a stock that trades in the United States but represents a certain number of shares in a foreign corporation. ADRs are issued and sponsored in the U.S. by a bank or brokerage, they are bought and sold on the stock market in the United States just like regular stocks. ADRs are a great way for an individual to buy shares in a foreign company and capitalize on its growth potential outside North America. Most ADRs range in price from $10.00 to $100.00 per share. They are bought in the same manner as common stocks. The majority of ADRs do not require a minimum investment, but many brokerages require clients to have at least $500.00 to open an account, this is common with any investment. Of course, like with any investment, there are some risks. Investing in companies in different countries gives you the potential to capitalize on emerging economies, but researching foreign companies may be difficult because of language barriers.

2. Annuity: this is a series of fixed amount payments which are paid at regular intervals over a specified period. The majority of annuities are purchased through an insurance company. There are two type of annuities. The first is a fixed annuity which means the insurance company makes fixed dollar payments to the holder of the annuity for a certain period of term. This is a good financial tool for those seeking to receive a fixed investment income. Both earnings and principal are guaranteed by the insurance company. The second type of annuity is variable annuity. This means the insurance company guarantees a minimum payment, and the remaining income payments at the end of the accumulation phase, depending on the performance of your annuity investment portfolio. Annuities allow you to invest in a managed portfolio of stocks, bonds, money market funds, or any combination. The annual payment you will receive is determined by the performance of the portfolio. The minimum investment is generally $1,000 plus purchase fees. The risk of losing your principal investment are very low, annuities are considered to be very safe.

3. Closed-End investment fund: This is an investment fund that issues a fixed number of shares in an active, managed portfolio of securities. Closed-end funds represent a portfolio of securities that are similar to a mutual fund, but unlike a mutual fund the market price of the shares is determined by supply and demand, not by the net asset value. The closed-end shares are traded in the market just like stocks. There is no minimum number of shares to buy and they can be bought on stock markets with the assistance of a full service or discount broker. You are usually charged the typical brokerage commission as well as an annual management fee, which typically is under 1%. These funds are easy to buy and sell. Closed-end investment funds are regulated by the Securities and Exchange Commission. Some closed-end funds primary concern is capital appreciation, while others are more focused on income. Keep in mind fixed interest payments are taxed at the same rate as income and the price of the closed-end fund is not only determined by the performance of the securities held by the fund, but the price of the fund is generally determined on supply and demand in the open market.