Glossary Building 2

I started out researching the fiduciary rule for this weeks post prompt. Right then, I came across a word I had never heard before. It may come as no surprise, but that word was in fact “fiduciary.” I continued on reading, hoping to gain some more knowledge. I ended up coming across two more words that spark my interest, “robo-advisors” and “index funds.” Now, it needs to be stated that I am the furthest thing from having a business working mind, or anything of that sort. So, these words could be simple terms to some but to me, they are a challenge. I wrote down the three words so that I could come back to them after I finished my readings.

The articles I was reading were completed and I still did not fully understand the three terms. I knew that a fiduciary was a person that acted under the fiduciary rule. Meaning, they legally had to give appropriate financial or legal advice that would benefit their specific client at the moment, rather than benefiting themselves. I searched around and saw that my own understanding of the term was pretty spot on, but dumbed down a bit for myself. After that, I turned to robo-advisors and found that the word means almost exactly what you would think. A robo-advisor is a legitimate online system that provides financial advice with hardly any human interaction. The software was created with algorithms that manage clients assets to optimize financial success. Pretty cool, but would you trust that? I then needed to understand and identify what the term “index funds” meant. Index funds are mutual funds. These are specifically designed to watch the returns of the market, and track it. An index fund holds all of the stocks on an index, which is basically just a list of investments. This one is still a little fuzzy for me and hard to grasp but I got a better understanding of it when I did research of my own. Since Tucker’s article (in this weeks post, prompt 2) was so difficult to understand, it helped me immensely to research these terms on my own. That way it was easier for me to grasp his concepts and ideas.

Definitions:

Fiduciary: involving trust, especially with regard to the relationship between a trustee and a beneficiary.

Robo-Advisors: a class of financial advisor that provide financial advice or portfolio management online with moderate to minimal human intervention.

Index funds:  mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor’s 500 Index (S&P 500).

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