Market Performance: February 12, 2024.

US stocks ended mixed on Monday after the S&P 500 index notched a historic close in the prior session, as investors prepared for the first key inflation update of the year and the next wave of earnings reports.

The S&P 500 (^GSPC) closed just below the flat line after a record-setting week that saw the benchmark end above 5,000 for the first time. The Dow Jones Industrial Average (^DJI) gained around 0.3% to hit a fresh record, while the tech-heavy Nasdaq (^IXIC) fell 0.3%.

Shares of chipmaker Nvidia (NVDA) rose 2% to hit another record on Monday before paring gains. British semiconductor designer Arm (ARM) also surged to a new record, extending its rally from last week.

What Is Financial Leverage, and Why Is It Important?

What Is Financial Leverage?

Financial leverage is the concept of using borrowed capital as a funding source. Leverage is often used when businesses invest in themselves for expansions, acquisitions, or other growth methods. Leverage is also an investment strategy that uses borrowed money—specifically, the use of various financial instruments or borrowed capital—to increase the potential return of an investment.

Understanding Financial Leverage

Leverage is using debt or borrowed capital to undertake an investment or project. It is commonly used to boost an entity's equity base. The concept of leverage is used by both investors and companies.

Investors use leverage to significantly increase the returns that can be provided on an investment. They leverage their investments using various instruments, including options, futures, and margin accounts. Companies can use leverage to fccinance their assets. In other words, companies can use debt financing to invest in business operations to influence growth instead of issuing stock to raise capital.

Investors who are not comfortable using leverage directly have a variety of ways to access leverage indirectly. They can invest in companies that use leverage in the ordinary course of their business to finance or expand operations—without increasing their outlay.

23% of Americans Bomb This Financial Quiz. Can You Do Better?

Despite the vast depth of information and education available today, financial literacy isn’t improving among adults in the U.S. A financial advisor can help you improve your financial literacy to better understand your money.

On average, American adults correctly answered only 50% of the questions in the 2022 Personal Finance Index, an annual survey conducted by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business.

Since researchers from the TIAA and George Washington University started gauging financial literacy among adults in 2017, functional knowledge hasn’t improved. The area where people struggle the most? Understanding financial risk. Here’s a look at the survey’s findings and some of the questions that were asked.

Financial Literacy Isn’t Improving:

Unfortunately, this year’s survey and previous studies have revealed that many adults in the U.S. function with a poor understanding of financial topics.

On average, U.S. adults answered only 50% of the index questions correctly in 2022, a figure that has remained steady since 2017.

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