General Investing
Why is financial literacy important?
Without financial literacy skills, you can miss opportunities that help you maximize your money, understand the risks and costs of credit and debt, and it is a tool to achieve financial freedom to afford student loans, a car, and later on a house, which are long-term goals
What is a stock?
Percentage share in the ownership of a company
Define budgeting
Managing your money in a smart way usually in the form of helping you save money
Define interest rates and when they would be used
the cost of borrowing, in a loan either a student loan, mortgage,auto loans, credit cards
List at least one example of a stock and an ETF/Mutual Fund
Answers vary, but an example could be Apple and the S&P500
Explain what the stock price means
The current price to purchase 1 share of a specific company
Define/explain the need v. want concept
It forces you to consider whether your next purchase is an absolute necessity as opposed to something nice to have
What is the difference between compound and simple interest? Which grows faster?
Simple interest is calculated only on the original amount of money you borrowed, grows at a constant rate while compound interest on a loan or deposit that is calculated not only on the initial amount (the principal) but also on the accumulated interest from previous periods, grows faster over time
Order these investments from most to least risky: Individual Stocks, Savings Accounts, and Bonds
1. Individual Stocks
2. Bonds
3. Savings Accounts
What does the company Nvidia sell?
Technology company that designs chips for different devices
What are three examples of expenses
rent/mortgage, home insurance, car insurance, utility bills, credit card bills, and car
What is an example of a good credit score?
around 700
What is one example of something that could impact the stock price (either positively or negatively)
Current events, new laws, company leadership, sales, and earnings
What is the magnificent 7?
7 huge technology companies, including Apple, Microsoft, Alphabet (Google), Amazon, NVIDIA, Meta Platforms, and Broadcom (Tesla just dropped and was replaced by Broadcom)
What is one piece of advise you would tell someone looking to improve their budget?
answers vary
Define what a credit score means
Number that shows how financially reliable a person is
What is an IPO (Initial Public Offering)?
when a company goes public, anyone can buy stock in this company because it is now sold on the public market
What does EPS stand for?
Earnings per share
Which is bigger, net or gross income? Why?
Gross income would be greater because it is before you subtract any expenses, after subtracting expenses then this is your net income
What does the term principal mean?
the starting amount of money you borrow