Investing Basics
What does it mean to invest?
To put money in something hoping it grows
What is risk?
The chance of losing money
What is a stock?
A share of ownership in a company
What does diversification mean?
Spreading investments across different assets
What is interest?
Extra money you earn
What is the main goal of investing?
To make your money grow over time
What is return?
The money earned from an investment
What is a bond?
A loan you give to a company or government
Why is diversification important?
It reduces risk
What is compound interest?
Earning interest on your interest
What is an asset?
Something you own that has value and can grow over time
Which is usually safer: a savings account or a stock?
A savings account
Who becomes an owner when they buy a stock?
The investor
If you invest in 10 different companies, are you diversified
Yes
Does money grow faster with simple or compound interest?
Compound interest
What is the stock market?
A marketplace where investors buy and sell shares of companies
Which investment can go up and down more: stocks or savings accounts?
Stocks
What does it mean to “go public”?
A company sells shares to the public for the first time
Why is investing in only one company risky?
If that company fails, you lose everything
Why is starting early helpful?
Your money has more time to grow
What is liquidity?
How quickly an investment can be turned into cash
What is a simple way to lower risk?
Don’t put all your money in one thing
What is a dividend?
Money a company pays to its stockholders
What is a simple way to diversify?
Invest in a mix of things
What does the Rule of 72 help you estimate?
How long it takes money to double