Compounding
What is a compound investment?
You take the interest and add it back to the principal.
How do mutual funds work?
Pools money from multiple investors into stocks and bonds.
What should you do before you invest?
Think
What is a stock?
A piece of a company you can buy.
What is a Bond?
A loan an investor buys from a company.
Name a type of Compounding Interest:
Savings account
Certificates of Deposit
Money Market Accounts
Stocks
EFT's
Mutual fund
REITs
Real estate
Rental Homes
Bonds
Are funds risky?
Yes.
What are EFTs
Exchange-Traded funds
What are the types of Stock market?
Bear market and Bull market.
How do interest rates affect bonds?
What is a simple investment?
Principal gets interest
Who runs mutual funds?
Professional Money Investors
What are Capital Gains?
Profits through investments
How do I buy and sell stocks?
A brokerage firm.
How are Bonds rated?
By risk.
If I put $100 into compounding interest and get 6% every month, what will I get next month?
$106
How have mutual funds performed?
They perform well under the right sectors.
What is diversification?
Putting money in different investments.
What's the difference between a Bull market and Bear market?
Bull market: Going up
Bear market: Going down
Name a type of bond.
US Treasury
Agency Bond
Municipals
Corporates
What is the Compound interest formula?
A = P (1 + (r/n))^(nt)
A = Amount
P = Principal
r = Interest Rate
n = Interest compounded
t = time
Advantages from mutual funds include:
Diversification
Liquidity
What is the 10/5/3 rule of investments?
Determines investment rate of return.
10% - Long term
5% - Debt
3% - Savings
Why do Stocks go down fast?
The bear and bull market does the opposite of how stock markets work.
What makes an AAA bond?