Things 1
What is risk tolerance? Explain.
The amount of risk you are willing to allow in your investment decisions.
What is a dividend?
Money from profits paid regularly by a company to its shareholders.
How does investing in the stock market differ from putting money in a savings account at a bank?
Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies.
What is a brokerage account?
Type of account used to buy and sell stocks, bonds, and other funds.
What's the difference between a bond and a stock?
Bonds are loans while stocks are partial ownership.
What are options?
Contracts that gives the buyer the opportunity to buy or sell an underlying asset at a given price.
Explain what it means to diversify your portfolio.
Spreading out your assets across multiple asset classes to better reduce risk.
Why are Index Funds such a popular investing option?
They provide a low-cost, diversified investment option that closely matches the overall return of a given index, such as the S&P 500
If you bought 5 shares of a stock at $20 a share and then six months later you sold those 5 shares at $30 a share... what was your profit or loss?
$50 profit
What are TWO ways you can make money by investing from a stock?
Dividends.
Selling higher.
Explain a 401K
an employer oriented retirement account that your employer may offer where your company matches what you put into that account financially.
What's the difference between a call or put option?
A Put option allows the holder to sell the asset at a stated price in the future.
Explain the difference between a ROTH IRA and a Traditional IRA.
ROTH you pay taxes on your income now and your withdrawals later are tax free.
Traditional you make tax deductions now and your withdrawals you pay taxes on.
Explain the difference between simple and compound interest.
Simple interest is earned once from one thing.
Compound interest is where the interest earned also earns interest by being reinvested back in. It's interest earning on interest.
What are ETFs?
Exchange Traded Funds.
Type of security that follows a specific asset and can change prices regularly throughout the day as the securities are exchanged on the market.