Asset Types and Investments
These financial instruments represent partial ownership in a publically traded company.
What are stocks?
Spreading investments across multiple asset classes and industries to prevent a single declining stock from destroying your savings is known as this.
Stock prices continuously fluctuate up and down based on these two fundamental market forces.
What are supply and demand?
This economic term describes the market instability caused by uncertainty prior to political elections.
What is election anxiety?
The S&P index represents approximately this percentage of the total market value of all US stocks.
What is 80%?
These loans made to a government or company pay regular interest and are generally considered safer than stocks.
What are bonds?
This type of interest grows exponentially over time by earning interest on both your initial principal and previously earned interest.
What is compound interest?
The two primary organized stock exchanges where shares are bought and sold in the US.
What are the New York Stock Exchange and the Nasdaq?
When central banks raise these, borrowing costs for companies increase and stock prices decrease as investors shift to bonds.
What are interest rates?
Because you cannot invest in the S&P 500 index directly, investors buy these products, like VOO or SPY, which mimic the index.
What are ETFs or Mutual Funds?
These are the one type of investment we covered that do not generate any cash flow, dividends, or interest and rely solely on market demand/price appreciation for returns.
What are cryptocurrencies?
This risk occurs in conservative portfolios when low investment yields fail to keep up with rising costs, eroding purchasing power over time.
What is inflation risk?
What is a bank loan?
A growing GPD usually results in this effect on overall stock market prices (increase or decrease).
What is an increase in stock market prices?
The S&P 500 offers instant diversification because its companies span across this specific number of market sectors.
What is 11?
This type of investment allows individuals to invest in commercial real estate portfolios without purchasing physical property.
What is a REIT (Real Estate Investment Trust)?
This is the riskiest type of investment portfolio.
What is an aggressive growth portfolio?
Counterintuitively, stock market prices are not driven by facts, but by this psychological factor among investors.
What are expectations?
Low levels of this metric indicates that people have extra disposable income to spend and invest, which boosts stock prices.
What is unemployment?
Over its lifetime, the S&P 500 has averaged this percentage in annual returns, comfortably beating the historical average inflation rate of ~2.5%.
What is 10%?
Professionals recommend allocating no more than this percentage range of your portfolio to cryptocurrency due to its extreme risk.
What is 1% to 5%?
What are the three goals when building an investment portfolio?
The Coldplay CEO Kiss Cam scandal is an example of this factor that affects the stock market.
What is a scandal/company performance?
Investors are advised to maintain this kind of mindset and avoid "panic selling" when stock prices drop during normal market fluctuations.
What is a long-term mindset?
The S&P 500 faces concentration risk because a crash in this single sector—which makes up nearly 1/3 of the index—could cause significant overall drops?
What is tech / AI?