Types of Accounts
What is a bond?
A loan that you give to the government or company who then pays you back with interest.
Is saving high or low risk?
Low Risk
One of the largest stock exchanges in the world.
What is the NYSE (largest)
NASDAQ (2nd largest)
How can you start investing under the age of 18?
Custodial account with your parent
What is the difference between a Bear Market and a Bull Market?
Bear Market is negative growth/pessimistic
Bull Market is positive growth/optimistic
Why should you not keep your money in a shoe box?
Not safe
Not earning interest
If your money is in a savings account, is it hard or easy to get access to your money?
Easy
How can you start investing at a young age?
Custodial account w/ your parent
What does principal mean?
Original amount of money saved or invested, separate from interest or earnings
What is a 401K account?
A retirement plan through your employer who will often match your contributions, allowing you to save for retirement.
Name one type of retirement account
401k
IRA
Does a savings account give you a higher or lower potential for profit than an investment?
Lower potential
Dante has $100 & wants to put it towards ONE stock, What is something he should do with his money instead?
Diversify
Buy different stocks
What is a benefit of investing early?
The earlier you start, the more you will benefit from earning compound interest.
What is the benefit of investing in a ROTH IRA vs. a Traditional IRA?
A ROTH IRA takes taxes out BEFORE you invest. With a Traditional IRA, you pay taxes once you retire, costing you more money in the long-run.
What is a stock?
Paying to have a share in a company
What is it called when the bank pays you for keeping your money in the bank?
Interest
Name something you can invest in
Stocks
Bonds
Which type of interest earns you more money- simple or compound?
Compound
What is a key difference between saving and investing?
Saving guarantees you the money you put away while investing has no guarantees.
Why did Sunoa & Melea decide to invest in an index fund rather than buying stocks for some of their favorite companies?
So their risk and investment is diversified
Name 2 benefits of having a savings account
Keeps Money Safe
Money grows with interest
Prepared for unexpected expenses
Ready to make big purchases
Helps you achieve big life goals
What is the difference between "passive" investing and "active" investing
Passive Investing is when your fund is managed by Robo-advisors
Active Investing is when a human manages your fund day-to-day
Calculate the simple interest:
Starting amount (principle)=$100
Interest Rate=5% for 4 years
$20
If Sally is 50 years old, what percentage should she invest in bonds vs. stocks. (......remember, 120-age=what?)
70%^ in stocks and 30% Bonds