What Are Securities
What is a security in investing?
A security is a financial tool, like a stock or bond, that people use to invest and grow their money.
What does it mean when you buy a stock?
You own a small piece of a company.
What is a bond?
A bond is a loan you give to a company or government that pays you interest.
What is a mutual fund?
A collection of stocks and/or bonds managed by professionals.
What does “risk” mean in investing?
The chance that you could lose money or earn less than expected.
Why do people buy securities instead of just leaving money in a checking account?
Securities help money grow over time, while most checking accounts earn little to no interest.
How can stocks make money for investors?
Through company growth (price increase) and sometimes dividends
Why are bonds considered safer than stocks?
They provide regular interest and are less affected by market swings.
Why might mutual funds feel less overwhelming to Jordan than picking individual stocks?
They are already diversified and professionally managed.
What does “reward” mean in investing?
The potential return or growth of your money.
Which two common securities would a beginner like Jordan most likely hear about first?
Stocks and bonds
Why might stocks feel risky to someone like Jordan?
Their value can go up and down in the short term
How could bonds fit Jordan’s low-to-medium risk tolerance?
They offer steady income and help balance risk in a portfolio.
How do investment companies help beginner investors?
They manage investments and make diversification easier.
Why do higher returns usually come with higher risk?
Because investments with more growth potential also have more uncertainty.
How do securities help someone like Jordan reach long-term goals such as buying a home or retiring?
They allow money to grow over many years instead of staying the same.
Why do stocks usually offer higher long-term returns than savings accounts?
Because they involve more risk but also more growth potential.
What is interest in relation to bonds?
It’s the payment you receive for lending your money.
Why do mutual funds reduce risk compared to owning a single stock?
Because money is spread across many investments.
Why is understanding risk important for someone nervous about investing like Jordan?
It helps them choose investments that match their comfort level.
Why are securities important for building wealth, even if someone starts with small amounts
Because consistent investing over time allows money to compound and grow.
Why is it usually smarter for a beginner to own many stocks instead of just one?
It reduces risk if one company performs poorly.
Why do many long-term investors hold both stocks and bonds?
To balance growth and stability.
Why are mutual funds often recommended for long-term investing?
They offer diversification and steady growth over time.
How can diversification reduce investment risk?
Losses in one investment may be offset by gains in another.