Stock Market Basics
If you buy a stock of Apple, what do you actually own a piece of?
The stock itself
What is a Roth IRA?
After-tax contributions that grow tax-free, and qualified withdrawals in retirement are also tax-free.
What ETF consists of 500 companies in one stock?
Explain Diversification
Spreading investments across various assets, industries, minimize risk and maximize potential returns.
NVDA
Nvidia
Explain why diversification and why it’s important for investors?
Diversification means spreading investments across different assets to reduce risk. Example: owning stocks, bonds, and real estate instead of putting all money into one stock
What is the main difference between a Roth IRA and a Traditional IRA?
Roth = taxed now, tax-free later. Traditional = tax-deductible now, taxes paid when you withdraw in retirement.
What is a mutual fund?
A professionally managed portfolio that invests in many securities, giving investors diversification for a fee
Explain Dollar-Cost Averaging
Investing a fixed amount of money at regular intervals, regardless of market fluctuations, which can reduce overall risk and average out purchase prices.
TSLA
TESLA
What does IPO stand for?
Initial Public Offering
What’s one major benefit of a 401(k) plan that makes it different from an IRA?
It’s employer-sponsored and often includes matching contributions.
How is an ETF different from a mutual fund?
ETFs trade on stock exchanges like stocks, while mutual funds are bought or sold at the end of the day
Explain Buy and Hold Strategy
A long-term approach where investors purchase stocks and hold onto them for an extended period, riding out market fluctuations.
SBUX
StarBucks
What’s the difference between a bull market and a bear market?
Bull = rising stock prices, Bear = falling stock prices
What is the difference between a pension and Social Security?
A pension is provided by an employer with defined retirement benefits, while Social Security is a government program that gives retirement income to eligible workers.
Which usually has lower fees a mutual fund or an ETF?
An ETF
Daily Double!
Explain what shorting a stock means (Explain simply, you don't have to be super detailed)
TM
Toyota (Motor Company)
What’s the difference between the primary market and the secondary market for stocks?
The primary market is where new shares are created and sold directly by the company to raise money (like an IPO).
The secondary market is where investors trade existing shares with each other on stock exchanges.
Why might a young investor choose a Roth IRA over a Traditional IRA?
Because their taxes are likely lower now, so paying taxes upfront makes sense, and they get tax-free growth and withdrawals later.
Which type of fund can be traded during the day like a stock?
An ETF
Define Volatility
The rate at which a stock/fund price goes up or down
SPOT
Spotify