Types of Investments
What is an investment?
To obtain an additional source of income or gain profit from an initial amount of money over a specific period of time.
Is it a Risk or a Reward:
Buying Stocks / Bonds
Risk
How does saving differ from investment?
Investments are long term / gradual (over time)
Who pays the interest?
Borrower
What is the current retirement age nationally?
66-67
What is a share in the ownership of a company called?
A Stock
What is a reward with investing in Commodities?
- Protects against inflation
-Potential profit
-Physical Asset (such as gold)
What is one major way to save money?
Budgeting
What type of interest is only charged on the principal or the initial amount of money borrowed?
Simple Interest
What retirement plan do you take out if you are self employed?
Individual Retirement Account (IRA)
What are physical products that you can invest in called?
Commodities
Which type of investment has the highest risk to reward ratio?
Stocks
Which one is more expensive?
Investing
What type of interest that is charged on the principal amount, as well as any accumulated interest?
Compound Interest
Retirement plan paid for by employer
401k / 403b Account
What is a loan to a company or government that pays investors a fixed rate of return?
A Bond
How do Lenders prevent money risks with Borrowers?
Interest
Which has a higher risk of losing money?
Investing
What type of interest remains the same throughout the fixed rate term, often 2-5 years.
Fixed Interest
What is a typical retirement savings amount?
~$300,000
Which investment do investors pool money to buy multiple stocks?
Mutual Fund
Is it a risk or a reward:
Liquidated Stocks
Reward
Which one has minimal fees?
Saving
What type of interest changes over time and can go up or down.
Variable Interest
Who pays Social Security?
The government (comes from taxes)