Basics of Investing
What is investing?
Using money to try to grow wealth over time
What is a stock?
Ownership in a company
What is a bond?
A loan to a company or government
What is a mutual fund?
Pool of investments
What is risk?
Chance of losing money
What is a stock market?
A marketplace where stocks are bought and sold
What is a share?
A unit of ownership
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Who issues bonds?
Governments and corporations
What is an ETF?
Fund that trades like a stock
What is diversification?
Spreading risk
What is a portfolio?
A collection of investments
What is a dividend?
Payment from company profits
What is bond interest called?
Coupon
What is diversification?
Spreading investments
What is risk tolerance?
How much risk you can handle
What is compound growth?
Earnings that generate more earnings over time
DAILY DOUBLE:
What is the S&P 500?
Index of 500 large U.S. companies
What is maturity date?
When principal is repaid
What is expense ratio?
Fee to manage fund
What is volatility?
How much prices change
What is liquidity?
How quickly something can be turned into cash
What is capital gain?
Profit from selling higher than purchase price
Describe bonds vs stocks in regards to risk and return?
Bonds = lower risk, lower return
Why use funds?
Instant diversification
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Why diversify?
Reduces impact of losses