Investing basics
What is investing?
Putting money into assets to try to grow it over time.
What is a stock?
A small share of ownership in a company.
What is a bond?
A loan you give to a company or government.
What is mutual fund?
A mix of different investments grouped together.
What is diversification?
Spreading money across different investments.
Why do people Invest?
To build wealth and grow money over time.
What does it mean to "Own stock"?
You own part of the company.
Who pays you back in a bond?
The issuer (company or government).
What is an index fund?
A fund that tracks a market index like the S&P 500.
What is long term investing?
Holding investments for many years.
What is risk in investing?
The chance you could lose money.
What is a dividend?
Money paid to shareholders from company profits.
Which is usually safer: stocks or bonds?
Bonds
Are index funds actively or passively managed?
Passively managed
What is dollar cost averaging?
Investing the same amount of money regularly over time.
What is return?
The money you earn from an investment.
Why do stock prices change and vary ?
Because of supply/demand and company performance.
What is risk tolerance?
How much risk you are comfortable taking.
Why can index fund not beat the market?
Because they are designed to match the market, not outperform it.
Why is time important in investing?
More time = more growth from compound interest.
Why is investing better long-term than saving cash?
Because investments can grow faster than savings due to compound growth.
What is the risks of stocks?
Their value can go up or down quickly.
Why do investors diversify ?
To reduce risk by spreading money across investments.
One advantage and disadvantage for index funds?
Advantage: low fees + steady returns
Disadvantage: no chance of outperforming the market
What is the key goal of retirement investing?
Growing money over time so you can live off it later.