Stock Market
Why invest money in the stock market?
Investing allows you to accumulate wealth for retirement. It is best used for retirement because time is what is needed to accumulate wealth and weather the ups and downs of the stock market.
What is a brokerage account used for?
It’s what you use to buy and sell investments through a brokerage firm.
What kinds of beliefs and behaviors can prevent people from making smart investing decisions?
Exiting the market because that’s what everyone else is doing
Buying because you heard rumors
Buying because stock it going up.
What's a good reason to use a Target Date Fund?
Retirement
What does it mean to contribute to a 401(k)?
means putting a portion of your paycheck into a retirement savings account.
What is the role of the stock exchange?
The stock exchange is like a marketplace where people buy and sell shares of companies.
What is a ROBO Adviser?
A computer software system that adjusts a portfolio based on client preferences.
Describe the relationship between risk and return when considering an investment?
Investors expect to earn a higher return when they invest in a high-risk asset like stock in a small company
Why are Index Funds such a popular investing option?
They include all of the stocks in an index.
If your company offers a 401(k) match, how much money should you contribute to that?
You should always put aside as much as you can towards it because you will double your money every month. It is essentially free money that the company will add toward your retirement.
How is a bond different from a stock?
A bond is a loan you give to an organization while a stock is something you purchase.
What are the drawbacks to Robo Advisors?
A disadvantage is that you may not be able to get advice from a human financial advisor when you want it.
“Actually, good investing is boring!”What does this mean?
Set it and forget it, meaning let time do the work.
What is an actively managed mutual fund?
It Is managed by a fund manager who charges a fee for their services.
What is a vesting period?
The period of time it takes for shares in an employer retirement plan to be owned fully by the employee
What does it mean to "go public"?
"Going public" means that a company offers its shares to the general public for the first time through a process called an Initial Public Offering (IPO).
What do you need to do to open a brokerage account?
Must be able to transfer money from a checking or savings account.
Must be at least 18 years of age or have a parent to open with you.
How does diversification minimize risk?
Diversifying your portfolio helps reduce risk because it provides a variety of investment strategies to balance out the ups and downs of the market (market fluctuations)
What are some characteristics of an ETF?
ETF prices can change throughout the day as they are exchanged on the market.
Describe the concept of compound interest and its impact on retirement savings.
Compound interest is the interest you earn on both the original amount of money you invest (the principal) and the interest that has already been added to that amount.
What are dividends?
Money that a company pays out to stockholders when the company is performing well and making a profit. Typically quarterly.
What is one of the three types of brokerage accounts?
Online, Managed, Retirement
Why is it important for you to understand YOUR risk tolerance before you start investing?
You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with.
What is the purpose of a hedge fund?
A hedge fund is an investment fund that pools money from wealthy individuals or institutions to make a wide range of investments.
What is the significance of an IRA in retirement planning?
(IRA) is a key tool in retirement planning because it allows individuals to save and invest for retirement PRE Tax!