Why Should I Invest
Grow wealth over time by putting money into assets that have the potential to increase in value or generate income
What is the purpose of Investing?
Amount of uncertainty a person is willing to handle
What is Risk Tolerance?
An increase in an investment
What is Appreciation?
This type of investment vehicle pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities.
What is a Mutual Fund?
Financial Institutions that fascilitate the purchase and sale of financial securities by buyers and sellers and the opening of savings
What are Brokerage Firms?
The rate at which prices of goods and services increase over time, thus decreasing a person’s purchasing power over time.
What is Inflation?
This strategy helps reduce overall risk by spreading investments across various asset classes, industries, and geographic areas, minimizing the impact of any one investment’s poor performance.
What is Diversification?
Certificate of debt issued by a corporation or government.
What is a bond?
Diversifed Index and Mutual Funds, run by professional managers are a great option for this type of investor.
What is a beginner investor?
The worlds largest stock exchange located on Wall Street
What is The New York Stock Exchange?
Called the 8th wonder of the world by Albert Einstein, this form of interest works best the early your start investing.
What is compound interest?
This means spreading your investments across multiple types of investments, such as stocks, bonds, and cash, to manage risk.
What is diversifying by asset class?
This person chose bonds because they typically pay fixed interest at regular intervals
Who is a person who wants to earn regular income on their investment?
A fund with an average return on investment above 8% for longer than 5 years.
What is a mutual fund with a good track record?
The name collectively given to 401(k), 403(b), Traditional IRA, Roth IRA, and Pension
What are Retirement Plans?
A government program that was never meant to be the sole source of income for Americans in retirement, thus the need to invest for retirement.
What is Social Security?
This method involves comparing the potential return of an investment to the amount of risk involved, helping investors decide if the potential reward justifies the risk.
What is analyzing the risk-to-reward ratio?
Stocks represent ownership in a company while bonds are loans to entities.
What is the difference between stocks and bonds?
Diversifed Index and Mutual Funds, run by professional managers are a great option for this type of investor.
What is a beginner investor?
This profession most often associated with Pension Plans
What are government workers?
Avoiding this situation, borrowing and owing money to creditors, at all costs allows a person to maximize investing for retirement.
What is Debt?
This means spreading your investments further within each asset class, like stocks, by investing in a variety of stocks or funds that include many different stocks.
What is diversifying across investments
Bonds are typically safer than stocks because they have fixed returns and lower volatility.
What are safer, bonds or stocks?
This type of mutual fund changes investment strategies as the person gets closer to retirement
What is a “life-cycle” fund?
Someone who prefers a Roth IRA verses a Traditional IRA
What is a person who rather pay taxes on investments now than later?
Investments planned for 5 to 10 years or longer.
What is a long-term investment strategy?
To manage risk effectively, an investor can combine different asset classes and investment strategies while using tools like diversification and rebalancing to align with their goals.
What is creating a balanced portfolio?
An investment strategy that includes 60% stocks (index or mutual funds), 35% bonds, and 5% cash equivalents would be a good strategy for this person.
What is a balanced investment strategy of stocks and bonds for a 40 year old looking to retire in 25 years?
These funds are designed for investors who are concerned about companies' environmental, social, and governance practices.
What are Socially Responsible Mutual Funds (SRMFs)?
An investment strategy that includes 70% stocks (index or mutual funds), 20% bonds, and 10% alternative investments or cash equivalents would be a good strategy for this person
What is a diversified portfolio for a young 25-year old?