Investment Basics

What are stocks?

• Stocks are units of measurement for cooking.

• Stocks are ownership shares in a company.

• Stocks are physical goods sold in stores.

• Stocks are types of bonds.

What are bonds?

• Bonds are debt securities.

• Bonds are cryptocurrencies

• Bonds are commodities

• Bonds are stocks

What are mutual funds?

• Mutual funds guarantee a fixed rate of return

• Mutual funds are only available to institutional investors

• Mutual funds are a type of savings account

• Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities.

Why is risk management important in investing?

• Investing should be done impulsively without considering potential risks.

• Risk management is crucial for identifying, assessing, and mitigating potential risks associated with investments, ultimately protecting capital and ensuring more consistent returns.

• Ignoring risks leads to better investment outcomes.

• Risk management is unnecessary and adds unnecessary complexity to investing.

What is diversification?

• Diversification is spreading investments across different assets to reduce risk.

• Diversification is only applicable to real estate investments.

• Diversification is the process of selling all investments at once.

• Diversification is putting all investments in one asset to maximize returns.

What is a 401k?

• A retirement savings plan sponsored by an employer.

• A type of car insurance policy

• A new social media platform

• A popular brand of coffee

What is a Roth IRA?

• A Roth IRA is a type of health insurance plan

• A Roth IRA is a type of credit card

• A Roth IRA is a type of savings account for children

• A Roth IRA is a type of individual retirement account that allows you to contribute after-tax income, and qualified withdrawals are tax-free.

How can you invest in stocks?

• You can invest in stocks by asking a fortune teller for advice

• You can invest in stocks by randomly picking companies from the phone book

• You can invest in stocks by burying money in your backyard

• You can invest in stocks by opening a brokerage account, researching stocks, placing buy orders, and monitoring your investments.

What are the benefits of investing in bonds?

• Fixed income stream, diversification, potential capital preservation

• High liquidity, guaranteed returns, low risk

How does mutual fund investing work?

• Mutual fund investing involves investing in a single stock chosen by the investor

• Mutual fund investing guarantees a fixed rate of return for all investors

• Mutual fund investing works by pooling money from multiple investors to invest in a diversified portfolio managed by a professional fund manager.

• Mutual fund investing does not involve any risks