Investment Basics: Diversifying Your Portfolio in the Stock Market

The video discusses various approaches to managing money, including savings, credit, and debit cards. It introduces investing as a wealth-building strategy, emphasizing the benefits of long-term investments and diversification. The video explains investment vehicles like ETFs and mutual funds, and highlights the accessibility of index funds for small investors. It encourages viewers to start small and do their own research, concluding with a thinking exercise on stock market participation.

What is one reason people might consult a financial planner?

• To plan a vacation

• To figure out the best way to manage their money

• To buy a new car

• To learn how to cook

Why is the stock market considered a good strategy for building wealth?

• It guarantees immediate profits

• It requires no initial investment

• It can grow money over time with minimal effort

• It is risk-free

What is a key strategy to minimize risk when investing in stocks?

• Only investing in new companies

• Investing all money in one company

• Investing in a variety of companies

• Avoiding the stock market entirely

What is an ETF?

• A financial planner's advice

• A fund that buys a section of the market

• A single company's stock

• A type of savings account

How does a mutual fund benefit an investor?

• It requires no initial investment

• It is managed by a company to reduce the investor's burden

• It allows the investor to manage hundreds of stocks individually

• It guarantees high returns

What is the advantage of an index fund?

• It tracks a single company's performance

• It allows investment in a broad market index like the S&P 500

• It requires no fees

• It is only for wealthy investors

What should beginners look for when starting to invest?

• A service that requires a large initial investment

• A service that charges high fees

• A service that allows small initial investments

• A service that only offers mutual funds