Investing

Investing 

The process of putting your money to work over the long term, by buying and holding assets that will grow from compound interest 

• more long term - 10-60 years 

• more risky 

Assets for investing

• stocks

• bonds

• mutual funds

• index funds

• property

• cypto currency

Avg. annual return on investing

6-10%

IPO

initial public offering

• Anyone can buy stock

dividend

paying back investors

Market Cap

the total value of the entire company

PE Ratio ( Price-Earnings Ratio)

a classic valuation metric which shoes the pice of one share divided by the earnings per share from the last 12 months

Bond

• less risky than stocks

Default risk

you might now be paid back?

Interest Rate Risk 

the risk that interest increases before the bond reaches maturity

Maturity Date

length of time the bond is held and then paid back after

Face Value

how much it costs to buy a bond

Coupon Rate 

% of interest you will receive because you hold a bond 

Diversification

buying stock in several different companies

• reduces risks

• some will go up and some will go down

asset allocation

spreading out around different types of stock

• furhter diversifies

Mutual Funds

• made up of money stocks and/or bonds with different objectives (international, growth, and income, growth, etc.)

• Pay a fund manager and it can be an expensive 

• trade at the end of business dad

Index Fund

• type of mutual fund that follows a particular index (S&P 500)

• no fund manager 

• cheaper alternative

• trade occurs at the end of the day 

ETF (Exchange Traded Funds)

• a group of securities, like a mutual fund, and typically track a particular index, sector, commodity, or other assets

• not managed by a complany so you have to control

• Trade occur when you want ot buy and/or sell

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