personal finace review

Speculative Investments

Investments that carry a very high level risk potential for dramatic ups & downs in short period of time

Bonds

Less risky than stocks but usually do not have the potential to earn as high of return

Dividends

Distribution of profits by corporations to it’s shareholders

Common stock

a stock you receive voting rights , dividends and assume higher risk level

Mutual fund

A collection of stocks and bonds , or other securities which are traded

Preferred stock

Type of stock that gives fixed dividends and priority over common stock holders , but usually no voting rights

Diversification

Spreading your money across different investments to reduce risk

Financial planner

A professional who helps you manage your money , set goals and create plans for saving , investing and budgeting

Prospectus

A document that explains important details about an investment , including risk , fees and performance , so investors can make informed decisions.

IPO ( Initial Public offering)

When a company sells its stock to the public for the first time allowing regular investors shares and become part owners

Stock

A share of ownership in a company

Stock exchange

A place where people buy and sell company shares to invest and make money

Capital gain

The profit you make when you sell and investment for more then you paid for

Capital loss

The money you lose when you sell and investment for less the you paid for it

Bull market

Occurs hen investors and optimistic about the economy and by stocks

Bear market

Occurs hen investors are pessimistic about the economy and sell stocks

Penny stock

High risk stock mostly from small or new company’s

Portfolio

Collection of all your investments

Collectible

An item people buy and keep because it may increase in value over time , such as coins , cards ,arts or rare toys

Time value money (TVM)

Concept that money you have now is worth more than the identical sum in the future

Roth IRA

A special individual retirement account were you pay taxes on money going into your account and all future withdrawals are tax free

401k

Retirement savings account offered by many employers

IRA

(Individual retirements account)

Traditional IRA’s allow individuals to contribute pretax dollars to retirement account investment grow tax-deferred until withdraw during retirement.

Will

A will is a legal document that explains your belongings and money when you pass away.

Dow jones

A index of 30-blue chip stocks that provide a snap shot of the markets performance

NASDAQ

A global electronic marketplace where investors buy and sell shares of publicly traded company’s

Risk

Uncertainty regarding the outcome of a situation or event

Return

Annual interest is paid to an investor once the maturity date is reached , the principal is repaid the the bond holder .

Why is time value of money important in investing

They are important because they show how money grows over time , help compare investments options and guide smart financial decisions.

What are the three differences between saving and investing

Risk , returns , time

Define inflation and why it is important in investing

Inflation is rise in general level of prices , it’s important because it can shrink you money’s value so investing helps grow faster than inflation

What is the difference between bull and bear market

A bull market is when prices are rising and bear market are when prices are failing

Why do companies sell stock

To raise money for growth , projects , or paying off debt without taking loans

Why do companies sell stock

To raise money growth , projects or paying off debt without taking loans

What is the difference between stock exchange and stock indicator?

Exchange is a place stocks are brought and sold and indicator is how market or stock is performing.

What is S&P 500

A stock market index of 500 large U.S. companies showing overall market performance.

What is the largest exchange in the world

NYSE

Name 2 major differences between common and preferred stock

Common stock can vote dividends not guaranteed, preferred stock no vote , fix dividends paid first .

Why do corporations and government sell bonds

They sell bonds to borrow money for projects or paying off debt it back with interest

What is the main reason investors buy mutual funds ?

Investors buy mutual funds to diversify their money and reduce risk while getting professional management

How can a financial planner help you in your investing ?

A financial planner can help by creating an investment plan , choosing the right investments , and guiding you to reach your financial goals.

What is commercial real estate? Why do people use it as an investment strategy?

Commercial real estate is property used for business purposes , people invest in it to earn rental income and long term value growth .

Metals and collectibles

Gold silver , platinum, art , stamps , rare cards

What is a gain or loss , how to calculate the total gain or loss , and what is the return on the investment?

You know it’s a gain or loss when the share goes up or down , then you multiply then how much you purchased shares and the shares now and to find the rate of return subtract the 2 shares and divided it by the shares you started off with

What investment go at the bottom of the financial pyramid compared to the top

At the bottom of the financial planning are safe , low risk investments like savings and emergency funds . At the top are high-risk high return investments like stock and speculative investment.

What is the relationship between risk and return while investing ?

Higher risk can bring higher returns, lower risk usually gives lower returns