Intro to Investing By Ben Quick

Risk v. Return High risk investments pay higher rates of return than low risk investments. The type of investment chosen depends on the goals of the investor. Investors should avoid complex investments they do not understand.

Types of Investments Certificates of deposit are issued by financial institutions and are the most common form of investments available. Bonds are long-term investments in which the borrower pays a stated rate of return (interest) on the amount of money borrowed (principal). *Example: Treasury Bonds , Corporate Bonds, Municipal Bonds

Types of Investments (cont.) Stocks - certificates of ownership in a corporation. Stocks can produce high returns, but have a greater risk than bonds or CDs. Stocks are less risky over time, especially if the investment in stock is diversified (spread over several different companies).

Types of Investments (cont.) A 401(k) plan is a tax-deferred investment plan that acts as a personal pension fund for employees. Mutual Funds – an investment where a financial company diversifies and makes investment decisions on behalf of investors.

Historical Values From 1900 – 2014, the stock market has an averaged return rate of 9.4% From 1900 – 2014, the bond market has an averaged return rate of 4.9% From 1900 – 2014, the inflation rate has averaged 3.4%

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