1. Investing: putting savings to use

2. Stocks Share of ownership in a corporation
How do investors earn money from stocks:
Dividend payments
Sale of the stock for a higher price that it was purchased for
“capital gains”

3. Trading stock Stock brokers buy and sell stock for their customers
Trade on stock exchanges
New York Stock Exchange
Option: right to buy or sell stock at a future date for a preset price

5. Tracking performance
Stock index: measures and reports the change in price of a set of stocks
Dow Jones Industrial Average
S & P 500
NASDAQ composite
Bull Marker: period when stock prices rise
Bear Market: period when stock prices fall

7. Bonds
Contracts issued by a corporation or government to repay borrowed money, plus interest, on a fixed schedule.
Bond holder receives interest every year
Coupon rate

8. Bonds continued Types: Municipal Issued by state and local government
Junk bond
Issued by corporation
Higher risk
Treasury
Issued by Federal Government
Very low risk

9. Other types of investments
Mutual funds
Pool of money from many investors managed by an investment company used to purchase wide variety of assets
Certificate of deposit (CD)
Investor receives interest from bank
Risk: investor can lose out if interest rates go up

10. Smart Investing Diversification
Purchasing many different financial assists to minimize risk
Risk vs. Return
Riskier investment: higher potential return
Safe investment: lower rate of return
Young: can afford to be risky
Older: want to be more safe