2. Fact or Fiction 1. Only rich people invest money in the stock market. Fiction: anyone that has money can invest. 2. Stocks & bonds are always risky places to put your money. Fiction: some are riskier than others. 3. People generally begin saving for retirement around the age of 50. FACT: that is too long to wait

3. Fact or Fiction 4. Social Security was designed to be a primary source of retirement income. Fiction: only used as a supplement. 5. Before investing, you should follow the progress of the stocks to determine how successful your investment will be. FACT 6. Today, many companies already enroll employees in retirement plans. FACT – ask before you accept a job.

4. Is an investment in the ownership of a corporation, usually represented by shares of the business

5. Dividends A company’s profits are paid to its stockholders in the form of dividends If value of company goes up – the value of its stock goes up as well If value decreases so does the value of your stock

6. If you sell your stock at a higher price, the amount of your profit is called a capital gain

7. If you sell your stock at a lower price, the difference between what you paid for it & your selling price is called a capital loss

9. Common Stock Owners of common stock receive dividends based on the company's earnings They also have voting rights in electing company's board of directors & deciding important matters Each share of stock is a vote

10. Preferred Stock Owners of preferred stock receive a fixed dividend The same no matter what kind of profit the company is making – no matter how poorly the company is doing No voting rights either

12. New York Stock Exchange Largest exchange in the world & oldest Since 1790s Most transactions are now done electronically, but NYSE still has floor traders who conduct transactions face to face

13. NASDAQ Largest US stock market All trades done electronically through a network of computers National Association of Securities Dealers Automated Questions system

14. -Safe investments -Ownership of large respected corporations that have been established for many years -Ex. Disney

15. Dow Jones Industrial Average The Dow Quotes the number of points a stock has risen or dropped, not actual stock prices Each point is equal to one dollar per share Dow indicates the overall performance of the stock market Also called a stock index

16. Market that exists if investors are generally optimistic about the economy & the market goes up

17. Exists if investors are more pessimistic about the economy & the market goes down

18. S&P 500 index Standard & Poor’s A dividend of publisher McGraw –Hill Based on performance of top 500 US companies in terms of price per share & number of shares owned by the public More companies than DOW represented

19. Fortune 500 Fortune Magazine List of top 500 companies in terms of how much they have earned Not a stock index

20. Futures: contracts to buy or sell a commodity, stock, or other financial instrument for a set price, at a specific date in the future Commodities: bulk items ex. Livestock, corn Options: similar to futures, has right but not obligation to buy or sell – an optional contract Penny Stocks: low-priced stocks, $1 or less a share, usually for start- up companies – high risk

21. Bonds Are like an IOU, ex. sold by a company that might need to build more facilities – a promise to pay a certain amount on a certain day – companies are borrowing the money 2 types: Corporate bond: sold by corporations Municipal bond: sold by cities, towns, & countries

22. Mutual Fund People pool their money to buy stocks, bonds or other assets – this collection is called a portfolio A manager receives a fee from investors to maintain the portfolio for the group This allows investors to diversify their investments /put money into many things instead of just one

23. Other Ways to Invest Real estate Collectables Pension: company retirement plan 401 (k): tax-deferment plan funded by regular contributions from the worker (employee) – these contributions come out of pay check before any taxes are taken IRA: individual retirement account – make annual contributions – no taxes taken