Types of Investments Flashcards
Stocks and Equities
These terms are used interchangeably, shares of publicly traded companies that you purchase as an owner. You participate in the profit and loss as a result. You can buy or sell shares through a broker. Some stocks pay a dividend where they are distributing part of their profits to shareholders. The value of the share or stock goes up or down based on the profitability (or expected profitability) of a company and the demand by others to buy or sell the stock.
Mutual Funds
A set of stocks in certain companies. You buy or sell a share of the value of the entire fund.
Fund can be based on company size (large. medium and small cap)
Can be sector based
Can be region based
Cannot be bought or sold until the end of the day.
Good way to invest without much research, and diversify.
ETF’s Exchange Traded Funds
Similar to a Mutual Fund except they allow you to buy or sell during the day vs. the end of the day. Because of this they are more erratic than mutual funds.
Certificates of Deposit (CDs)
A note issued by a bank you purchase in exchange for a certain rate of return (interest) for a certain period of time. You basically loan the bank your money which you have limited access to and they guarantee you a rate of return. You’re the power now bb!
Can be months, can be years. The longer you wait the higher your return/interest.
CD’s are insured by the FDIC, the Federal Deposit Insurance Corp, up to 250000 so they are safe. Pick a good bank though, AAA or AA
Bonds
Notes issued by a company (corporate bonds) state, municipality, or the Federal Govt. You purchase bonds in exchange for a certain rate of return for a set period of time.
Super similar tp CD’s. Federal bonds are insured, State, corporate or city? Do your research.
Federal Reserve
The banks bank, the money supply
No gov oversite, self governed
Treasury
Fiscal policy- gov spending and taxes
Goes through Congress
2nd quarter earnings
walmart adjusted expected earnings
dow jones 100 (index
100 largest
s&p 500 (index)
different sizes and industries
Nasdaq index
tech and generally newer companies
