Quick Investment Education

Investing is defined as the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.
Unlike consuming, investing earmarks money for the future, hoping that it will grow over time.
Investing, however, also comes with the risk for losses.
Investing in the stock market is the most common way for beginners to gain investment experience.
What kind of investor are you?

Things to know before starting

Risk tolerance
Risk tolerance is an investor’s ability to psychologically endure the potential of losing money on an investment. A person’s risk tolerance can change throughout their life and determines what type of investments they are likely to make.

Goals
To end up where you want to be, you need a financial plan. Ask yourself what you want. List your most important goals first. Decide how many years you have to meet each specific goal, because when you save or invest, you’ll need to find an option that fits your time frame.

Timeline
Time has a big impact on what you can expect of your investments. Compound returns are the returns you earn on your returns.

Setting up to invest

Pay off high interest debt
You cannot expect your investments to outpace your interest charged on debt.
Max out employer retirement plan.
Maxing out what your employer will match is highly recommended because you have someone else contributing to your retirement as well as you.

Asset Classes

Stocks
A stock (also known as "shares" or "equity") is a type of security that signifies proportionate ownership in the issuing corporation. This entitles the stockholder to that proportion of the corporation's assets and earnings... These investments can be purchased from most online stock brokers

Bonds
Government securities (Treasury bills, notes)
A government security is a bond or other type of debt obligation that is issued by a government with a promise of repayment upon the security's maturity date. Government securities are usually considered low-risk investments because they are backed by the taxing power of a government.
Corporate bonds
A corporate bond is a debt security issued by a corporation and sold to investors. The backing for the bond is usually the payment ability of the company, which is typically money to be earned from future operations. In some cases, the company's physical assets may be used as collateral for bonds.
Municipal (muni) bonds
A municipal bond is a debt security issued by a state, municipality or county to finance its capital expenditures, including the construction of highways, bridges or schools.

Cash
Currency or currency equivalents that can be accessed immediately or near-immediately.

Balance Portfolio

Balance diversification
Diversification is a technique that reduces risk by allocating investments among various financial instruments, industries, and other categories. It aims to maximize returns by investing in different areas that would each react differently to the same event.
Balance asset allocation
Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon.



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