Investment Basics

Your money remains tax-deferred in this account until you withdraw ( then it's taxed as income).

• Roth IRA

• Traditional IRA

Why is it important to start investing as soon as possible?

• You take less risk when you are young, so money will be safe

• You have more time for your money to compound

• Investing is an easy way to make quick money

• Fees on investments are cheaper when you are younger

What is a stock?

• A loan an investor makes to a company or government that pays interest over time.

• A share of ownership in a company

• A collection of investments sold as a package.

• An option to purchase something in the future at todays price.

This is a type of investment where investors pool their money together to buy stocks, bonds, and other securities 

• Diversification

• Mutual Funds

• Pool Party

• Mutual Diversification Portfolio

Business spending on capital
Inventories (unsold goods) and
Purchases of new homes. Ex: An entreprenuer buys a new tshirt printing machine for their tshirt business.

• Consumption

• Investment

• Government Spending

• Exports

What is a bond?

• A loan an investor makes to a company or government that pays interest over time.

• A share of ownership in a company.

• A collection of investments sold as a package.

• An option to purchase something in the future at today's price.

Which of the following is a benefit of diversification in investing?

• Increased risk of loss.

• Concentration in one type of asset.

• Reduced risk through spreading investments.

• Guaranteed high returns.

What is a dividend?

• A portion of a company's earnings distributed to shareholders.

• A type of bond issued by the government.

• A fee paid to a broker for buying stocks.

• A tax imposed on investment income.

What is the primary purpose of a stock exchange?

• To provide loans to businesses.

• To facilitate the buying and selling of stocks.

• To regulate the banking industry.

• To offer insurance policies.

What does the term 'liquidity' refer to in investing?

• The ability to quickly convert an asset into cash.

• The potential for an investment to grow over time.

• The risk associated with an investment.

• The interest rate on a loan.