Investing 101: Understanding Stocks, Bonds, and Mutual Funds

by | May 16, 2023 | Retirement Annuity




DISCLAIMER: This isn’t investment advice

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1%/10 Net 30

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IA-1092 SEC Release

11th District Cost of Funds Index (COFI)

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51% Attack

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Acquisition
Asset Management

Automated Teller Machine (ATM)

Balance Sheet

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Capital

Capital Asset Pricing Model (CAPM)

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Credit Default Swap (CDS)

Current Ratio

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Limited Liability Company (LLC)

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Line of Credit (LOC)

Liquidation

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Liquidity Coverage Ratio (LCR)

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Loan-To-Value Ratio
libor

Macroeconomics

Magna Cum Laude

Management by Objectives (MBO)

Margin

Margin Call

Market Share
Moving Average Convergence Divergence (MACD)

Multilevel Marketing

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Neoliberalism

Net Asset Value (NAV)

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Net Income (NI)

Net Operating Income (NOI)

Net Present Value (NPV)

Net Profit Margin

Net Worth
(NYSE)

Nominal
Null Hypothesis
Oligopoly

Onerous Contract

Online Banking

Open Market Operations

Operating Income

Operating Leverage
Operating Margin
Operations Management
Opportunity Cost
Option

Organization of the Petroleum Exporting Countries (OPEC)

Organizational Behavior (OB)

Organizational Structure

Original Equipment Manufacturer (OEM)

Original Issue Discount (OID)

Out Of The Money (OTM)

Outsourcing

Over-The-Counter (OTC)

Over-The-Counter Market

Overdraft

Overhead

Overnight Index Swap

P-Value

Partnership

Penny Stocks Trade

Per Capita GDP

Perfect Competition

What Is Personal Finance, and Why Is It Important?
Phillips Curve
Ponzi Schemes
Put Option

Q Ratio (Tobin’s Q)

Quadruple Witching

Qualified Dividend

Qualified Institutional Buyer (QIB)

Qualified Institutional Placement (QIP)

Qualified Longevity Annuity Contract (QLAC)

Qualified Opinion

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Qualitative Analysis

Quality Control

Quality of Earnings

Quality Management

Quantitative Analysis (QA)

Quantitative Easing

Quantitative Trading

Quantity Demanded

Quarter (Q1, Q2, Q3, Q4)

Quarter on Quarter (QOQ)

Quasi Contract

Quick Assets

Quick Ratio

Quintiles

Quota

R-Squared

Racketeering

Rate of Return

Rational Choice Theory
Security

Series 63

Series 7

Sharpe Ratio

Short Selling
Social Responsibility
Solvency Ratio
Spread
Standard Deviation
Stochastic Oscillator
Stock
Stock Keeping Unit (SKU)
Stock Market
Stop-Limit Order
Straddle
Strength, Weakness, Opportunity, and Threat (SWOT) Analysis
Subsidiary
Supply Chain

Sustainability

Systematic Sampling

T-Test

Tariff

Technical Analysis
Treasury Bills (T-Bills)

Treasury Inflation-Protected Security (TIPS)

Triple Bottom Line (TBL)

Troubled Asset Relief Program (TARP)

Trust

Trust Fund

Trustee

TSA PreCheck

Turnover

Underlying Asset

Underwriter

Underwriting

Unearned Income

Unemployment

Unemployment Rate

Unicorn

Valuation

Value Added

Value Chain

Value Investing

Value Proposition

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Value at Risk (VaR)

Value-Added Tax (VAT)

Variability

Variable Annuity

Variable Cost

Variance
Velocity of Money

Venture Capital

Venture Capitalist (VC)

Vertical Analysis
Vertical Integration
Visual Basic for Applications (VBA)
W-2 Form

W-4 Form

W-8 Form

Waiver of Subrogation

Wall Street

War Bond

Warrant

Wash Sale

Wash-Sale Rule

wealth management

Weighted Average Cost of
X-Efficiency

X-Mark Signature

XBRL (eXtensible Business Reporting Language)

XCD (Eastern Caribbean Dollar)

XD

Xenocurrency

Xetra

XML (Extensible Markup Language)

XRT

Yacht Insurance

Yale School of Management

Yankee Bond

Yankee Market

Year-End Bonus

Year-Over-Year (YOY)

Year to Date (YTD)

Year’s Maximum Pensionable Earnings (YMPE)

Yearly Rate Of Return Method

Yearly Renewable Term (YRT)

Yield

Z-Score

Z-Test

Zacks Investment Research

ZCash…(read more)


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Investing can be an overwhelming subject, especially for those who are new to it. However, understanding the basics of investing can be an essential step towards financial success. In this article, we will discuss the basics of investing, including stocks, bonds, and mutual funds.

Stocks

Stocks, also known as equities, represent ownership in a company. When an individual invests in stocks, they become a shareholder in that company. The success or failure of a company can affect the value of its stocks. If the company performs well, the value of its stocks usually increases, and if the company doesn’t do well, the value of its stocks decreases.

Investing in stocks can be a risky bet, but it can also be a rewarding experience. Historically, stocks have provided higher returns than other asset classes, such as bonds or cash. However, it’s important to keep in mind that past performance is not indicative of future results.

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Bonds

Bonds represent debt securities issued by companies or governments. When an investor buys bonds, they are essentially lending money to the issuer. The issuer then promises to pay the investor back with interest after a designated period.

Investing in bonds can be less risky than investing in stocks because they tend to be less volatile. However, with lower risk comes lower returns. Bond returns are usually lower than stocks returns, but they can provide a steady stream of income as well as diversification in a portfolio.

Mutual Funds

Mutual funds are a type of investment vehicle that pools money from multiple investors to buy a diversified collection of stocks, bonds, or other securities. Rather than buying individual stocks or bonds, investors can buy mutual fund shares, which represent their ownership in the underlying assets.

Mutual funds can be a convenient way for people to invest in a diversified portfolio without the need for extensive knowledge or research. However, they do come with fees, which can eat into returns. It’s important to research and compare mutual funds before investing.

Conclusion

Investing can be daunting, but these basics of investing can help people get started. It’s essential to remember that every investment comes with risks and that a diversified portfolio can help to mitigate those risks. Understanding the differences between stocks, bonds, and mutual funds can help investors make an informed decision about how to allocate their money towards a well-rounded portfolio.

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