When people save their money, they often put the majority of their savings into bank savings deposits. These accounts currently earn well less than 1% interest annually, a small amount that does not keep up with inflation. To earn a greater return, many people allot some of their savings toward investments. There are a number of different types of investments:
- Individual stocks and stock mutual funds
- Individual bonds and bond mutual funds
- Real estate and Real Estate Investment Trusts or REIT’s
- Commodities, such as gold and silver (precious metals), energy and agriculture
- Mutual funds are baskets of stocks and/or bonds and baskets of real estate holdings are REIT’s
There are many thousands of stocks, bonds and mutual funds, both in the United States and in foreign countries. Unlike Federally insured bank accounts, investments carry more risk. Many people don’t understand how to assess investments or where to begin the process. When this happens it is easy to become overwhelmed and give up, leaving your money in bank savings accounts, CD’s or money markets. These accounts currently earn less than the rate of inflation, which reduces the purchasing power of your savings.
TABLE OF CONTENTS
- SECTION 1: HOW DO MARKETS WORK?
(Indexes) - SECTION 2: TYPES OF INVESTMENTS
(Stocks, Bonds, Mutual Funds, Exchange-Traded Funds, Certificates of Deposit, Annuities, Alternative Investments) - SECTION 3: BUILDING A PORTFOLIO
(Finding Your Risk Tolerance, Following the Risk Pyramid, Portfolio Risk Profiles) - SECTION 4: PRINCIPLES OF INVESTING
- SECTION 5: GETTING STARTED
(Researching Investments, Working with Brokers and Financial Advisors, Investing on Your Own)