11/01/2023
Investing your money is a great way to secure your financial future, but it can be intimidating to try and get started if you don’t know any of the terminology involved.
That’s why it’s important to learn some investing terms before you dive into the stock market.
Let’s start by looking at the most basic investing term: stocks. A stock is a type of security that gives the owner of it a piece of ownership in a company.
When the company does well, the stock prices go up, and when it does well, they decrease.
Stocks are typically bought and sold on stock exchanges like the New York Stock Exchange.
Other terms you should learn include bonds, which are debt investments in which a person loans money to a company, government, or other entity.
Bonds usually come with a fixed rate of interest and are usually purchased on a debt exchange like the Chicago Board of Trade.
Mutual funds are another type of investment that are typically managed by professional money managers.
They are collections of different stocks and bonds that come together in one fund.
Investors then purchase shares in the fund, which gives them ownership of the different investments inside it.
There are also ETFs, or exchange-traded funds.
These are similar to mutual funds but are traded on exchanges like stocks.
They have the advantage of being more liquid than mutual funds and can be traded throughout the day like stocks.
Finally, there’s the concept of “buying on margin” which means borrowing money from a broker to purchase stocks.
This can be incredibly risky but might be something to consider if you have experience investing and have the funds available to pay back the loan if something goes wrong.
Overall, learning investing terms is an important first step for those who want to invest their money in the stock market.
If you take the time to understand each of these individual concepts, you will be better prepared to make smart investment decisions and hopefully grow your wealth.
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