Basic Investing PDF

Chapter 1: Making Sense Define ownership investments Types of ownership investments (three major) Pros and cons Ways to achieve financial independence S.M.A.R.T financial goals Define lending investments Types of lending investments Pros and cons...

Chapter 1: Making Sense Define ownership investments Types of ownership investments (three major) Pros and cons Ways to achieve financial independence S.M.A.R.T financial goals Define lending investments Types of lending investments Pros and cons What are brokers / investment firms How to find the best brokers/ investment firms Chapter 2: Retirement Accounts Short term financial goals vs long term financial goals What is a “rainy-day” fund Define consumer credit Types of retirement accounts + acronyms Tax advantages for retirement accounts disadvantages for retirement accounts How to avoid early withdrawal penalties What are some retirement plans IRA (Individual Retirement) vs Roth IRA Chapter 3: Risk & Returns What’s the importance of a risk and return? Methods to reduce risk Define Inflation Define purchasing power + example Importance of liquidity Ideas to minimize risks Define “rate of interest” Define yield Real return vs average return How compounding grows investment dollars Chapter 4: Minimize Taxes Define tax-sheltered retirement accounts Capital gain vs ordinary income tax Federal marginal income tax rate + example Advantages to marginal tax rate knowledge What is cooperate tax rate  Strategies to reduce taxes you pay on investments Part 2 Ways to reduce taxes when selling a investments How and why determine cost basis of your shares What is the FIFO Method What is the average cost method Define capital gains tax + example Why should you sell securities at a loss? Define wash-rule + explanation Chapter 5: Money Mutual Funds What are money market mutual funds? Benefits and drawbacks mutual funds Savings Account vs Mutual Funds List the most common money fund holdings Different ways to access money from mutual funds Purpose of money mutual funds How to find good money mutual funds Define municipal Alternatives to money mutual funds What is a Money Market Deposit Account (MMDA) Chapter 6: Stocks What are stocks + example What are stock offerings Benefits and drawbacks of stocks Define initial public offering (IPO) vs price per share What happens when a company decides to issue a stock Define profit/ earnings Examples of nonprofits Major ways companies increase profits How can you make money investing in a company stock Part 2 What does major market index mean What is DIJA market index What purpose does indexes serve Indexes and stocks DIJA tracks Define price/earnings ratio (P/E) + example Part 3  Why is it important to diversify Define common stock What are some “common stock” mistakes Define stock mutual funds + example Stock mutual funds and ETFS advantages and disadvantages What are hedge funds? How much percentage should your investment dollars be? Ways to ensure stock market success? Chapter 7: Bonds What are Bonds? Why should someone consider bonds? Benefits and drawbacks of bonds Define tax implications Bond: mutual funds vs ETF vs individual Who issues bonds? Define index bond What is “credit rating” of a bond? What is maturity plus their classifications? What is a yield curve? Part 2 When can bonds be sold? Purpose of investing in bonds? What are some alternatives to bonds? What are Guaranteed-Investment Contracts (GIC)? What are private or second mortgages? Why should you avoid private mortgages? Major ways to invest in bonds What are treasury bonds? Ways to minimize mistakes from individual bonds Define effective yields Chapter 8: Fund Investing (ETFs) What are ETFs? How to invest in an etf? Reasons to invest in funds What is an individual fund manager? How to keep cost down on funds Define Index funds Actively managed vs passively managed funds What are mutual index funds Part 2 Benefits and drawbacks of ETFs Define asset allocation When is the best to buy ETFs? How to pick the best funds? What are international/overseas funds? Define Total market value/capitalization Best way to balance funds How to find the best bond funds Part 3 What are the dangers of yield-chasing? Short term vs intermediate vs long term bonds Define Unit Investment Trust (UIT) UIT benefits and flaws Define Wrap account Define hedge funds Hedge funds pros and cons Chapter 9: Investment Alternatives Define options Pros and Cons of options Name the types of commodities What are Metal ETFs What are cryptocurrencies? Pros and cons of cryptocurrencies What are collectibles Pros and cons of collectibles Annuities vs cash-value life insurance Define: Annuities, life insurance, cash-value coverage Define: Affiliates