Welcome to the Investing 101 section of our Learning Center! Whether you're new to investing or looking to expand your knowledge, this guide will provide you with the foundational information you need to start making informed investment decisions.
Understanding the Basics
What is Investing?
Investing is the process of allocating money with the expectation of generating an income or profit. There are various types of investments, including stocks, bonds, real estate, and more. Each type of investment carries its own level of risk and potential return.
Why Invest?
Investing allows you to grow your wealth over time. By investing in a diversified portfolio, you can potentially earn higher returns than you would by simply keeping your money in a savings account.
Types of Investments
- Stocks: Ownership in a company.
- Bonds: Lending money to a government or corporation.
- Real Estate: Investing in property for rental income or resale.
- Mutual Funds: Pooled funds from multiple investors used to purchase a diversified portfolio of assets.
- Exchange-Traded Funds (ETFs): Similar to mutual funds, but traded like stocks on an exchange.
Key Concepts
Risk vs. Return
Every investment carries a certain level of risk, which is the potential for losing your invested capital. Generally, higher-risk investments offer higher potential returns, while lower-risk investments offer lower potential returns.
Diversification
Diversification is the practice of spreading your investments across various asset classes to reduce risk. This helps to protect your portfolio from the volatility of any single investment.
Time Value of Money
The time value of money refers to the concept that money today is worth more than the same amount of money in the future due to its potential earning capacity.
Additional Resources
For more in-depth information on investing, we recommend checking out our Investing for Beginners guide.
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