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Chapter 10 investing

TermDefinition
What are the 5 steps to building a solid financial foundation 1. Increase cash flow (going to university) 2. ensure proper protection ( buying insurance) 3. Eliminate debt 4. Emergency fund 5. Investment
How much do the top 1% in the world earn 50,000 usd
What is the 1% net worth 770,000 usd
How do you honour good fortune 1. Invest wisely (just a small portion and it will grow over time) 2. Obtain wealth 3. Help others
How do you gain good fortune By sacrificing a few things and investing now can live how you want in the future
What are the 2 main concerns for people 1. Running out of money during retirement 2. having to work until they die
How many people work for you if you invest in the S&P 500 Around 22,000,000 employees
Benefits of sacrificing a little and investing 1. Never have to work again 2. Visit all the places that you want to see 3. Donate money to anyone 4. Buy kids a home 5. find finacial freedom
Wat risk should people be focusing on with retirement Not saving enough money to live a safe and comfortable retirement
downsides of investing in one business When you invest in one business there can be good years and bad years as well and you absorb all gains and losses
upsides of diversification it allows for you to get gains when ones business is doing well and absorbs the losses of another business
What is risk rule 1 "Own all the boats" diversify your investments
Problem with buying individual stocks If you pick the right one you'll be rich but if you pick the wrong one you'll be one of those people who say that the stock market is gambling
What is risk rule #2 Don't get off the roller coaster (only those who get off the roller coaster can get harmed)
Why do most people get off the roller coaster? They don;t have the right plan to not give into emotional fear when the market drops (Don't sell your stock when the market drops)
What one concern about only buying in dips You don't know which dip is going to be the lowest
Who were the best investors Women (because they were patient and stayed on the roller coaster)
Who were the best investors Dead people and people who forgot that they owned stocks
Risk vs Volatility Use volatility because if you diversify your portfolio they will go up and down but would never lose them all, but if owning a few stocks that is risky
Short term rule of thumb Any money you want access to in 5 years or less place in a high interest saving account
long term rule of thumb Invest all your money in the stock market on a consistent basis and don't get off the ride
Money market securities Provides interest on income and provide a low level of risk ( Commercial paper, money market account. t-bills)
Stocks Certificate of partial ownership of a firm (business septically corporation) are used to raise capital
Primary market Used to sell newly issued securities are traded
Initial public offering The first time the firms shares are offered to the public
secondary market Market which facilitates the trading of existing securities( TSX, NYSX, TMX, and NSDAQ)
What makes the price fluctuate of the secondary market The supply and demand (high demand higher prices, low demand low prices) (dodge coin and game stock)
Created by: annajone
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