Basics of Investing & Resume Essentials
- Investing Defined: Investing is committing capital into an instrument for the purpose of gaining additional profit or income. This can be achieved through various instruments and techniques.
- Key Investment Instruments:
- Stocks: Shares in a company's ownership, entitling you to a claim on the company's earnings and assets.
- Bonds: Fixed-income instruments representing a loan made by an investor to a borrower, with varying types such as corporate, government, municipal, and agency bonds.
- ETFs: Pooled investment securities that operate like mutual funds, allowing you to buy many stocks and bonds in a market segment at one time.
- Mutual Funds: Financial vehicles that pool assets from shareholders to invest in securities, usually managed by professional money managers.
- Cryptocurrency: Digital or virtual currencies that use cryptography to secure transactions.
- Derivatives: Financial contracts whose value is dependent on an underlying asset or group of assets. They can be used for risk mitigation, speculation, or leverage.
- Investment Strategies Overview:
- Technical Analysis: Uses charts and indicators to identify market behavior trends and patterns.
- Growth Investing: Focuses on investing in stocks of companies expected to grow faster than the market or their industry peers.
- Value Investing: Involves identifying and buying undervalued stocks with the expectation of realizing a profit in the future.
- Key Differences:
- Bonds provide fixed income and are generally more secure than stocks.
- ETFs can be traded on a stock exchange, while Mutual Funds can only be traded at the end of the market day. ETFs are typically passively managed, whereas Mutual Funds are actively managed.
- Risk Factors:
- Cryptocurrency is extremely volatile and risky.
- Derivatives require understanding and management of complex contracts and potential obligations.