Stocks,+Mutual+Funds,+and+Bonds

A stock is a certificate that shows that you own a small fraction of a corporation. When you buy a stock, you are paying for a small percentage of everything that that company owns, buildings, chairs, computers, etc. When you own a stock, you are referred to as a shareholder or a stockholder. In essence, a stock is a representation of the amount of a company that you own. There are two general categories of stock which are common stock and preffered stock. Most stockholders own common stock in a company. These stockholders have the right to elect the company's Board of Directors. A board of directors helps ensure that the company's management makes decisions keeping in mind shareholder interests. The other category of stock is preferred stock. Like owners of common stock, stockholders with preferred stock have an ownership stake in the company. However, owners of preferred stock usually don't have the right to vote for the board of directors. Also, many companies pay a dividend on its preferred stock. Stockholders of preferred stock get paid their dividend before holders of common stock. Regardless of what type of stock a person owns, all stockholders receive a company's annual report. This important report details the company's financial health and may provide information on the company's achievements during the year and plans for the future. Stock goes up and down depending on s upply and demand, inflation and deflation Stock Investors Beware Buy low sell high state of economy diversify risky only use extra money
 * Stocks**

Mutual fund - looks and acts like one stock, instead of investing in separate stock, you invest in a fund that has stocks in it Advantages: "diversification" - your money is more spread out - some stocks go up, others go down; professionals watch your account; you do not have to keep as close eye on the stocks (but you should keep track of the fluctuating mutual fund)
 * Mutual Funds**

Disadvantages: less risk so less chance of making a large payback (said to be "safer"); if your looking to make a lot of money in the market quickly this is probably not recommended; If you are looking to make money quickly - this is not recommended because you will not make as much money because you are only buying small percentages of stock mutual funds - have stocks, bonds and money in it

A small percentage (1-5%) of your investment goes towards the mutual fund manager - he/she actively watches and trades stocks within the fund. The manager is usually well trained, educated, experienced, and has several people under him/her Facts about mutual funds

Mutual funds tickers are symboled with 5 digits in x eg. FBGRX Open end funds-sells as many shares as a buyer wants to buy (no limit - unless its too much to handle) In other words, you can continue to put money into the fund to have investors invest the money for you

Bonds is money that one lends the government and after a certain time they pay you back with interest meaning that your money might double. The advantages of purchasing bonds is that They are exempt from state and local taxes; interest earned on bonds can be tax-deferred until the bond is redeemed.
 * Bonds**

Fixed = Guranteed (EE bonds) backed by US government and is fixed and guranteed - - - I bonds change, or adjust based on inflation, if the economy is doing well, the interest rate goes up, if the economy is doing bad, the interest rate and decrease - it can even go to 0.0% You must wait until the bond mature before you redeem it because the value will keep increasing over time, if you redeem it too soon you may lose interest, you may get a penalty or may have to pay certain taxes US. Treasuries - backed by US (I and EE)

Corporate Bonds- a corporation may sell bonds

Municipal Bonds - NYC, Hempstead, etc

Agency Bonds - The MTA sells bonds, the ride you take actually costs them more than $2

The US Treasuries issue the safest bonds

The Corpotate bonds are the riskiest because the corporation may go out of business

All bonds recieve ratings on how safe or risky that investment might be

Which one is the safest? a) stocks b) bonds c) mutual funds