Here are some principal investment terms:
- Investment Objectives are usually based upon three factors: risk tolerance, volatility, and return on your investment.
- Risk Tolerance is the amount of risk or loss an investor is willing to tolerate. It is measured on a continuum that moves from conservative, to moderate, to aggressive.
- Volatility is the “up and down” value of a stock at any given time in the stock market.
- Return is a percent of money that you earn on your investment.
- Diversification is a way to manage risk that combines different types of investments within a portfolio.
- Prospectus is a formal document that is required by and filed with the Securities and Exchange Commission (SEC), providing details about an investment offering to the public.
- Stock is ownership in a public company or corporation. Stock is sold to raise money for expansion or debt reduction. Here are some stock examples:
- Blue-Chip Stocks are the largest, more stable companies in the country, such as Coca-Cola, Disney, and IBM.
- Growth Stocks are usually in smaller and newer companies with the potential to appreciate rapidly in market value.
- Income Stocks are from stable companies that pay large dividends, such as Pharmaceuticals, Telecommunications, and Oil.
- Value Stocks are in companies whose market price is lower than the company’s sales, earnings, and overall financial value.
- International Stocks are from companies in developed and emerging economies
- Developed economies such as Western Europe, Canada, Australia, Japan, etc.,
- Emerging economies such as Latin America, China, India, Indonesia, etc.
- Stockholders own shares of the company and earn money based on the number of shares owned.
- Bonds are loans. When you buy a bond, you loan money, called the principal, to an organization, and they pay back the money (principal) plus interest at a set time in the future.
NOTE: The relationship between stocks and bonds is that when the stock market goes up, the bond market usually goes down and vice versa.
- Mutual Funds are operated by professional money managers who combine money from the investing public and use that money to buy securities like stocks, bonds, and money market instruments.
- Real Estate is categorized as: residential, commercial, industrial, undeveloped, and special use.
- Commodities are most often used as inputs in the production of other goods or services. Some examples of commodities include: grains, gold, beef, and natural gas.
Remember we put Investment Objectives and Risk Tolerance at the top of our list for a reason. These are key to investing and reaching your goals.
A Journey to Personal Financial Success
At Morgan Franklin Fellowship (MFF), we support the concept of financial freedom – by teaching participants how to save by paying themselves first, invest for their future and grow their net worth.
Learning how money works and how to talk about money with others are the first steps towards recognizing an individual’s lifelong financial goals. Our online programs, podcasts, blogs, and book reviews and resources are designed to help you learn the concepts, rules and vocabulary of money, finance and investing.
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Our Standards of Financial Literacy – Learning about money series is engaging, full of interesting information, and easy to navigate. Adapted from the National Standards for Personal Financial Education developed by the Council for Economic Education (CEE), this robust curriculum features six short lessons on such important topics as earning income, understanding the value of saving and using credit. When completed, this program lays the foundation for becoming an MFF Fellow.
Becoming an MFF Fellow is the ticket to access additional MFF programs and opportunities for mentoring, networking, internships and real-world opportunities. Hear from the MFF Fellow themselves on how these opportunities encourage them to continue their journey to personal financial success.
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