What is the difference between a stock and a bond?
The difference between a stock and a bond is stocks are ownerships that share a company while bonds are a kind of loan from investors to a company or government.
Which security tends to have the best returns?
Stocks offer an opportunity for higher long-term returns compared to bonds but come with a greater risk.
How are risk and return connected?
The greater the risk that an investment may lose money, the greater its potential for providing a substantial return.
What are some steps you could take to mitigate risk while investing in the stock market?
- Understand your Risk Tolerance
- Keep Sufficient Liquidity in your Portfolio
- The Asset Allocation Strategy
- Diversify, Diversify and Diversify
- Instead of Timing the Market, Focus on Time in the Market
- Do your Due Diligence
- Invest in Blue-Chip Stocks
- Monitor Regularly
What does it mean to have a “well balanced portfolio?”
A well-balanced portfolio helps to diversify your asset classes.
What is “rebalancing” a portfolio and why is it important?
Rebalancing means selling some assets in your portfolio and buying others to help maintain your target asset allocation.
Core Competency Self Assessment
How much information did you use to help you with answering the above questions?
Some websites and google search.
Has investing become a more approachable or attainable concept to you?
yeah, I understand the concept better.
What is something that you have learned which you have changed your mind about?
I learned the difference between stock and bond, as i thought they were way mor similar before.