| In order to invest properly and to increase your | | | | give you a share in a corporation. Bonds or fixed |
| assets to ensure your financial security, you need | | | | income securities pay interest over a fixed period |
| to develop a long- term investment plan. In order | | | | of time. To understand mutual funds you need to |
| to do this, factors like your age, stage of life, | | | | know that they are diverse equity funds that pool |
| personal priorities and risk tolerance have to be | | | | money together from many different investors |
| considered in order to design an investment | | | | for greater buying power. Futures are obligations |
| strategy that meets your needs. | | | | to buy or sell a specific commodity at a preset |
| It is a well-known fact that every investment can | | | | price on a specific day. Options give you rights to |
| be risky, but some investments have a greater | | | | buy or sell a specific stock, bond, etc at a preset |
| risk than others. Risk tolerance is the amount of | | | | price during a specified time period. |
| money you feel comfortable investing with the | | | | The term asset allocation simply means how you |
| risk factor in mind. If you are basically a | | | | divide your investments between stocks, bonds, |
| conservation person, then you will probably be | | | | mutual funds and cash equivalents. This depends |
| most comfortable taking limited risks by investing | | | | on your financial goals, when you want to achieve |
| in cash, secure stock and fixed income | | | | them, and your willingness to risk. Next in line |
| investments. If you consideration taking moderate | | | | comes diversification that allows for further |
| risks, than you could consider putting your assets | | | | spreading your investments between the major |
| into growth stocks, and if you are willing to take | | | | asset categories of stocks, bonds and cash |
| significant risks, then high-risk investments are for | | | | equivalents. Diversification helps you decrease |
| you. | | | | your investment risk. As you know, no |
| There are different types of investments to | | | | investment is risk free. Without risk, there would |
| choose from. Stocks are equity investments that | | | | be no reward. |