Investing
Stocks/Equities
Ownership in a public company
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What is the Stock Market?
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A platform where you can buy and sell shares of publicly traded companies.
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Companies use it to raise money, and investors use it to grow their money over time.
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Prices go up and down based on how well a company is doing and how much people want to buy or sell its stock.​
Stock Exchanges:
What causes fluctuation?
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Stocks in the United States are traded on major exchanges, such as the New York Stock Exchange (NYSE) and NASDAQ.
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For significant movements across the stock market, a major event must occur. These events include: new regulations, a pandemic, or surprising economic news, and how governments react. ​
Bonds
Loans to companies or governments that pay interest.
By investing in a bond, an individual is lending money to governments or companies that are trying to raise money. The entity that receives the money lent, agrees to pay the money back along with interest. This interest is typically paid at regular intervals (such as annually or semiannually), and the full amount of the loan—called the principal or face value—is returned to the investor at the bond’s maturity date.
Factors that affect bonds:
Maturity-
The specific date when the bond’s principal (the original amount lent) is due to be repaid to the investor.
Duration-
The measure of how sensitive its price is to changes in interest rates.
It’s not just about time — it combines the bond’s maturity, interest payments, and yield into one number.
Quality-​
How reliable or financially stable a company, government, or bond issuer is. High-quality investments are less likely to default and are considered safer.
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Creditworthiness: How likely the issuer is to repay the debt.
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Credit ratings: Bonds are rated by agencies (like Moody’s or S&P).
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High-quality bonds = "investment-grade" (e.g., AAA, AA, A, BBB)
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Lower-quality bonds = "junk bonds" or "high-yield" (e.g., BB, B, CCC
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Inflation-
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High inflation reduces the purchasing power of future bond payments, making bonds less attractive.
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This can lead to lower bond prices and higher yields.
Supply and Demand-
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High demand for bonds can drive up prices and lower yields.
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Low demand can push prices down and increase yields.
Why invest in bonds?
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Low-risk investment
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Diversification
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Steady and predictable income
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Capital preservation
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Tax advantages (e.g., municipal bonds)
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Hedge against stock market volatility
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Fixed returns if held to maturity
Different types of bonds:
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U.S. Treasury bonds
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Issued by the U.S. federal government, these are considered one of the safest investments. They pay interest every six months and mature in 10 to 30 years.
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Government Agency Bonds
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Issued by government-sponsored entities, these bonds help fund public programs, such as housing or agriculture. They offer slightly higher yields than Treasury bonds but with a bit more risk.​
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Municipal Bonds
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Issued by state and local governments to fund public projects like schools, roads, or hospitals. Interest is often tax-free at the federal (and sometimes state) level, making them attractive to higher-income investors.​
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Corporate Bonds​
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Issued by companies to raise money for operations, expansion, or other goals. They usually offer higher interest rates than government bonds but come with higher risk depending on the company’s financial health.​
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Cash & Cash Equivalents
Safe, liquid assets like savings accounts or CDs.
Cash and Cash Equivalents are highly liquid investments that can be turned quickly into cash (in 90 days/ 3 months). Cash and Cash equivalent investments include low risk assets. These assets are often used to cover expenses or short-term financial needs.
Examples:
Physical Cash:
Actual currency (bills and coins) kept on hand that can be used immediately for transactions.
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Checking Accounts:
Bank accounts that allow deposits and withdrawals at any time, providing instant access to funds for daily expenses.
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Savings Accounts:
Bank accounts that earn small amounts of interest while keeping money safe and readily available when needed.
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Money Market Accounts & Funds:
Low-risk accounts or pooled funds that invest in short-term, safe securities, offering easy access to cash along with a slightly higher return than savings accounts.
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Certificates of Deposit (CDs):
Time deposits offered by banks that pay interest, considered cash equivalents only when they mature within three months, since they can be quickly converted to cash.
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Treasury Bills (T-Bills):
Short-term government securities that mature in one year or less, backed by the government and easily sold in financial markets for cash.
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Commercial Paper:
Unsecured, short-term debt issued by large companies to finance immediate needs, usually maturing within 270 days and easily traded for cash.
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Banker’s Acceptances:
Short-term credit instruments guaranteed by a bank, often used in international trade, that can be sold in secondary markets and converted into cash quickly.
Characteristics:
High Liquidity:
It must be easy to convert into cash without significant loss in value.
Short-Term Maturity:
Usually 3 months or less from the date of purchase. This makes them predictable and reliable.
Low Risk:
Value is stable and not subject to big market fluctuations (unlike stocks or bonds).
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Widely Accepted:
They are commonly used in business transactions and recognized in financial markets.
advantages
limitations
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Safety – They carry little to no risk of losing value, unlike stocks or bonds.
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Liquidity – Funds can be accessed immediately to cover expenses or emergencies.
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Stability – They are not affected by large swings in the market, which makes them reliable in uncertain times.
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Flexibility – Businesses can quickly deploy cash for new investments, acquisitions, or to take advantage of opportunities.
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Low Returns – They typically earn very little interest compared to other investments.
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Inflation Risk – Over time, inflation reduces the purchasing power of cash.
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Opportunity Cost – Money held in cash equivalents could potentially earn more if invested in higher-return assets like stocks or bonds.
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Over-Reliance Risk – Companies that hold too much cash may be criticized for not using funds efficiently to grow the business.
Real Estate
Property investing (direct or through REITs).
Real estate investment is when you purchase property (like land, houses, apartments, or commercial buildings) with the goal of making money, either through rental income, property appreciation (increase in value over time), or both.
Examples:
Residential:
Anywhere people are able to live or stay such as single-family homes, condos, vacation rentals, townhomes etc.
​Commercial Property:
Spaces that are rented or leased out by businesses. This can include office buildings, malls, hotels, restaurants and more!​
Land:
Buying raw land to develop, farm, or appreciate. Land includes surface and extends to below Earth's surface. ​
Industrial Real Estate:
Includes warehouses, factories, manufacturing sites, production, and storage. ​
Real Estate Investment Trusts (REITs):
Investing in shares of companies that own commercial real estate. When you invest in an REIT you are purchasing publicly traded shares. If the REIT does well you earn dividends.
How to make money with Real Estate:
Renting:
Homes you own that you can rent out to tenants. You can make monthly income from rental properties.
​Buying and Selling:
Homes that can be sold for a higher price after renovations
Property Appreciation:
Over time property value increases, and then you can sell at a profit
Pros
Cons
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Steady Income - if your estate is a rental it can provide a consistent cash flow​​​
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Appreciation - Over time your property may gain value
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Tax benefits - A real estate investor can take advantages of incentives and deductions such as mortgage interest, property tax and maintenance expenses. ​​
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Diversification - provides hedge against market volatility
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Control - more control over property management unlike stocks and bonds.
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High Initial Costs- requires a significant amount of money to invest. It also costs money to maintain.
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Illiquidity-Real Estate isn't a liquid investment. You won't be able to access funds or money quickly.
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Property Management - Either you can mange your property or you can hire someone to deal with tenants and maintenance issues.
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Market Volatility- Real estate is often affected by market fluctuations.
Commodities
Physical goods like gold, oil, and agricultural practices
Investing in commodities provides diversification to your portfolio and a hedge against inflation. Commodities includes raw materials, like metal, agriculture, and energy. Commodities are dependent on market demand.
Types of Commodities
Energy: Crude oil (Brent, WTI), natural gas, gasoline, heating oil, coal, uranium
Metals: Gold, silver, platinum, palladium, copper, aluminum, nickel, zinc, iron ore
Agriculture: Corn, wheat, soybeans, rice, oats, coffee, cocoa, sugar, cotton, orange juice
Livestock: Live cattle, feeder cattle, lean hogs, dairy, poultry
Emerging: Commodities: Lithium, cobalt, rare earth elements, graphite, timber, rubber
Why Invest in Commodities:
Hedge Against Inflation: When prices rise, commodities often increase in value.
Diversification: They help balance a portfolio since they move differently than stocks or bonds.
Global Demand: Commodities are driven by supply and demand worldwide, offering growth potential.
Investing in Commodities:
Direct Ownership: Buying physical gold or silver.
Futures Contracts: Agreements to buy or sell commodities at a set price in the future.
ETFs & Mutual Funds: Easier ways to invest without handling physical goods.
Commodity Stocks: Investing in companies that produce or process commodities (like oil companies or mining firms).
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Cryptocurrencies
Digital currencies like Bitcoin and Ethereum.
Cryptocurrencies are digital or virtual currencies that use blockchain technology for secure and transparent transactions. Unlike regular money, they’re not controlled by any government or bank, making them decentralized.
Basic & Essentials to know about Cryptocurrencies
Cryptocurrencies work by using blockchain technology. ​Each set of blocks contains a set of transactions that have been verified. Transactions with these digital assets are recorded publicly, stored online, and sent securely using encryption, with special codes used to keep them safe.
Blockchain technology - technology that powers cryptocurrencies- public, decentralized ledger that records all transactions across computer networks
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Blocks: Each block contains a list of transactions (who sent what to whom).
​ Chain: Every block is connected to the one before it, creating a chain — that’s why it’s called a blockchain.
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Decentralized: Instead of being stored in one place, copies of the blockchain are shared across thousands of computers around the world.
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Secure: Once information is added to a block, it can’t be changed. This prevents fraud and makes every transaction traceable.
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Mining: The process of checking and confirming cryptocurrency transactions and adding them to the blockchain.
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Wallets: Digital apps or tools that let you store, send, and receive cryptocurrencies safely.
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Keys: Unique codes that prove you own your cryptocurrency. Private keys should never be shared, because anyone with them can access your funds.
Investing in Cryptocurrencies:
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1. Decentralization
Cryptocurrencies are not controlled by banks or governments. People can send and receive money directly, giving them more control over their funds.
2. Security
Transactions are recorded on a blockchain, which is secure and hard to change. This protects the money and keeps the system trustworthy.
3. Global Accessibility
Cryptocurrencies can be used anywhere in the world with an internet connection, making them useful for international payments and people without banks.
4. Investment Potential
Some cryptocurrencies, like Bitcoin, can increase in value quickly. People invest in crypto for growth, diversification, or as a long-term digital asset.
5. Innovation and Technology
Crypto supports new technologies like smart contracts, NFTs, and decentralized finance, offering new ways to use and manage money.
Risks:
1. Volatility
Cryptocurrency prices can change dramatically in a short time, sometimes within hours. This means investors can gain or lose large amounts of money quickly.
2. Scams & Hacks
Cryptocurrencies are digital and online, which makes them a target for hackers and scams. Using secure platforms, strong passwords, and trusted wallets is essential to protect your funds.
3. No Regulation
Unlike traditional banks, cryptocurrencies have limited government oversight or protection. If a platform fails or funds are lost, there may be little legal recourse.
4. Environmental Impact
Some cryptocurrencies, especially those that rely on mining, use large amounts of electricity, which can harm the environment and increase energy costs.
5. Technical Complexity
Cryptocurrencies require some technical knowledge to store and use safely. Mistakes like losing your private key or sending crypto to the wrong address can result in permanent loss.
6. Market Uncertainty
The crypto market is still new and rapidly changing, and regulatory changes or market trends can affect prices and the usability of coins.
Mutual Funds & ETFs
Bundles of assets — easy diversification.
Mutual Funds: A collection of stocks, bonds, or other investments managed by professionals. You pool your money with other investors to grow together.
ETFs (Exchange-Traded Funds): Like mutual funds, but trade on stock markets like regular stocks. Often track an index, sector, or commodity.
Mutual Funds
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Investors pool their money by buying shares in a mutual fund, which allows them to invest in a wide variety of assets such as stocks, bonds, or other investments all at once.
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A professional fund manager carefully selects and manages the mix of investments, aiming to grow the fund over time and balance risk for all investors.
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The value of your investment changes as the overall performance of the fund’s assets changes.
ETFs
​Exchanged Traded Funds
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ETFs are investment funds that trade on stock exchanges like individual stocks, so their prices fluctuate throughout the day based on supply and demand.
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They often track a specific index, sector, or type of investment, such as the S&P 500, technology companies, healthcare, or bonds, giving investors exposure to a whole group of investments in a single purchase.
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ETFs combine the benefits of diversification with flexibility, allowing investors to buy or sell shares at any time during market hours while still following the performance of the underlying assets.
Why invest in Mutual Funds & ETFs:
Diversification: Investing in mutual funds or ETFs allows you to spread your money across many different stocks, bonds, or other assets, which reduces the risk of losing money if one investment performs poorly.
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Professional Management: Mutual funds are managed by experienced fund managers who research and select investments for you, making it easier to invest without needing to pick individual stocks or bonds yourself.
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Flexibility: ETFs can be bought or sold at any time during market hours, giving investors the freedom to react to market changes and adjust their portfolio whenever needed.
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Lower Costs: ETFs typically have lower management fees than mutual funds, which means more of your money stays invested and can grow over time.
Types of Investments
Mutual Funds
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Equity Funds: These funds invest mostly in stocks, aiming for long-term growth. They are ideal for investors who want to increase their wealth over time and can handle short-term market fluctuations.
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Bond Funds: Bond-focused funds invest primarily in government or corporate bonds to generate steady income. They are generally less risky than equity funds and provide more predictable returns.
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Balanced Funds: Balanced funds mix both stocks and bonds to offer a combination of growth and stability. They are designed for investors who want moderate risk while still having the potential for returns.
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Index Funds: Index funds track a specific market index, like the S&P 500, by holding the same stocks in the same proportion. This allows investors to match the market’s performance without trying to pick individual winners.
ETFs (Exchange-Traded Funds)
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Stock ETFs: These funds focus on stocks from a particular industry, sector, or group of companies. They allow investors to gain exposure to a targeted area of the market without buying individual stocks.
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Bond ETFs: Bond ETFs invest in government, corporate, or municipal bonds and provide regular income while allowing the flexibility of trading like a stock.
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Commodity ETFs: Commodity ETFs track the price of physical goods such as gold, oil, or agricultural products, giving investors exposure to raw materials without directly buying them.
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Sector/Theme ETFs: These ETFs focus on specific industries or investment themes, such as technology, healthcare, or renewable energy, allowing investors to target growth in a particular area of the economy.
Risks to know:
Risks
Explaining
Market Risk
The value of mutual funds and ETFs can go up or down depending on how the market performs. This means you could lose money if the investments in your fund decline in value.
Fees
Mutual funds often charge management fees and other expenses, which can reduce your overall returns over time. Even ETFs have some fees, so it’s important to check costs before investing.
Tracking Error
ETFs are designed to follow an index or sector, but sometimes they don’t perfectly match its performance. This small difference can affect your returns compared to the index you’re tracking.
Liquidity Risk
Some ETFs may have fewer buyers or sellers, making it harder to sell shares quickly at a good price. This can be a problem if you need to access your money fast.
Interest Rate/Bond Risk
Bond-focused funds or ETFs can lose value if interest rates rise, because bond prices often fall when rates increase. This affects funds that invest heavily in bonds.
Concentration Risk
Funds that focus on a specific sector, industry, or country may be more volatile. If that area performs poorly, your investment could be significantly impacted.