Here is a quick run-down on the major investment products available to you.
-STOCKS-investments in specific publicly traded company like Exxon or Apple. These companies issue shares of their stock to the general public. Each share that you own represents a fractional percentage of the company that you own.
-BONDS-loans that investors make to corporations and governments when they are raising capital. The corporation or government then makes FIXED interest payments to the bond investor over a set period of time, known as term. At the end of the term, the investor gets back the original investment amount, called the principal.
-MUTUAL FUNDS- Investments that pool money from many investors and invest in a specific set of stocks or bonds. A typical fund, an index fund, attempts to mimic the performance of a specific market index. Market Index funds are groups of funds that benchmark the performance of other investments. IE-the S&P 500 index fund tries to replicate the performance of the S&P 500, which is a widely known index of 500 of the most widely held US stocks.
-ETFs-these are funds that track indexes but are bought and sold like stocks.
