Low / High Risk Examples

Allocate: To set apart for a particular purpose. Bond: An agreement to lend money to a borrower for a period of time for which you will be paid interest. Certificate of Deposit (CD): A financial account that requires your money be held on deposit for a specific amount of time. High-risk investment: Using your money in a venture where the possibility of loss is greater. Interest: A fee charged for borrowing money. Low-risk investment: Using your money in a venture that has a lower risk of loss. Maturity: The date on which a bond investor can receive the initial investment. Money market deposit account: Offered by a bank or credit union, this account works like a checking account except the number of transactions per month is limited. It pays a higher interest rate than a savings account. Stock: Shares representing ownership of part of a company. Venture: A business undertaking involving risk in the hope of profit. Low / High Risk Examples: 1.​ Savings account at a credit union or bank: ○​ Risk Level: Low Risk ○​ Explanation: A savings account is insured by the FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration), protecting your money up to a certain limit. 2.​ Buying one share of stock online: ○​ Risk Level: High Risk ○​ Explanation: Stocks are subject to market fluctuations. Buying just one share may not result in significant loss, but it can still lose value based on market performance. 3.​ Buying a Certificate of Deposit (CD) at a credit union or bank: ○​ Risk Level: Low Risk ○​ Explanation: CDs are insured by the FDIC or NCUA and guarantee your principal investment plus interest if held to maturity. 4.​ Buying a money market account at a credit union or bank: ○​ Risk Level: Low Risk ○​ Explanation: Money market accounts are insured and offer a steady interest rate, although typically lower than riskier investments. 5.​ Buying a bond at a credit union or bank: ○​ Risk Level: Low Risk (in most cases) ○​ Explanation: Bonds are considered relatively safe, especially government or municipal bonds, as they provide fixed interest payments and return your principal at maturity. 6.​ Buying an apartment building to rent out apartments: ○​ Risk Level: High Risk ○​ Explanation: Real estate investments require significant capital, and returns depend on finding reliable tenants and managing maintenance costs. There is also the risk of property value declining. 7.​ Buying solid gold coins: ○​ Risk Level: High Risk ○​ Explanation: Gold is subject to market volatility and does not produce regular income like interest or rent. Its value depends on external market factors. 8.​ Buying a piece of fine art: ○​ Risk Level: High Risk ○​ Explanation: Art investments are highly speculative, and their value depends on demand, authenticity, and trends in the art market. A fee charged for borrowing money is Interest. A share of ownership in a company is Stock. If you set aside a sum of money for a specific purpose, you allocate the money. Bonds are an agreement to lend someone money in return for specific interest. A bond investor can receive their initial investment back on the date of Maturity. A financial account that holds your money on deposit for a specific period of time is a Certificate of Deposit (CD). An investment in which you stand a greater chance of losing money is a High-risk investment. The Coca-Cola Company 1.​ What is their stock ticker symbol? ○​ KO 2.​ How much does it cost to buy one share of stock in this company? ○​ As of January 14, 2025, $61.70 3.​ Does this company pay a dividend? ○​ Yes, Coca-Cola pays a regular dividend. 4.​ What products does this company sell? ○​ Coca-Cola sells a wide range of beverages, including soft drinks like Coca-Cola, Diet Coke, Sprite, Fanta, as well as bottled water, juices, sports drinks, and energy drinks. 5.​ Do you think this is a good investment? Why or why not? ○​ Coca-Cola is a stable company with a strong global brand and a history of consistent dividend payments, making it a good choice for income investors. However, shifting consumer preferences away from sugary drinks could be a concern for long-term growth. 6.​ Who is their biggest competitor? ○​ PepsiCo Apple Inc. 1.​ What is their stock ticker symbol? ○​ AAPL 2.​ How much does it cost to buy one share of stock in this company? ○​ As of January 14, 2025, $235.47 3.​ Does this company pay a dividend? ○​ Yes, Apple pays a dividend. 4.​ What products does this company sell? ○​ Apple sells iPhones, iPads, Mac computers, Apple Watch, AirPods, and services like Apple Music, iCloud, and the App Store. 5.​ Do you think this is a good investment? Why or why not? ○​ Apple is a leading tech company with a strong track record of innovation, brand loyalty, and profitability. It has diversified income streams through products and services, making it an attractive long-term investment. However, it is subject to competition and market volatility. 6.​ Who is their biggest competitor? ○​ Samsung Electronics Ford Motor Co. 1.​ What is their stock ticker symbol? ○​ F 2.​ How much does it cost to buy one share of stock in this company? ○​ As of January 14, 2025, $12.35 3.​ Does this company pay a dividend? ○​ Yes, Ford pays a dividend. 4.​ What products does this company sell? ○​ Ford manufactures automobiles, including cars, trucks, SUVs, and electric vehicles (like the Ford Mustang Mach-E and F-150 Lightning). 5.​ Do you think this is a good investment? Why or why not? ○​ Ford is an established player in the automotive industry with a growing focus on electric vehicles (EVs). While the EV market presents growth opportunities, competition is intense, and the automotive industry is sensitive to economic cycles. 6.​ Who is their biggest competitor? ○​ General Motors (GM) The 5 principles of money ●​ Make ●​ Save/Invest ●​ Protect ●​ Spend ●​ Borrow Make (Time Value of Money): The idea is that money you make today is worth more than the same amount in the future. This is because you can use it to earn more over time. For example, if you save or invest money now, it can grow and give you more later. Save (Risk and Return): When you save money, there’s usually a trade-off between how much you earn and how much risk you're willing to take. If you put your money in a low-risk savings account, you'll earn a small return. But if you’re willing to take more risk by investing in stocks, you could earn a higher return—but there’s a chance you might lose some of your savings. Invest (Diversification): Investing means putting your money into different assets (like stocks, bonds, or real estate) to help it grow. Diversification means spreading your investments across different areas so that if one doesn't do well, others might still succeed, protecting you from losing all your money at once. Protect (Liquidity): Protection in finance means having easy access to money when you need it. Liquidity refers to how quickly you can turn something into cash without losing value. For example, keeping some money in a savings account or cash is easy to access (high liquidity), while owning a house might take longer to sell and turn into cash (low liquidity). Spend (Financial Leverage): Spending wisely includes knowing when it might be helpful to borrow money (leverage) to make larger purchases or investments. If you borrow money to buy a car or home, you're hoping that the value of what you bought will rise or that you'll be able to pay off the debt without losing money. However, borrowing also means you need to be careful, because spending more than you can afford can lead to financial trouble. Certificate of Deposit (CD): A savings product that earns interest. Stock: a share of ownership in a company. A bond is a promise by a borrower to pay a lender their principal and usually interest on a loan. Governments, municipalities, and corporations issue bonds. A Mutual Fund is a pool of investors in a particular sector. IRA= Individual Retirement Account IPO- Initial Public Offering ( when a company goes public) FDIC- Federal Deposit Insurance Corp. Fiduciary- Acts in your best interest.