Investing 101

Investing 101 - Allison Barr Allen

• stocks: own portion of company
• bonds: loans to large organisations, like cities and governments. a bond is a piece of a loan
• mutual funds: collection of stocks, bonds, etc.
• index funds: type of mutual fund which matches/tracks components of market index
• ETFs: marketable security tracking stock index, commodity, bonds, or basket of assets. trade like common stock on exchange

look for index funds, not actively managed (i.e. not where humans pick things).

retirement accounts:

• 401K: employee retirement savings plan
• IRA: individual retirement account, not sponsored by employer
• Roth: taxed now, not when you take distributions

CARE investment framework:

• cash: ensure you have cash for 3-6 months of living expenses
• arrears: create spreadsheet with all loans & debts, pay off all debt with APR > ~7%
• retirement: set up corporate retirement account, 10%+ of salary
• extra: extra savings can be invested in Brokerage Account
  • individual stocks: best less than 10% of total assets. products you use and like
  • real estate: watch out for fees, closing costs, maintenance costs…