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Financial Investments

Page history last edited by Robert W. Maloy 11 months, 3 weeks ago


 Financial Investments



Bull and Bear Statute, Frankfurt Stock Exchange, Germany









Investing for beginners


What does it mean to invest?


It means allocating existing resources (usually money) with the expectation of generating profit. 

Here are some examples of different types of investments

  • Investing in real estate. You buy a house at a cost of $200,000 put $50,000 of renovations into the home so that the total investment is $250,000. Then you sell the house for $325,000 for a profit of $75,000. 


  • Investing in businesses. Give a struggling business money in exchange for a stake in their company. If company turns successful now you have some of their future profits. 


  • Investing in a college education. Spend $30,000 x 4 years for a total investment of $120,000. The investment was your time and your money. Get a job that only hires college graduates at a salary of $75,000 per year with bonus potential and work at that company for many years. The investment was worth it for you



Looking into more complicated investments


1.     A 401K

A 401k is a company sponsored retirement plan. Employees can have a portion taken out of their paycheck through automatic payroll withholding and the company they work for can match some or all of that percentage. In the present times pensions from employers have become increasingly rare as companies have shifted the responsibility and risk of saving to the employees. 



2.     Open an investment account

Investment account such as a Traditional IRA or a Roth IRA can be a great way to retire a millionaire. A Roth IRA is a tax-advantaged retirement savings account that allows a person to withdraw your savings tax-free. A Traditional IRA is different because of how the account it taxed. This chart details the difference.


Roth IRAs are better for people who think that their taxes will be higher in retirement than they are now. Traditional IRAs allow people to contribute pre-tax money to their retirement account where the investments will grow without taxes taken out until they are withdrawn. When they are withdrawn is when they are taxed. There is a limit to contribution in a Roth IRA of either $139,000 for singles or $206,000 for couples. In 2020 the limit per year was $6,000 so $500 per month. A Roth IRA can be established at any point but note that not all financial institutions are equal. Each has a different set of rules and regulations that can have an impact on your savings so be careful when choosing.














3.     Stocks

A stock is a share in a particular company or organization. Owning stock in a company does not mean you own part of the company you simply own part of the shares of that company. As a stock holder in a company you can vote in the shareholder meetings and you can collect dividends (part of the company‚Äôs profits). You can also sell your shares if the company value rises or falls and the more shares you have in a company the more voting power you have. As a voter you can help appoint a company's board of directors which can alter the trajectory of a particular company.



4.     Bonds

A bond is a loan issued by the government or a corporation when they want to raise money. When you buy a bond you are issuing a loan to the company you bought it from. Unlike a stock, there is no say in the company's business when you buy a bind it is simply a monetary transaction. The benefits of a bond for the buyer is that the loans acquire interest payments overtime (usually about twice a year) so while you pay a certain amount at first you actually receive more back from the company. Once A bond "reaches maturity" it is completely paid off by the company it was issued to.




How to begin investing from Investopedia 

Women on Wall Street 


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