Fp120 R6 Investments Worksheet 2
University of Phoenix Material
Investments Worksheet
Answer the following questions in at least 50 words each:
What are the main differences between a 401K and a Roth IRA?
One of the main differences between a 401K and an Roth IRA is that a 401k is offered by your employer, while the Roth IRA is something an individual seeks and funds on their own. With a 401K your employer contributes or matches what you are putting into your 401K.
How would you explain the difference between a stock, a bond, and a mutual fund?
A stock is like owning a piece of a company, you are investing your money into something that is your that can make you more money. A bond is like loaning money to a bank or the government and when they pay you back, they pay you back with interest. A mutual fund is like investing in something with a group of people. Everyone owns a piece of it and benefits from it if it grows.
What are the risks and rewards of investing?
For investors, risk comes in many forms. There's the risk of a downturn in stock prices. There's the risk that inflation will erode an asset's purchasing power. There's the risk of political instability affecting international markets, but without risk there is no rewards. Sometimes you have to take a higher risk to get a better reward. They say depending on age should be how much you should be willing to risk.
How can you minimize the risks associated with investing?
The best way to minimize the risk associated with investing is really getting to know what you are investing in and getting to know each risk with each stock/bond/or mutual fund you are investing in. The best way is by diversifying your portfolio which means buying a single type of asset from many different companies. This hedges against the risk that a single company or industry will perform poorly or go bankrupt.
What would affect your decision to invest?
I think the only thing that would affect my decision in investing is if I have enough money to
Investments Worksheet
Answer the following questions in at least 50 words each:
What are the main differences between a 401K and a Roth IRA?
One of the main differences between a 401K and an Roth IRA is that a 401k is offered by your employer, while the Roth IRA is something an individual seeks and funds on their own. With a 401K your employer contributes or matches what you are putting into your 401K.
How would you explain the difference between a stock, a bond, and a mutual fund?
A stock is like owning a piece of a company, you are investing your money into something that is your that can make you more money. A bond is like loaning money to a bank or the government and when they pay you back, they pay you back with interest. A mutual fund is like investing in something with a group of people. Everyone owns a piece of it and benefits from it if it grows.
What are the risks and rewards of investing?
For investors, risk comes in many forms. There's the risk of a downturn in stock prices. There's the risk that inflation will erode an asset's purchasing power. There's the risk of political instability affecting international markets, but without risk there is no rewards. Sometimes you have to take a higher risk to get a better reward. They say depending on age should be how much you should be willing to risk.
How can you minimize the risks associated with investing?
The best way to minimize the risk associated with investing is really getting to know what you are investing in and getting to know each risk with each stock/bond/or mutual fund you are investing in. The best way is by diversifying your portfolio which means buying a single type of asset from many different companies. This hedges against the risk that a single company or industry will perform poorly or go bankrupt.
What would affect your decision to invest?
I think the only thing that would affect my decision in investing is if I have enough money to