Investing 101
Investing is how you make your money grow over time. It's about putting your savings into assets that have the potential to increase in value. For young women, starting to invest early can harness the incredible power of compound interest, setting you up for significant wealth building and future opportunities.
Key Concepts
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Investment: Sacrificing money now to gain more money in the future.
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Return on Investment (ROI): The profit or loss from an investment, relative to its cost.
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Risk vs. Reward: Higher potential returns usually come with higher risk.
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Diversification: Spreading your investments across different assets to reduce risk ("don't put all your eggs in one basket").
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Inflation: The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Investing helps your money keep pace with or beat inflation.
How to:
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Stocks: Represent ownership in a company.
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Bonds: Lending money to a company or government in exchange for interest payments.
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Mutual Funds: A collection of stocks, bonds, or other securities managed by a professional.
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ETFs (Exchange-Traded Funds): Similar to mutual funds, but traded like stocks.
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Savings Accounts (for short-term goals): While not truly "investing," they are a safe place to hold money.