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Understanding Stocks, Bonds & Mutual Funds

Breaking Down Investment Basics with Noah Dennis

As a Financial Advisor, I understand that investing can be intimidating. That’s why I’m here to break down some of the basics! To begin, there are three main asset classes: stocks, bonds, and cash. Let’s start by defining them:

First, what is a stock? It is ownership in a piece of a company. Each stock has a particular value and is a slice of the equity in a company, public or private.

Second, what is a bond? It is ownership of a piece of the debt of a company. Each bond has a particular value and is a slice of the debt a company owes to its creditors.

Lastly, what is cash? It is the money you have in the credit union or bank, whether in checking, savings, or certificates of deposit.

A Mutual fund is typically an actively managed portfolio of stock or bonds and cash. An exchange traded fund or ETF is a similar type of investment, but trades like a stock. There are two aspects of mutual funds and ETFs that are helpful for a portfolio: diversification and management. Many mutual funds are actively traded, the managers are buying and selling stocks and bonds, trying to achieve a higher risk adjusted rate of return. Many ETFs are not as actively traded and often reflect an index, such as the S&P 500 or the Nasdaq 100. Both are appropriate and helpful in different situations.

As a Financial Advisor, I can help you implement strategies for investing that will be appropriate for both your qualified (401k or IRA) monies and your independent investment monies. More importantly, I can help you understand your financial situation and help you pursue your savings, investment, and financial objectives.

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Wealth Management

Elements Wealth Management
225 South East Street; Suite 156
Indianapolis, IN 46202

1-888-425-0374

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