Taking the Mystery Out of Investing Part 1
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66For the last 15 years I’ve been interested in and trying to understand the world of investing.
An old boyfriend told me about the rise of mutual funds at the time and suggested that I learn about it so we could start investing.
Back then there was no Internet and I didn’t know enough to pick up a magazine like Money or Kiplinger’s. So I struggled to understand what investing was all about.
What I could gather was that the stock market involved money. I didn’t know how it all went together or what the basic premise was.
Getting Educated About Investing
Over the years I got a little more understanding but not enough to become an active investor.
Recently my brother told me that he’s been investing; buying stock and selling them. He likes doing it and has encouraged me to jump in.
I am a little more apprehensive though because as a single woman with children to provide for, it just seems too risky. On the other hand it’s a way to make money over the long term and have a nice nest egg when I’m ready to retire.
A few months ago a man, Mr. Swank, knocked on my door and introduced himself as my neighborhood investment agent from Edward Jones Investments.
I thought it was odd that this man, in a suit no less, was knocking on my door, but I also thought it was a very brave way to approach people and drum up business. He was very nice and definitely not the pushy, salesman type. He left his information and was on his way.
Around Christmas time I got a card from him. Nice touch.
A few weeks ago I emailed him and asked to speak to him and do an interview for my loyal readers.
This topic is important for many reasons for many women.
We just don’t know, don’t understand, or are just downright intimidated with the concept of investing. Mr. Swank was kind enough to accommodate me so we scheduled a time to meet.
He was very knowledgeable and patiently answered my questions. He confirmed my thoughts and introduced new information that I will review below.
Basic Investing Terms
So what is investing and what are stocks, bonds, and mutual funds? That is the million dollar question.
In a nutshell, investing is the activity of evaluating and purchasing ownership in or loaning money to a company or municipality with the expectation that you will receive a return for the money given.
Stocks –part ownership in a company. Think Walmart, Home Depot, Apple, etc. The number of shares you purchase represent the amount of ownership you have in a company.
Your investment grows as the company grows so the shares increase or decrease in value depending on how well the company performs. If the company makes money, you make money and vice versa.
Bonds –A promissory (loan) note you hold for giving a lump sum amount to a city, state, or company for a variety of projects include a new park, building, or other improvements.
You are basically a mini bank who lends the money. You will get your money back with interest. The rate of interest may vary.
Mutual Funds –A group or portfolio of several companies that is managed by a professional company.
This company has the ability to purchase stocks from several companies and offer you a portion based on your buying power. Mutual funds are a great way for beginners to start investing.
In the next post I will go over how to get the guts to invest and the start up cost. It’s much cheaper than you think.
Samantha Gregory
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Hi Samantha,
Thanks for covering this topic! It’s a great introductory piece for beginner investors.
I’m a recently employed college graduate in my early twenties. Which investment “stocks, bonds, or mutual funds” would be best for someone in my shoes? What investments did you make at my age?