Investing Basics

Whether you invest through the company you work for or on your own, it is important for you to start as early as possible. This will allow you to maximize your returns over the years and establish a secure financial future for you and your family.

There are three basic types of investments you can choose from: stocks, bonds, and mutual funds.

Asset Class	What it is	Characteristics
Stocks/Mutual Funds	Stocks are investments in individual businesses where you own a share of a company. A mutual fund is composed of several stocks.	High potential for growth over the long term Increased risk Performance impacted by world-wide economic and political factors
Bonds	When you buy a bond, you’re lending money to the issuer (e.g., a government, municipality, corporation, or federal agency), which then pays you back with interest. Examples include: U.S. Treasury, state, municipal, and corporate bonds.	Potential for increased income More stable than stocks Bond prices decrease with rising interest rates
Short-Term or Fixed Income Investments	These investments include cash, money market funds, U.S. Treasury bills, and certificates of deposit. They are designed to return your money with interest, after a relatively short amount of time.	Less volatile than stocks or bonds Lower potential for growth Little inflation protection

Asset Class

What it is

Characteristics

Stocks/Mutual Funds

Stocks are investments in individual businesses where you own a share of a company.

A mutual fund is composed of several stocks.

High potential for growth over the long term
Increased risk
Performance impacted by world-wide economic and political factors

Bonds

When you buy a bond, you’re lending money to the issuer (e.g., a government, municipality, corporation, or federal agency), which then pays you back with interest.

Examples include: U.S. Treasury, state, municipal, and corporate bonds.

Potential for increased income
More stable than stocks
Bond prices decrease with rising interest rates

Short-Term or Fixed Income Investments

These investments include cash, money market funds, U.S. Treasury bills, and certificates of deposit. They are designed to return your money with interest, after a relatively short amount of time.

Less volatile than stocks or bonds
Lower potential for growth
Little inflation protection

For additional information, you may contact one of the brokerage firms listed below.
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Fidelity Investments

Vanguard

Scottrade