Between 401(k)s, 403(b)s, IRAs, and 529s, investing can sound a whole lot like alphabet soup. But unlike the warm, comforting soup of our childhood, this one can stir up a lot of confusion.
The good news is, you don’t have to make big investment decisions on your own―as we’ve discussed before, whatever your goals are, there are plenty of professionals out there to guide you. But even when you’re working with the most trusted expert around, it’s still your money, so you need to feel confident with what’s happening.
Here’s a quick rundown of some basic terms.
A Few Types of Investments
Stock: When you buy stock, you’re buying a small piece of a company. That little piece is called a share. There are two ways to make money from stock. One is to sell it for more than you bought it for. For example, let’s say a startup has stocks that are 10 cents a share. You buy 1,000 of them, for a total investment of $100. Over time, the price goes up to $1 a share. You sell them for $1,000, which means you have a $900 profit.
You can also make money through dividends, which means a company pays a portion of their earnings out to shareholders. This can happen monthly, quarterly, or annually.
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