LEVEL 1 GLOSSARY
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Bonds
When you buy bonds, you're basically lending money to municipalities, states, and other government entities, which they use for construction projects and other fun stuff. They then pay you back with interest. These aren’t the biggest money makers, but bonds are fairly stable for those of you who think “risk” is a dirty word.
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NASDAQ
It's known as The National Association of Securities Dealers Automated Quotation System, but suffice to say this stock exchange is one of the biggies.
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Return
Gain (or loss) from an investment. Unless you're fiscally masochistic, you're going to cross your fingers for a gain.
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Revenue
The money generated from sales. If you own a lemonade stand and charge 25 cents per cup, add up all the sales for the day and—voila!—that's the revenue (just to keep you on your toes, sometimes people just refer to this as sales).
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Stock
This is your piece of the corporate pie, and it entitles the holder to a share of assets and earnings.
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Bull Market
Like a bull charging forward, a “bull market” is typically a market on the upswing. Olé!
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Debt
It's a bad word in personal finance, but it's pretty common in the corporate world. This is the money that a company owes to a lender.
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Dow Jones Industrial Average
The grandaddy of them all when it comes to indices only because it’s the oldest and most popular—not the largest or most representative. The Dow only represents the prices of 30 largest and most widely held companies in the U.S.
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IPO
Short for Initial Public Offering, this is a private company's way of saying, "Do you want a piece of this?" This is when a company offers shares to the public to get more dough to grow the business. Also known as "going public."
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NYSE
The New York Stock Exchange, a.k.a. Wall Street, is where stocks are bought and sold.
See full glossary
In Level 1 we'll introduce you to some of the basic concepts of investing. Each concept features a brief description and a case study, so you can see how each concept works in what financial analysts call "the real world." When you've mastered a concept, click the link at the bottom of the page to add it to your Report Card and move to the next one. Master all the concepts in each level, and then take the quiz to see just how smart you are.
- What is money?
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The uses of money
- Function of a bank
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What is a company?
- Is that company any good?
- How companies make money
- Brands
- Stocks vs. bonds
- What is a stock?
- Compounding interest
- What is the market?
- LEVEL 1 QUIZ
The uses of money
What we'll learn:
1) What are the uses of money?
2) Why invest?
3) Don't forget about giving it, too.
Everyone loves money — you can use it to buy all kinds of stuff, like burgers, iPods, and plane tickets to Costa Rica. And Americans are definitely good at spending money.
But there's more that you can do with money than just spend it. You can save it, invest it, or — and let's not forget this — donate it to charity.
Since you probably get the gist of spending it, we'll dive right into saving it. You've heard this since you were wobbling around the floor in diapers: save, save, save. Your parents were right... sort of.
Everyone should have a rainy-day fund for when the car needs a new engine or when the cat needs her gallbladder removed. But what do you do with non-emergency money? Put it in your savings account?
Perhaps a Certificate of Deposit (CD)? Well, that's way better than burying it in your backyard, but it's still not great. Why? Because your money is being lazy.
Your money might be earning a little interest (one or two percent) if you put it in a savings account or CD, but it will barely keep pace with inflation, which is about three percent. That means your money is losing value every year.
If you had $1,000 today, you would need to have $1,030 next year to buy the same amount of stuff. So how can your money keep up? Make it earn more for you.
Enter the stock market. Investing your money gives it the opportunity to make more than one or two percent. (It also gives you the opportunity to lose more than one or two percent, but hopefully by the end of WeSeed's Learn levels, that won't be the case.)
On average, the market pays out about eight percent. That's quadrupling what you would have earned by investing your money in a bank!
And then let's remember that there's always charity. There's a saying we like to throw out every now and then: Make as much as you can, save as much as you can, donate as much as you can, and spend as much as you need.
In all of this talk about making money, we should remember to give some back, too.
Three Facts to Wow Your Friends at a Party
1) Warren Buffett made his first stock purchase when he was 11 years old.
2) In the 18th century, people would store their money in "pygg" (clay) pots or jars, which became known as "piggy banks."
3) The saying "Save your money for a rainy day" comes from an Italian comedy, The Bugbears, written in 1561.
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