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
Ronald vs. The King
Let's say you had a Big Mac today, and it really hit the spot. And the lines were out the door, so you're thinking, "What the heck, I'll buy some McDonald's (MCD) stock at WeSeed."
But what does that word "stock" mean? As we said before, a stock is a little piece of ownership in a company. So if you buy stock in McDonald's, you're buying a little piece of all those Big Macs and McNuggets.
Not a big piece, but if you really like McDonald's, that won't bother you. Wouldn't it be great to stroll into McDonald's like you owned the place? Well, that's exactly what you would be doing if you owned its stock.
But let's say you also like to eat at Burger King.
Maybe the fries aren't as good, but you're partial to the burgers. Should you own a piece of Burger King instead?
Here's one way to decide: Take a stroll in one of the restaurants and act like you own the place. Which one is in better shape? Which one would you rather own: McDonald's or Burger King (BKC)?
That's what owning stock really comes down to: Which business would you rather own? Now, you could also decide to buy both of them.
That's what we call diversification, which is kind of like stopping at McDonald's for the fries and then swinging over to Burger King for a burger. But we'll get to that soon.
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