Investments 101: a primer

By Barb Sieminsk i

After years of hearing about Wall Street, stocks, bonds, CDs and money-marketing funds, you’ve finally decided to take the plunge and tr y an investment on your own. Which area will your money do best in?

Familiarize yourself with these terms and you’ll be more aware of how they relate to your financial goals An investment, simply put, is a process that can help grow your money for profit As with any new venture there may be risks involved

CHECKING AND SAVINGS ACCOUNTS are deposit accounts that usually are used for funds that need to be accessible Typically these are insured funds with lower interest rates than most alternatives and minimal balance requirements which, make them a good star ting point for saving for other investments.

Please be aware that stocks, bonds, annuities, etc are licensed produc ts and may not be exac tly as defined below ; for these, bring in a financial advisor.

STOCKS: When you buy shares of a company ’s stock, you own a piece of that company and can collec t dividends as the company grows They offer shor tand long-term growth.

BONDS: A bond is a loan an investor makes to a company in exchange for interest payments over a par ticular period of time, plus repayment of principal at the bond’s maturity date with regular interest payments. Different bonds include corporate, municipal, agenc y, treasur y and other types

ANNUITIES: A contrac t between you and an insurance company in which the company promises to make periodic payments and can be either immediate or deferred

MONEY MARKET ACCOUNT: A type of savings account that earns a higher rate of interest than a basic savings account but the minimum deposit and balance for this account is usually higher than the minimum balance of a basic savings account

RETIREMENT SAVINGS: These include IRAs or a 401(k) and collec t interest to help you save for a time when you won’t be work ing or when you will be work ing ver y little

COMMODIT Y FUTURES: An agreement to buy or sell a specific quantity of a commodity (oil, metals, grains, currencies, etc ) at a specific price on a specific date in the future

CERTIFICATES OF DEPOSITS (CDs): Deposits that pay an agreed-upon interest rate when the contrac t expires and can provide a safe and predic table return These funds are not as liquid, which generally makes their interest rates higher than a savings account

Brittainy Chaffee, private banker of STAR Financial, offers some advice when navigating financial matters

“Finding an exper t with whom you are comfor table, trust and who will listen to your needs is a first step, ” said Chaffee. “Information is available online but it can be difficult to gauge where to star t A financial professional can help navigate you in the direc tion you would like to go as well as save you time and stress ” Your home, for example, can be a large investment on your par t Will you have your home paid off before retirement? Do you have equity built in your home that can be used for home improvements and more?

“Are you familiar with your mor tgage and if the rate is fixed throughout the term of loan, or is it an adjusting rate?” asked Chaffee “ The average homeowner stays in her/his home for 7 years If you plan to move within this time, an adjustable rate mor tgage could be a potential benefit for you to take advantage of a lower interest rate on the loan.” a

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