Chapter 1 INVESTMENTS People can earn money by working But did you know your money can earn money too There are many ways to grow your money This is called investing You can earn interest You can sell stocks You can buy bonds These investments work slowly They grow your money over months or years In time they can really add up Money can be used to earn more money What is this process called
One reason to invest is inflation This is an increase in prices For example the average movie ticket cost 6 in 2004 By 2014 that price had jumped to 8 When prices go up your money does not buy as much The same amount of money is now worth less Investing helps your money grow It helps you keep up with inflation TICKETS TO MOVIES HAVE BECOME MORE EXPENSIVE IN RECENT YEARS
Professional investors do research to figure out which investments are risky and which are safe Risk Investments have different amounts of risk Higher risk means a higher chance of losing money Some investments have low risk They are known as safe investments Why would people take risks The answer is in the payoff Risky investments can grow your money quickly Safe investments earn money more slowly There is a lower chance of losing money
A lemonade stand is an example of a high risk investment It costs money to build the stand and buy supplies You could make money if the stand succeeds But what if no one wants to buy lemonade You might not even make your money back Savings accounts are low risk investments Your money is safe in the bank There is no way to lose money However the money will grow slowly The first step in investing is deciding how much risk to take Did you know ARTER D It is never too early to start investing Investor Tacy Holliday was fourteen when she started growing her money She took a part time job Tacy put the money she earned into a savings account Then she researched investments Once she had 4,000 she started buying stock In five years her account grew to 12,000 Kids can start investing even earlier It is easy to start a savings account Parents can help kids research other investments
