Cash Course: Investing | Kids Shows

foreign hey now that you've started saving where are you going to put your money oh I'm just gonna put it in my piggy bank have you considered making some financial investments what's that a financial investment is someplace you put your money where it can grow over time so you can receive regular income from it or sell it for a good profit someday people invest so that they have money for retirement to grow their wealth in general or to protect their money from losing value through inflation which is what will happen if you just keep it in your piggy bank unlike a simple savings account there are some risks involved you might lose some or all of your money but without the possibility of risk there can be no profit the higher the potential profit the greater the risk oh that's okay I don't want to lose my money it can be scary to think about taking risks but investing some of your money could lead to some great things like what like did you know that back in 1903 a man named John Gray invested ten thousand five hundred dollars in his nephew's business the Ford Motor Company 16 years later the value of Gray's shares had increased so much that his heirs sold them back to Ford for over 26 million dollars [Music] amazing right when it comes to investing some risk and some patience could make you some serious money the safest kind of investment is called a CD oh I already have lots of CDs not that kind of CD oh a bank CD also known as a certificate of deposit they are very low risk since they're guaranteed by the government you get your full principal back at the end of the term anywhere from one to ten years paying you interest in return it won't make you an heir of John Gray but it's a safe place to park money for a short term and to give your money some protection against inflation next are bonds which is when you loan money to a business or government bonds pay you a fixed amount of interest at regular intervals over time and you get your principal back at the end wait they give me Interest they do let's say you invest twenty thousand dollars in a bond that pays five percent interest for ten years the yearly interest is a thousand dollars and you get paid 500 every six months for ten years at the end you've earned ten thousand dollars profit and you get your original twenty thousand dollars back a bond is a bit more risky than a CD though some bonds are guaranteed but some are not so you have to know what kind of bond you're buying and if the company goes bankrupt you probably won't get your investment back oh one of my friends was telling me about stocks I think what you mean is stocks stocks also known as equities are what most people think of when they want to seriously grow their money buying stocks means that you buy a share of an actual company you become part owner if the company does well you'll make money by earning a share of the company's profit called a dividend or by selling the stock at a higher price than you paid for it if the company does poorly you'll lose money possibly all of it buying stock in a large company with a long history of success is generally less risky than a smaller or newer company some people also invest in real estate which is land and buildings because it's actually a tangible physical asset not just a money contract like stocks and bonds buying a house and then renting it to someone else can provide a regular income and since real estate typically goes up in value not down it can be sold for a profit land is almost always worth something oh my friend's doctor's mailman told me about this thing called Auto coin you must be talking about a cryptocurrency which is another kind of investment crypto tends to be riskier because it's highly speculative meaning it's based more on what you think will happen than on real financial information Investments can take many forms and there are a lot of different names depending on what is being sold who is selling them and why so do you think you're ready to invest here are a few simple steps you can take first determine how much you're able to invest risky Investments especially should not be made with money you can't afford to lose don't risk money that you need for daily food clothing and shelter only begin investing after you've balanced your budget and saved enough for an emergency fund second diversify by separating your money into several different Investments if one of them goes badly you won't lose all your money if you're investing for retirement you want to take higher risk at first to actively grow wealth and towards the end shift to lower risk to protect it third be smart do your research and learn from your mistakes so you'll avoid trendy or emotional Investments that don't pay off consider a good time a good risk and a good price to make your investment profitable from the start Investments take time to grow so the sooner you start and the more patient you are the sweeter and greater the potential return like cookies in the oven when you invest you give up the opportunity to buy something small now so that you can have something big in the future check your budget and once you can afford it work on establishing an investment maybe start with a CD or Bond but be patient because good things come to those who wait and invest wisely [Music] subscribe and watch more at prageru.com