A little recap: If you own stock, you own part of a company. So if you own Pixar stock then everyone at Pixar is working to earn you money. As Pixar was bought by Disney, then everyone at Disney is working to make you money. Disney bought the Star Wars movie franchise. If you own Disney stock then every time a new Star Wars Movie is released you get a slice of the pie. Stocks are excellent at combating inflation, which is important because your money is always losing value.
Bonds are money you are paid to lend. If you own a Pixar 10 year bond then Pixar promises to pay you every year for 10 years, plus give the money back at the end of 10 years. Bonds are great for dealing with deflation (when the cost of goods goes down) because when things are cheap money buys more!
Funds are your security. If you invest in a group of business, you’re more likely to get a return. The more stocks or bonds you invest in, the more stocks and bonds in your fund, the more likely you’ll get a return. Funds increase certainty in investing.
This is why investing in total stock market and total bond market funds are the way to go. But first, make sure you understand how the market works.
Jordan Harris just passed his PhD defense and is waiting for conferral in august of 2017 (YAY). He is a Licensed Marriage and Family Therapist and a Licensed Professional Counselor. He has over 5 years of experience counseling individuals, couples, and families from a wide diversity of backgrounds. He sees clients both in his office and consults online. You can contact him at 318-238-0586 with him online or connect with him through email at firstname.lastname@example.org or follow him on twitter @changeencounter. Also, he is not your financial adviser and information provided should be used at your discretion.