Finance 101

Answers to basic financial questions

Do you know....?

  • how a mutual fund works?
  • how student loans work?
  • what is a mortgage?
  • basic financial skills you need?
  • what is a bitcoin?

Use this resource to learn more about some basic financial questions.

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What is a mutual fund?

composed by K. Schneider

What is a mutual fund?

How can someone with a small amount of money invest in the stock market? By pooling money with other investors in a mutual fund. Investment companies or licensed investors can start a mutual fund. These financial leaders take a pool of money from investors and create a portfolio of investments. The managers purchase stocks, bonds and investment certificates with the pool of money.

How does a mutual fund work?

Mutual funds are designed to make dividends on the original investments. Many investment companies such as Fidelity, Vanguard and Putnam offer different kinds of mutual funds with different goals. Goals of funds may be to make money quickly by taking risk, make money over a long period of time by keeping stable, or provide a certain return or gain by a certain time period. Expert fund managers work to make sure the fund is meeting goals by monitoring the market and the financial news.

Who manages the fund?

The fund managers use the pool of money to buy stocks or bonds and organize them into a fund portfolio. The shares of stock can gain value, and then the mutual fund is worth more than the original investment. One feature of mutual funds is that they can be diversified; many different investments can be combined so that there are more options for growth of the money. Mutual fund investments can be made in a closed group of just a few investors, or open to anyone with the required amount of money.When investors pool money, the fund has the power to purchase larger blocks of stocks than an individual, so it is a mutual benefit.

How do you invest in a mutual fund?

Some mutual funds allow investors to contribute as little as one-thousand dollars. The fund manager then invests the money from all investors into stocks, bonds, or savings accounts.. Since the fund manager keeps focus on the investments, mutual fund shares include an expense for management. Investors note this as the expense ratio. When a person wants to purchase shares in a mutual fund, the Net Asset Value Price(NAVP) is determined for a share or portion of the specific mutual fund. Most mutual funds shares are traded on the stock market and are open to any investor with the required initial “dive” into the pool.

A mutual fund allows investors to dive into a larger market of investment options by pooling money into a fund. It helps individuals grow investments by purchasing the expertise of the fund managers. You can dive into the pool of investing by purchasing shares of a mutual fund.

Sources Consulted

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Invest early and often

It is important to start saving for college as soon as possible.

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Smart Borrowing

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How Student Loans Work

composed by Grey N

composed by Grey Newton

Only those in need of money are able to acquire such loan. If there is enough income for the household the Federal government will deny any application for the loan. There are two ways to apply for the loan.

One way to apply is directly through the Department of Education. The other way to apply is through the Federal Family Education Loan. In freshman year the loan amount is $5,500, while senior year the amount is $7,500.

Any money left over from the loan, which is paid directly to the school, is given to you in cash, to your bank account, or given by check. Scholarships, grant money, or financial assistance is used to pay any of the fee and then the loan is used, this is where extra money comes in.

Resource consulted

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What is a mortgage?

composed by Ashley Vang

Let’s start of with, “What is a Mortgage?”

A mortgage is a loan used to purchase a home, or a car, or anything expensive, and you don’t have enough money. In order for you to be able to buy your house, the bank has to be able to trust you with your credit history, like all your assets and income, if they can’t approve it, then you won’t be able to buy your house, or anything.

If you bought the property, you’d have to serve collateral, or in other words, a repayment, like if you borrowed money, you would have to do a small payment every month until it’s all paid off, if you don’t you’ll either lose your house, car, or whatever you bought, which that is called a lien, you’re past your date that you’d have to pay for your home, also when you don’t pay your payment after awhile, you’ll eventually get a “foreclosure”, which is when they kick you out of your home, and you’re homeless. When you buy your house, the bank can choose how much you’ll have to pay, but the payment will have to be in your range that you can pay in.

What is a Mortgage | by Wall Street Survivor


Basic Money Lessons

Composed by Skyler H.

As young adults,it is important to know basic money lessons to be financially successful in the future. To start off, students are not exposed to enough financial literacy education. Not having these classes lack information that students should know. Another thing you might not have learned is how to budget.

Budgeting is an important skill to know so that you know how to spend your money wisely. Which leads me to a few more tips like, time value in money. This is prior to saving money. For example, that $1.50 on the soda you buy everyday really adds up. This can lead to being in debt. Another tip you probably don't know about. Not paying back student or auto loans can wreck your personal finance.

Furthermore, knowing how credit works is also very important. The higher your credit score, the more banks, auto lenders, and insurance agencies will trust you. To achieve a higher credit score, you should pay the money due every month on bills and such.

This brings up another tip. Savings accounts vs. checking accounts. Knowing the difference between these two things are helpful. And last but not least, what's a check without knowing how to fill one out? This might be one of the most required things to know about in the financial world. And this is why it is important to know basic tips about money!

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New currency options

What is a Bitcoin?

composed by Juan Hernandez

Bitcoin is a new form of currency and also is now a popular currency. Bitcoins can be used to make anonymous purchases, which makes them very attractive to certain individuals. They have attracted a crowd of investors as the cost of Bitcoins keeps increasing and there are also no fees associated with them during the transaction process.

Once purchased or mined, Bitcoins are stored in a digital wallet, where you can send, receive, spend and save them. Bitcoins can be stolen if someone hacks into your computer (they are working to make them more secure). If your computer crashes without a backup, Bitcoins can be lost. There are also positives, such as not having to go through a bank and not having a limit on how many Bitcoins can be created.

Finance 101

A magazine compiled by K. Schneider.

Thanks to fellow students for crafting excellent articles.