The High Schooler's Guide to Money by Merrill Than & Servideo J.P

Author:Merrill, Than & Servideo, J.P. [Merrill, Than]
Language: eng
Format: epub
Publisher: FortuneBuilders, Inc
Published: 2017-12-17T16:00:00+00:00

Equity . Finally, even though real estate goes through cycles, historically it goes up in value over time. A property you buy for $200,000 today might be worth $250,000 five years from now. That puts an extra $50,000 in equity in your pocket.

Keep in mind that rental properties don’t always equal completely passive income. If you rent properties out to other people, you are responsible for picking up the rent, and if the tenants have any problems, then you have to either fix them or find someone else to fix them. That can add up to a lot of work.

Rental income becomes much more passive when you hire a property management company to manage all of that for you and you just collect the check. Whether you hire someone to do the legwork for you is up to your personal preference: you can make less money and do little to no work, or make a little more and do more work.

Stocks. A stock is a share in the ownership of a company. If you buy a share of stock in Google, it means you own a small piece of that company. You can make money on stocks in three ways. One, by buying them when they’re priced low and then selling them for a higher price. Two, through dividends—sums of money that are paid regularly out of a company’s profits or reserves. And three, through indexes, which are groups of stocks in a particular industry, such as technology or oil. An index invests in a group of companies. A single stock invests in just that—a single company.

Bonds. Bonds are like IOUs that the bank or the government owes you. You can loan your money to a company, a city, or the government in exchange for a bond, and it promises to pay you back in full with interest.

Mutual funds. A mutual fund is a company that gets people together and invests their money in a combination of things. Different mutual funds invest in different assets. Each investor owns shares in the fund and makes money from interest (like loans), from dividends (like stocks), or if the assets that the fund has invested in go up.

Money market accounts. Money market accounts are similar to savings accounts, except that they usually require a larger deposit. Once you have a certain amount of money in your money market account, your bank will give you a little bit more interest than you would earn in a regular savings account. You can access the money in this account at any time.

CDs. A CD (or certificate of deposit) is a certificate issued by a bank to a person who’s willing to deposit money for a specific length of time. It’s like saying, “Hey, I’ll deposit this money in the bank and I won’t touch it for X number of months or years.” The longer you agree not to touch the money, the more interest your bank will pay.

Businesses. Businesses can be one of the best returns on investment there is, if you start the right one.

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