Business - Unit 5

• A corporate bond is an investor loaning money to a company (like Apple); in return, you will get interest
• Corporate bonds are issued by large corporations such as Apple, Netflix, Bank of Montreal, etc.
• You are paid interest for lending your money to the company (buying the Bond).
• A corporate bond generates fixed income because you get the same amount of interest every year.
• A GIC is an investment that offers a guaranteed rate of return over a fixed period (e.g 5 years)
• GICs are very safe investments with a guaranteed rate of return.
• Stocks are considered the most risky investments and GICs are considered the least risky investments.
• A mutual fund is an investment that is made up of a pool of money collected from many investors to invest in stocks, bonds and similar assets
• If you own a stock, you own a portion of a single company, but a mutual fund is made up of a pool of money from many investors to invest in a collection of stocks or bonds.
• The risk level of a mutual fund varies based on its investment focus.
• Mutual Funds are not insured or guaranteed.
• Common Stocks are part ownership of a publicly traded corporation.
• Compound Interest is when you earn or pay, interest on your interest.
• Simple Interest is when you pay or receive the same amount of money every year.
• A TFSA is a savings account, a person puts money in this account (which is then invested) for a long period of time.
• A mortgage is a type of loan used to buy or maintain a home, plot of land, or other types of real estate.
• Diversification means buying different types of investments to spread out your risk.
• An Interest table is a list of accounts with all assets and liabilities recorded in the correct order.
• Pre-career years are when a person is 16-25 years old and has minimal income, saving for university or college, and minimal risks.
• Investment recommendations for pre-career years include a Registered Education Savings Plan (RESP), Tax-Free Savings Account (TFSA), and GICs.
• Early Career years are when a person is 25-35 years old and has minimal risks, but a low income, maximizing their RRSP and GICs.
• Establishing years are when a person is 35-55 years old, their salary goes up, expenses decrease, and they take on more risk with stocks, corporate bonds, etc.
• Pre-Retirement (55-65) years are when a person has a lot of money-making potential, their salary is at its maximum, but has low expenses and takes on more risk with stocks, corporate bonds, mutual funds, etc.
• Retirement years (65+)are when a person's income decreases, but their expenses are low, and they take on more risk with stocks, corporate bonds, mutual funds, etc.