How much do you know about investing? DO you know anything? Have you ever even heard the words stocks, bonds, and mutual funds? If not, that’s okay. You can learn the basics very easily.

Before you can invest in the stock market, you should know what you’re doing. A company cannot be traded on an stock exchange until it has gone public. When a company is public, it can issue shares of stock which can be bought and sold. Your goal is to purchase stock at one price and sell it for a higher price to make a profit.

When you buy stock, you are buying part of the company. As a shareholder, you own part of the company. You are able to vote in the company, but usually just when voting for who will be on the board of director.

A stock is considered an equity security because you own part of the company. A bond is considered a debt security because you lend the company money, you don’t own any of it. You can buy bonds from the government, state, bank, or a corporation. If you buy a bond for $1,000 that matures in 10 years with an effective interest rate of 5% paid annually, every year you will receive $50 until the 10 years are up at which time they will pay you back the $1,000.

You can hold a bond until it matures or you can sell it. Bonds can be traded. Government bonds are the least risky investment and corporate bonds having ratings to show how risky they are.

They are rated in a lettering basis. For example, a AAA bond has very little risk but often have a low interest rate. As they go fro AA to BBB to CC and so on, they get riskier and riskier but offer a higher return.

A mutual fund is a little bit of both. It is a mix of stocks and/or bonds. Mutual funds work by pooling your money together with other investors money and investing in a lot of different investments.

No-load mutual funds are mutual funds that charge no fees. These types of funds, and any mutual funds for that matter, are a popular choice among investors because you don’t have to do the investing yourself.