Investing Principles
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Investing Principles
Personal Finance
![Page 2: Investing Principles](https://reader035.fdocuments.us/reader035/viewer/2022072014/56812cfe550346895d91d686/html5/thumbnails/2.jpg)
Time HorizonO The length of
time over which an investment is made or held before it is turned into cash (liquidated)
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Risk - RewardO Potential returns
on investments rise with an increase in risk, as does the potential for loss.
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Risk ToleranceO The ability and
willingness to stomach large swings in the value of his or her investments.
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Compound InterestO Interest that accrues
on the initial principal and the accumulated interest of a principal deposit, loan or debt.O The more frequently
interest is added to the principal, the faster the principal grows and the higher the compound interest will be.
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Pay Yourself FirstO Automatically
route your specified savings contribution from each paycheck at the time it is received. O Best done with
a Direct Deposit!
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DiversificationO A risk
management technique that mixes a wide variety of investments within a portfolio.