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Investing Money in Plain English
Duration:
3 minutes and 40 seconds
Country:
United States
Language:
English
Genre:
Instructional
Producer:
Common Craft, LLC
Director:
Lee LeFever
Views:
3,170
(366
embedded)
Posted by:
leelefever on Feb 9, 2009
A short explanation of the risks and potential benefits of investing money.
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Video Transcription
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- Most of us look forward to a comfortable future.
- To get there, you've got to be smart about using your money to make more money.
- This is Investing Money in Plain English.
- We know that putting money in savings helps you make more money over time, thanks to interest.
- It's predictable and based on an interest rate.
- However, there are ways to more money
- if you're ready to take risks.
- Consider this. You're here, and you want to be here.
- You have a choice between two options.
- Going around the mountain, which usually takes 5 hours.
- It's very predictable.
- Or going over the mountain, which can shorten the trip to 2 hours.
- It may seem like an easy choice.
- You can get there 3 hours earlier by going over,
- but there's a catch!
- You might get stuck in the snow,
- which is a risk that could make the trip even longer than going around the mountain.
- The best way to deal with risk is to be informed.
- If you do your homework, like checking the weather reports,
- you'll have a better chance of making a smart decision.
- Now, of course I'm not talking about getting from town to town,
- but reaching your financial goals.
- Having a savings account is predictable,
- it grows steadily with interest.
- Investing, on the other hand, can grow your money much faster,
- but there's also a chance you could lose some of it.
- There are many ways to invest.
- Let's say your friend is opening a coffee shop.
- She needs money to buy the beans and supplies.
- Because she can't afford everything,
- she asks people like you to be investors.
- You can see that this is a big risk,
- but you do the research and find that a new coffee shop could do very well.
- So, you give her company money,
- and you become an owner in a tiny part of the company.
- That bit of ownership represents the money you invested.
- If the coffee shop business is slow,
- the value of your investment may shrink.
- But if the coffee shop is successful,
- your investment could grow with the company.
- It may take time to see the outcome,
- but you've bet that your money would grow faster in an investment,
- than the modest earnings in a savings account.
- That's what makes it risky.
- It's hard to know how an investment will do over time.
- The same is true for the stock market.
- When you buy stocks, you're buying a tiny portion of a large business,
- and betting that the business will do well over time,
- increasing the value of your investment.
- Now, the stock market and private businesses aren't the only kinds of investing.
- Let's say you'd like to invest $500.
- You find antiques that you believe will be worth more in the future.
- If you're right, you may be selling them for $750 in a few years.
- If you're wrong, they may be worth only $400.
- By investing, you're taking a risk,
- and you have to be ready for both outcomes.
- Whether it's a friends coffee shop, the stock market, or antiques,
- the big ideas are the same.
- Savings accounts are predictable, and may be a good choice.
- But if you're ready to take the risk that you might lose money,
- you could put your money into an investment
- that has the potential for a much bigger payoff.
- Investing is serious business.
- And every investment comes with different risks.
- Do your homework
- and discuss your plans with a financial professional before getting involved.
- If you plan for the long term,
- you may find that a comfortable future isn't too many years away.
- I'm Lee LeFever, and this has been Investing Money in Plain English.
- Do you need this for work?
- Find presentation quality, unbranded versions of all Common Craft videos at CommonCraft.com.


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