The Millennial Optimist

Investing for Beginners – Options Now that we have a firm understanding of bonds, it is time to take a look at options. The main reason why we talk about options even though we are learning the basics of investing is the fact that options have been getting a lot of attention recently. This is because options can be very profitable quickly but are also considered one of the hardest investments to manage as they are risky and one bad move can lead to a large decrease in the value of your portfolio in a short period of time. Trading options should not be tried by beginners until you have a firm grasp on investing. Options – Hard Difficulty So what is an option? An option allows the investor the right – but not the obligation – to buy (call) or sell (put) shares of a company at a specific price (known as the strike price) and at a specific date in the future. With this in mind, we note that there are currently two general kinds of options: American options and European options. Alt...

Investing for Beginners – Bonds Now that we have gone over the benefits of stocks and how they work, we will take a look at a safer investment method for those who prefer to invest without risking their principal (the money that you are using to invest). This investing method also allows you to see a steady increase in your brokerage account rather than a high amount of daily fluctuations that you would see if you had invested in stocks. Bonds – Easy Difficulty So what is a bond? The easiest way to describe a bond is as an IOU where you provide some liquidity – in the form of a principal – to a company or institution and in return, they provide you with a promise that they will pay you back the money in full with a fixed interest rate. When a bond is set to expire, this is what is referred to as the maturity date – the date where the contract ends, and you receive your principal back. The maturity date is when the issuer, the individual who has borrowed the money from you, is e...

Investing for Beginners – Stocks Now that we have gone over how to open up a brokerage account and how to figure out what type of portfolio we feel comfortable with, we have officially reached the fun part of investing. There are so many ways to make money investing in 2020. As an investor, you are able to choose from a long list of investments to invest your hard-earned money. Will you pick a specific asset class like stocks? Alternatively, will you concentrate on a specific industry like Healthcare? There are so many options! We have gone ahead and made a simplified list of the options, with each one having their own post, open to everyday investors who are looking to make a return on their money over a couple of years.  Stocks – Easy/Medium Difficulty Stocks are shares – or parts – of a company that are publicly listed – meaning that they are available to trade by everyone through a stock market or stock exchange. When you purchase a stock, a transaction occurs where you...

Investing for Beginners – How to Construct your Optimal Portfolio Now that you have opened up your first brokerage account, we have reached that point in our investing journey where we can start learning how to create a portfolio. Now before we start chatting about stocks, bonds, the stock market and any other financial terms that are thrown around on TV, we should first define what a portfolio is and what needs to be considered when creating the optimal portfolio for you.  Please note that there is no single optimal portfolio, every single person will have a slightly different portfolio type that is based on your current financial situation and on specific attributes that are unique to you such as age and time horizon for investing. To highlight this, think about the time horizon and the financial stability of a recent university graduate – they have plenty of time for compounding their money but not a lot of disposable income to begin investing as they just finished school....

Investing in Canada for Beginners – Opening Your First Brokerage Account Are you looking to start investing this year? Are you having difficulty taking that first step and trying to figure out if you will manage your own investments or pay someone to do it or maybe even something in between? To save you from the hassle of trying to figure it out yourself, here is an easy way to start investing in Canada. The best part is, you do not even need that much money to start! I think it is safe to say that we all understand how important it is to work hard and do the best we can. The only reason why we try to work harder every day is to create financial stability so that we can improve our lifestyle and happiness. But as we all know, the secret to becoming financially independent is more than just what you are able to do while you work. It is about being smart and putting your money to work for you. As an individual, you only have a finite (or fixed amount) of time every day. Nobody ge...