Investing Unit 2 Investing Basics

  • Introduction
  • Unit 1: Basic Building Blocks of Successful Financial Management
  • Unit 2: Investing Basics
  • Saving and Investing
  • Risk
  • Diversification
  • Dollar-Cost Averaging
  • Time-Value of Money
  • Asset Allocation
  • Investment Preferences
  • Summary
  • Action Steps
  • About the Author
  • Unit 3: Finding Money to Invest
  • Unit 4: Ownership Investments
  • Unit 5: Fixed-Income Investing
  • Unit 6: Mutual Fund Investing
  • Unit 7: Tax-Deferred Investments
  • Unit 8: Investing with $mall Dollar Amount$
  • Unit 9: Getting Help: Investing Resources
  • Unit 10: Selecting Your Team of Financial Professionals
  • Unit 11: Investment Fraud



Investing Basics

Joan E. Witter, M.S., Michigan State University Extension

In unit 1, you learned about financial building blocks such as cash management. Now it’s time to examine basic investing principles. Wise investing requires knowledge of key financial concepts and an understanding of your personal investment profile and how these work together to impact investing decisions.

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This unit will:

  • Discuss the difference between saving and investing
  • Illustrate the risk/rate-of-return tradeoff
  • Explain the importance of the time-value of money and asset allocation
  • Challenge you to think about your personal risk tolerance
  • Help you to recognize that your tax bracket, financial goals and time horizon are key factors in defining an appropriate investment plan and asset mix for you and your family.