👋 Learn the financial markets
A Beginners guide to Global Assets
Discover how stocks, bonds, commodities, and more work in the global economy.
Expanding on Global Assets & How They Work
Now, let’s go deeper into each asset class and how it functions in the Global market.
Stocks (Equities)
What are stocks?
- Stocks represent ownership in a company. When you buy a stock, you own a fraction of that company.
- Example: If you buy Apple (AAPL) stock, you become a part-owner of Apple Inc.
How they work:
- Stocks are traded on stock exchanges like the New York Stock Exchange (NYSE) and Nasdaq.
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Investors make money through:
✅ Capital appreciation (Stock price increases)
✅ Dividends (Some companies pay regular profits to shareholders)
Who should invest?
- Best for long-term investors looking for growth.
- Higher risk, but higher potential returns.
Bonds (Fixed Income)
What are bonds?
- Bonds are loans that investors give to companies or governments in exchange for periodic interest payments.
How they work:
- When you buy a government bond, you're lending money to the government.
- When you buy a corporate bond, you're lending money to a company.
- Bonds pay a fixed interest rate (coupon rate) over time.
- At the maturity date, the investor gets back the original loan amount.
Example
- U.S. Treasury Bonds (T-bonds)
- Corporate bonds from companies like Microsoft
Who should invest?
- Best for conservative investors looking for steady income and lower risk.
Forex (Foreign Exchange Market)
What is Forex?
- The foreign exchange market (Forex) is where currencies are traded 24/7.
- Example: Trading USD/EUR (U.S. Dollar vs. Euro).
How they work
- Forex trading involves buying one currency and selling another.
- Prices change based on economic events, interest rates, and market sentiment.
- Traders use leverage to amplify gains (or losses).
Who should invest?
- Best for experienced traders who understand global economics and risk management.
Commodities (Gold, Oil, Agriculture)
What are commodities?
- Commodities are physical goods that are traded in markets.
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Two main types:
Hard commodities: Gold, silver, oil.
Soft commodities: Wheat, coffee, sugar.
How they work:
- Prices depend on supply and demand.
- Example: Oil prices rise when supply decreases or demand increases.
- Investors trade commodities through futures contracts or exchange-traded funds (ETFs).
Who should invest?
- Best for hedging against inflation or diversifying a portfolio.
Cryptocurrency (Bitcoin, Ethereum, etc.)
What are cryptocurrencies?
- Digital currencies secured by blockchain technology.
- Decentralized, meaning no government or bank controls them.
How they work
- People buy crypto on exchanges like Coinbase or Binance.
- Prices fluctuate based on supply, demand, and regulations.
- Some cryptos, like Bitcoin, are seen as "digital gold".
Who should invest?
- Best for tech-savvy investors who understand volatility.
- High risk, high reward.
Derivatives (Options, Futures, CFDs)
What are derivatives?
- Financial contracts derived from an underlying asset (stocks, commodities, etc.).
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Two main types:
Hard commodities: Gold, silver, oil.
Soft commodities: Wheat, coffee, sugar.
Types of derivatives:
- Options: Right (but not obligation) to buy/sell at a set price.
- Futures: Agreement to buy/sell at a set price in the future.
- CFDs: Speculate on price movements without owning the asset.
How they work
- Investors use derivatives to hedge risk or speculate on price changes.
- Example: Buying an oil futures contract to lock in prices.
Who should invest?
- Best for advanced traders looking for leverage and risk management.
Disclaimer
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