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Stocks 101: Stocks versus Other Investments

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1.
Over the long term, which investments provide the lowest real (inflation adjusted) returns?
Choose wisely. There is only one correct answer.
Savings accounts. Savings accounts provide the lowest real (or inflation adjusted) returns over the long term.
2.
What is perhaps the main reason to invest in stocks as opposed to other investments?
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They provide the highest potential returns. In fact, over the long term, no other type of investment performs better.
3.
Which of the following skills sets is NOT needed to be a successful investor?
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Advanced statistics. Understanding advanced statistics is not needed to be a successful stock investor. The vast majority of people have all the basic skills required.
4.
If you buy a stock, it will definitely increase in value over time.
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False. Though stocks on the whole have increased in value substantially over the decades, we should not say that a given stock will definitely increase in value over time. Some stocks simply don't.
5.
When you buy a stock, you are _______.
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Buying an ownership interest in a company. When you buy a stock, you are buying an ownership interest in a company. Bonds are loans from companies and the government.