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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.
Buying shares of stock in a company gives you ownership in that company.
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True. Stock is about ownership (also called equity) and all the benefits of that ownership.
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.
Which of the following investments are the most volatile in their pricing?
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Stocks. Stocks are the most volatile. Over the long term, stocks have a higher return than bonds or savings accounts. But this volatility means that over the short term, other types of investments may significantly outperform stocks.