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Stocks 101: Stocks versus Other Investments

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1.
Which of the following investments provide the biggest long-term returns?
Choose wisely. There is only one correct answer.
Stocks. Of the types of investments listed, stocks provide the biggest long-term returns. In attempting to reach your financial goals in life, maximizing the return on your investment dollars is key.
2.
A good way to minimize the effects of bad timing in stock choices is to invest for the short term.
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False. A good way to minimize such effects would be to invest for the long term instead, since volatility tends to iron itself out over time.
3.
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.
4.
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.
5.
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.