Strategy Beginner: Introduction to Investment Strategy

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1.
_______ are taxed at a relatively low rate if you hold your investments long enough.
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Capital gains. Long-term capital gains are taxed at a lower rate to encourage investment.
2.
Inflation affects _______.
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Both the value of investments and interest rates. Inflation affects both, which is why many investors watch it carefully.
3.
If you might need to use your principal soon, which aspect(s) of trading would especially concern you?
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Maturity date and minimum investment. Minimum investment determines how much of your principal will be tied up, and the maturity date how long.
4.
The more liquid an investment is, _______.
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The easier it is to turn into cash. Liquid investments are easy to turn into cash, either by withdrawing from them or selling them.
5.
In investment strategies, risk in traditional terms is _______.
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Good and bad. Risk in traditional terms can mean you fail to make money, or even lose it; but possible returns usually increase with the amount of risk.