INB - Acquiring Investments Lesson

Acquiring Investments

We have learned that risk and return are directly related. In addition, we know that time is an important element in how much our investments grow. So, how exactly do we invest? How do we purchase stocks, bonds, or other investments? To answer these questions we will first need to know something about the organization of financial markets and then the steps buyers take to connect with sellers in the market. Flip through the slideshow below to learn about the different financial markets.

Both stock markets and bond markets have two parts: the primary market in which debt and equity securities are issued and sold initially, and the secondary market in which investors buy and sell previously issued debt and equity securities amongst themselves. While the stock market gets most of the press, the bond market tends to be far larger and more active.

Where to Buy Investments

The table below shows a breakdown of where different investments may be purchased, as well as a definition of the types of services provided. Full-service brokers and money managers charge higher commissions and fees due to the nature of services provided. Discount brokers and online investment firms charge lower fees, making investing affordable to more people.

	Definition	Stocks	Bonds	Mutual Funds
Full-Service Broker -	Provides a large variety of services to its clients, including research and advice, retirement planning, tax tips, and much more. This all comes at a price, as commissions at full-service brokerages are much higher than those at discount brokers. Commissions are an order for someone to do something, such as sell a stock, and get paid.
Discount Broker	A stockbroker who carries out buy and sell orders at a reduced commission compared to a full-service broker, but provides no investment advice.
Online	Basically just order-takers that provide the least expensive way to start investing.
Money Manager	A business or bank responsible for managing the securities portfolio of an individual or institutional investor.   In return for a fee, the money manager has the fiduciary duty to choose and manage investments prudently for his or her clients. Fiduciary refers to a legal duty to act soley in another party's interest.
U. S. Government	Through the Federal Reserve and its member banks, the federal government is the sole provider of U.S. Treasury, notes, bills, and bonds.

 IMAGES CREATED BY GAVS