FIT FINANCES: INVESTING EDITION - CHAPTER 1: Understanding the Basics: Stocks, Bonds, ETFs, and Index Funds

Heather Newman
Jul 11
2 min read

Understanding the Basics: Stocks, Bonds, ETFs, and Index Funds

If you're finally ready to stop saying "I don’t get investing" — this is for you.

Let’s simplify everything.

STOCKS

Stocks represent ownership in a company.

When you buy a share, you're essentially buying a small piece of that company.

If the company does well, your share increases in value.

If it pays dividends, you may receive a portion of the profits.

✅ Potential for high returns
❌ Higher risk (can fluctuate wildly)

BONDS

Bonds are loans you give to a government or corporation.

They pay you interest over time, then repay the original amount.

✅ Generally more stable
❌ Lower returns than stocks, especially long-term

ETFs (Exchange-Traded Funds)

ETFs are a bundle of investments (stocks, bonds, or both) you can buy like a stock.

✅ Diversified (reduce risk)
✅ Usually low fees
✅ Trade like individual stocks

INDEX FUNDS

Index funds are a type of ETF or mutual fund that track a market index (like the S&P 500).

✅ Great for passive investors
✅ Low cost
✅ Historically strong returns

FEES: WHY THEY MATTER

Even small fees can cost you tens of thousands over time.

Expense Ratio: This is the annual fee a fund charges (ex: 1.5% = high, 0.03% = low).

Highest fees: Actively managed mutual funds
Lowest fees: Index funds and ETFs (ex: VTI, VTSAX)

Tip: Always check the expense ratio before investing.

Anything over 0.50% should be questioned.

WHY YOU NEED TO UNDERSTAND THIS (EVEN IF YOU HAVE AN ADVISOR)

Because it’s your money.

Advisors are helpful, but not all are fiduciaries (meaning they aren’t legally required to put your interests first).

Some recommend products that benefit them, not you.

Knowing the basics helps you:

Ask better questions
Avoid predatory fees
Stay in control of your wealth

TWO WAYS YOU MAKE MONEY FROM INVESTMENTS

Capital Gains — when your asset grows in value and you sell for a profit
Dividends — when a company shares its profits with you (stock owners)

TOP 5 WAYS PEOPLE LOSE MONEY INVESTING

Panic selling during market dips
Investing in what they don’t understand
Chasing trends (FOMO)
High-fee investment products
Trying to time the market

SHOULD YOU INVEST IF YOU HAVE DEBT?

Answer: It depends.

If your debt is high-interest (like credit cards), tackle that first. But if your debt is low-interest (like student loans or a mortgage), you may still want to invest while paying it down.

Golden Rule: Always have an emergency fund and a budget in place before investing.

✨ To get started with tools that help you build structure and organize your financial life, visit www.glitteru.com/theshop — budget sheets, savings trackers, envelope planners, and more await you.

Next up in Chapter 2:

How to Start Investing with $75/Week (even if you're 30, 40, or 50)

xx, Heather

structure is self-respect™glitteru.com