Episode 98: Investing 101 – The Basics
In this episode, we discuss the basics of investing
Transcript
Hey everyone, and welcome back to Balanced Wealth Podcast! I’m your host, Gavin DiStasi, and today we’re going back to basics with a topic that’s near and dear to my heart: Investing 101. Because let’s be honest, sometimes we all need a good old-fashioned refresher—especially when it comes to money.
Now, I’ve got a confession to make. When I talk with friends, family, or clients about investing, I can sometimes get a little ahead of myself. I jump into concepts thinking they’re “simple,” but halfway through I see those polite nods and glazed-over eyes. Because we so often assume that everyone knows the basics of investing, and you know what they say about making assumptions.
So today, let’s break it all down. No jargon. No fluff. Just simple talk about what investing is all about. Ok Let’s dive in.
What is a stock, really?
We all hear about stocks and the stock market, but what does it actually mean to own a stock?
At its core, a stock is a piece of ownership in a company. So, if a company has 100 shares and you own one, congrats—you own 1% of that business! And that ownership gives you some rights: You have a right
to share in the profits (otherwise known as dividends), to vote on company decisions,
you have a chance to benefit if the stock price goes up, and you’re at risk if it goes down,
And you have the ability to sell your shares whenever you want (assuming you can find a buyer).
Simple, right?
So the next logical question is why do companies issue stock anyway?
You might wonder, if companies could keep all the ownership to themselves, why bring in outsiders? The short answer: money.
When companies need cash—for things like expansion, equipment, marketing—they can sell stock to raise funds. This is called equity financing. The beauty for them? Once those shares are sold, there’s no obligation to pay interest like they would with a loan. The risk shifts to the investors.
But issuing stock isn’t the only way companies raise money. So Let’s talk about bonds.
A bond is basically a loan. When you buy a bond, you’re lending money to a company (or the government), and in return, they promise to pay you interest and give your money back later.
You’re not an owner—you’re a creditor. Which means your upside is limited, but your risk is lower. Bonds typically don’t fluctuate as much as stocks, and if the company goes bust, bondholders are first in line (after Uncle Sam, of course), to get their money back.
That’s why bonds are considered safer. Not exciting, maybe—but a steady player in your investment team.
So now that you know what a stock and bond are, should you just go out and start picking a bunch of them? Probably not.
Here’s where mutual funds and ETFs come in. These are tools that bundle a whole bunch of stocks and/or bonds together. Think of it like a smoothie—rather than picking individual fruits (which takes time and effort), you buy one pre-mixed drink that has a little bit of everything.
The big win here? Diversification—which is a fancy word for not putting all your eggs in one basket. It saves you time, reduces stress, and gives you built-in variety across sectors, industries, and even countries.
There’s a flavor for everyone: U.S. or international, active or passive, government bonds or riskier ones. Mutual funds and ETFs do the heavy lifting of diversification for you.
The next topic to explore, is Rebalancing – or what I call the grown-up way to invest
Okay, so you’ve got your investment funds sorted. Now what? Do you just let them sit there? Well there’s worse things you could do, but the short answer is no.
You see, over time, your portfolio is going to shift. Maybe stocks go up, bonds stay flat. Suddenly your “balanced” 50/50 mix is more like 70/30. That’s where rebalancing comes in.
Rebalancing just means selling a bit of what’s gone up and buying what’s gone down to get back to your original mix. It helps you sell high, buy low, and—this is key—keep your emotions out of the equation. You’re not trying to predict what will happen, you’re simply responding to what has happened, while also keeping the original risk and reward parameters of your portfolio in place.
Finally, let’s talk about The unsung heroes—Cash Reserves & Insurance
These are two often overlooked, yet vital pieces of your investment portfolio. You can have the most brilliant investment plan in the world, but if an emergency hits and you have to pull out money at the wrong time? Boom. The whole plan can fall apart.
Cash reserves are your financial safety net. And insurance protects you from life’s curveballs. Without them, you’re not really investing—you’re gambling.
So before you go all-in on your portfolio, make sure you’ve got the basics covered. That’s what gives your investments the time they need to do their thing.
Alright folks, that’s your crash course in Investing 101.
If you’re still unsure about any of this—don’t stay quiet. Ask questions. It’s your money, and you deserve to understand what’s happening with it.
And remember: no question is too basic if it helps you get smarter about your money.
Until next time—keep it simple, and keep it smart.
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