Investing 101  •  Lesson 10 of 10
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There are many reasons to start investing. You may have a specific financial goal in mind, such as building a retirement plan, college fund or nest egg. Most importantly, the earlier you start working towards your goals, the more time you will have and the less pressured you will feel — which can lead to better decision-making.

We’ve also covered a variety of investing terms you will need, including:

  • Volatility: the rate at which an asset increases or decreases in value over a period of time
  • IPO: short for Initial Public Offering, where a private company turns public by selling its shares on a stock exchange, making them available to the general public
  • Dividends: the distribution of a company’s profit in the form of payment made by the company to its shareholders.
  • Long (buy) position: owning an asset because you believe that its price will appreciate in value in the future.

You can choose to invest in a variety of instruments belonging to the different asset classes. They are:

  • Stocks: shares of ownership in a public company
  • Crypto assets: decentralized digital assets created for online use
  • ETFs: short for exchange-traded funds, which are baskets of instruments usually grouped by sector or industry

You have also learned the difference between short- and long-term investing. Investing can be further categorized as passive or active, but both typically have a longer term outlook and hold your assets for long periods. Short-term investing, however, is about creating results in shorter time frames.

We’ve discussed the importance of psychology on investing, and how to be aware of some of the emotions you may encounter as an investor. Expect to have losses occasionally; beware of biases, and don’t let “FOMO” take charge of strategic decisions.

Risk management is a priority for every investor. Avoid concentration of assets by allocating capital to a variety of different assets, thus, spreading your risk. Recognize which assets are riskier than others to create and manage a less volatile portfolio. And make use of a stop-loss to limit the downside of investments that don’t go the way you hoped.

How you structure your portfolio will define its volatility and risk exposure. Remember that diversifying your assets with varying types, sectors, geographic exposure or other criteria will help to keep your risk score low.

GREAT JOB!

Test yourself on what you have learned

Take A Quiz!

QUESTION 1 OUT OF

The primary goal of an aggressive investor is to: 

Change the priorities of a company
Maximize their returns
Preserve their money
Own as much stock in a company as possible

Correct!

Incorrect!

What are the markers of a SMART goal?

Specific, measurable, achievable, realistic, time based
Secret, minimal, artistic, reachable, true to yourself
Shareable, maximalist, above average, radical, temporary

Correct!

Incorrect!

What level of financial independence includes having multiple streams of income and secure retirement funds? 

Financially dependent
Financially secure
Financially stable
Financially solvent

Correct!

Incorrect!

Saving what percentage of income is recommended when following the FIRE method?

10-30%
30-50%
50-70%
70-90%

Correct!

Incorrect!

Dividends are usually paid out:

Quarterly
At random
Monthly
Annually

Correct!

Incorrect!

Leverage can amplify:

Only gains
Only risk
Both gains and risk

Correct!

Incorrect!

P/E ratio stands for:

Purchase-to-equity ratio
Price-to-earnings ratio
Portfolio-to-exchange ratio
Premium-to-expense ratio

Correct!

Incorrect!

What is the best way to reduce the impact of market volatility on your portfolio?

Invest in stocks
Keep your money in cash
Diversify
Invest in fixed-income investments

Correct!

Incorrect!

Stocks are

When you loan a company money in exchange for shares
Shares of ownership in a company
Certificates that guarantee returns to investors

Correct!

Incorrect!

What can drive stock prices?

Company and competitor news
Analyst ratings
Economic and political news
Investor sentiment
All of the above

Correct!

Incorrect!

Investing in stocks involves ______ risk

Some
No
An enormous amount of

Correct!

Incorrect!

Smart investors know that emotional intelligence is ______ important as financial literacy.

Not as
Just as
More

Correct!

Incorrect!

Behavioral finance is a field of study that…

Looks at the psychological and emotional aspects of investing.
Examines behaviors in stock trends
Is not a legitimate field of research.

Correct!

Incorrect!

One of the key principles of behavioral finance is that…

No one is capable of predicting their own emotions.
High potential returns often come with higher levels of risk, and vice versa.
Stocks that move up will always come down.

Correct!

Incorrect!

Meme stocks are:

Viral investments that tend to attract short-term investors
A guaranteed way to make money
Funny photos of stock tickers

Correct!

Incorrect!

______ investments carry risk.

All
Real estate
Stock
Crypto

Correct!

Incorrect!

Systemic risks include all except:

Market
Financial
Interest rate
Inflation

Correct!

Incorrect!

 All of the following are ways to diversify your portfolio except:

Asset class
Age
Geographically
Industry or sector

Correct!

Incorrect!

Diversification can help you:

Manage risk
Make exponentially higher returns
Turn around profit quickly

Correct!

Incorrect!

You can do better.
Not Bad, ready for more
Great score! Well done.
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This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. 

This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results.

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