9 basic investing questions you're too embarrassed to ask

Can You Pass a Basic Money Test?

You can't build wealth through investing if you never get started. And sometimes, getting started is just a matter of overcoming your fear of asking a stupid question.

When it comes to understanding how to buy and sell stocks, invest in a mutual fund, or open a retirement account, it may seem like people are talking a different language. It sometimes feels embarrassing to ask basic questions about investing, but you're not alone in wanting to know how to get started.

"I get questions that are very simple," said Craig Ferrantino of Craig James Financial Services in New York.

Ferrantino and other financial advisers say there are no bad questions when it comes to investing, and that your fear of embarrassment should be more than offset by your fear of making money and achieving financial freedom.

Here are some common investment questions that you might be too embarrassed to ask (but shouldn't be).

1. I Have Some Money — What Do I Do With It?

Sometimes, you don't even know where to begin.

Chris McMahon, a financial adviser in Pittsburgh, said he advised a man who got a sizable royalty check from a new natural gas operation in Western Pennsylvania. McMahon said the man began with one simple question: "What do I do with the check?"

If you're fortunate to have some money that you'd like to invest, simply asking "What now?" is not a dumb question. It's certainly better than doing nothing. If you're in this situation, most financial advisers suggest first assessing whether you have paid off any high-interest debt and have a sizable emergency fund. After that, it makes sense to open an individual retirement account (IRA) and begin making regular deposits, investing primarily in index funds that mirror the performance of the broader stock market. Do this, and you're off to a great start.

2. Okay, But How Do I Open an Account?

A lot of people never get started in investing because they are unfamiliar with the actual mechanics of investing. So understanding how to open a brokerage account and how to buy and sell stocks or mutual funds is crucial.

The good news is that it's easier than ever to get started. Anyone can open a brokerage account online at places like Fidelity, E-Trade, or TD Ameritrade. There's plenty of step-by-step advice you can find on these sites, and if you're ever confused, there is usually someone to call.

"There are friendly people who are employed to help you with this," McMahon said.

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9 basic investing questions you're too embarrassed to ask

Dog-sitting, babysitting, or house-sitting

These jobs are always in high demand, and the best part: you can name your price and create your own schedule! Post an ad on craigslist, or use your friends' and family's connections to get your name out there. 

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Rent out your space 

List your apartment on Airbnb or another rental site, and make some easy cash by staying at a friends and renting out your place for the weekend.

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Share your space

Just as you can rent out your full apartment or house, you can also post a free room (or even just your couch!) on sites like Craigslist or Airbnb. This way you can split your living expenses -- and maybe even make a new friend!

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Sell your body parts

Now here's a weird one: Donate your hair, breast milk, or even plasma for a profit. According to Grifols, if you're healthy and weigh above 110 pounds, you can earn up to $200 a month donating your plasma to life-saving medicine. 

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Sign up to participate in medical tests and clinical trials. 

Universities constantly need volunteers to test new medicines and treatments -- and because the pool of willing participants is limited, there is typically a large compensation for being a guinea pig. 

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Participate in a focus group

Companies and organizations will pay you to join a focus group. These can be conducted in person, online, or via phone. You will most likely be reimbursed in cash or gift cards -- plus, you often get to test out fun new products! 

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Take online surveys

Similar to focus groups, you can get paid to give your time and insights on an online questionairre. Plus, you can do this from the comfort of your couch. 

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Bank on your sperm

Although we don't necessarily recommend this option, there is a very high demand for healthy sperm donors. Keep in mind some of the obvious drawbacks, but sperm donation is non-invasive and highly compensated. 

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Crowdfund your dreams

Crowdfunding allows you to raise monetary contributions from a large group of people who want to support your venture. Post your project or idea on a crowdfund site, like GoFundMe.com, and see the cash pile up.

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Become a tutor

If you're qualified, post an ad online or on a community board to tutor children on their school courses or for the upcoming SATs.

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Get a part-time job

Capitalize your free time (on the weekends or after work hours) by working a part-time job. A bartender, waiter, or Uber driver are all great options for an additional source of income -- and great tips! 

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Resell tickets

Take this suggestion at your own risk: If you're staying within legal limits, buy tickets low and sell high as an effective way to source additional money. (Just make sure to check your state and local laws first!)

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You can sell anything on the internet these days... including your companionship! Get paid to go on a platonic outing for a few hours and enjoy your afternoon with a new friend. 

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Rent out your parking spot

Make sure to check with your landlord first, but if you have the option to park your own car further away, lend or share your parking space or driveway for the hour, day, or even month! 

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Keep a coin jar 

This one takes patience before a big pay out, but keep a spare jar or drawer for loose change that you usually toss anyway. It will keep it all in one place -- and those quarters do add up! 

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Make something to sell 

If you have a knack for arts & crafts, create jewelry or other handmade gifts to sell on sites filled with other thrifty vendors like Etsy

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Sell items online

This effective strategy requires low effort with a high return. Post photos of your used or non-used items on sites like eBay or Craigslist, and let the bidding begin! 

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Have a yard sale

Sell clutter you've been meaning to get rid of right in your front yard. This simple tactic is convenient, and guarantees a wad of cash right to your pocket.  

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Return past purchases

This tip may seem obvious, but is often overlooked: Take your recently-purchased items that are laying around back to the store for either store credit or a full refund. 

Recycle scrap metal and cans

Collect cans and scrap metal out your own garbage, basement, and street and bring to your local recycler to exchange your findings for money.  

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3. What Is a Stock?

When we first start learning about investing, the lingo and terminology can be confusing. But we're too embarrassed to stop someone mid-conversation and ask them some basic questions. There's no shame in asking people to back up and explain themselves. After all, this is all about you and your financial future.

One of the basic concepts in investing is owning shares of stock. In this situation, you literally have an actual share of ownership of a company. So the value of your shares can go up and down just as the value of the company does. This knowledge can serve as the basis for understanding mutual funds and exchange-traded funds, in which money from investors is pooled and then invested a variety of securities.

4. What Is a Bond?

Bonds, like stocks, make up a key component of most investment portfolios. And they are also a big driver of the economy, as companies and governments use them to finance big projects.

With bonds, an investor is essentially loaning money to a company or a government. An investor makes money by receiving interest payments from the borrower.

So for example, let's say the city of Duluth wants to build a new bridge. The government will issue bonds, which investors can then buy, thus financing the bridge construction. Investors make money on interest from the bonds. Interest rates depend on how likely the company or government is to repay the bonds.

Bonds don't increase or decrease in value like stocks, so they are commonly used by older investors who still want some income but have less tolerance for risk.

5. Can I Buy Just a Few Shares?

One of the biggest misconceptions about investing is that you need a lot of money to get started. Thus, people wait too long to get started.

Believe it or not, most discount brokerage firms will let you buy just a single share of stock. Don't be embarrassed! A single share of McDonald's stock is going to be worth more in the long run than that quarter pounder you just bought. And while some brokerages do require sizable minimum balances in your account, there are many that don't.

There is one important caveat to this, which is that you usually have to pay some fee each time you make a transaction. At discount brokerage firms, this is about $7–$10. So it does make sense to save up and buy larger quantities of stock if you can, otherwise transaction fees can cut into your returns. To avoid this, explore whether your broker offers some investments without transaction fees. Fidelity, for example, allows customers to trade most iShares ETFs for free.

6. What's the Difference Between a Roth and a Traditional IRA?

We hear these terms thrown around so much that you may feel little dumb for not knowing the answer. But don't. Ferrantino said he gets this question most of all, and he's glad that people ask it.

Individual retirement accounts allow people to invest in stocks, bonds, and other securities and see the money grow, without paying a lot of taxes along the way. Individuals can contribute up to $5,500 per year (or more if you're closer to retirement age). With a traditional IRA, the money you deposit is subtracted from your taxable income. (Savings up front!) With a Roth IRA, you pay tax up front but will not have to pay tax on any gains when you withdraw money when you retire. (Savings later!)

A financial adviser can help you decide which account is right for you, and may even advise you to have one one of each. Ferrantino said that one you understand the basics of IRAs, you can start to grasp more complex maneuvers, like converting a traditional account into a Roth. So it never hurts to ask.

7. My Company Offers a 401K. What Is It? How Do I Sign Up?

There are many workers who have a vague awareness that their company offers a retirement plan. But they often don't understand how plans work, and are too embarrassed to ask.

"The foreign language is scary," McMahon said.

McMahon said the good news is that most companies offer enrollment periods for their retirement plans, where employees can meet with plan representatives and ask any questions.

In simple terms, a 401K is a retirement plan that allows workers to set aside a portion of their salary and invest it in a variety of stocks, bonds, and mutual funds. The deposits are subtracted from taxable income, and most companies will match contributions up to a certain level. In other words, your company is giving you free money for signing up. So don't be embarrassed to get the ball rolling!

8. What Is an Asset?

Financial advisers say this question comes up a lot when people are applying for loans. Lenders will often want information on a borrower's "asset-to-debt" ratio. Meaning, how much you own versus how much you owe.

Young people, especially, are often baffled by the asset question because they are much more focused on reducing debt. In short, an asset is something that a person or company can own that counts towards their net worth. The equity in your home is an asset. Cash in the bank is an asset. Stocks and bonds are assets. Once you understand the definition of an asset, you can learn about the role they play in building wealth and helping you achieve financial freedom.

9. Do I Need a Financial Adviser?

At what point do you need outside help with your money? Well, that depends on your goals and the complexity of your investment portfolio. But by asking yourself this question, you can at least examine whether your situation would benefit from professional advice.

"If you're at a point where you think you need a plan, you probably need somebody," McMahon said.

Of course, financial advisers are biased here. But professionals like McMahon also said that it's easier than ever now for individuals to invest on their own using discount brokerage firms, and get great advice along the way. Sites like Fidelity, Charles Schwab, and E-Trade have a wealth of online tools and people to call if you you have questions.

"There are so many resources now, you almost can't screw it up," McMahon said.

Got any embarrassing questions? Go ahead and ask!

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