Financial markets

Points to know

• The main markets you'll hear about are stock markets, but bond markets are sometimes newsworthy as well.
• If you own a generous portion of stocks, you'll probably see a correlation between the behavior of the stock market and your account balance.

What's a "market," anyway?

While listening to business reports on the news, you might hear something like, "The markets were up today" or "A market plunge continued for the third day in a row." What does this mean?

"Market" is a term that, loosely defined, means "the buying and selling of related securities." You could talk about "the stock market" and mean "all stocks traded in the United States," for example.

Most excitement—and fear—relates to the stock market because stocks can increase or decrease in value very quickly. But there are bond markets too.

Find out more about stock markets

Find out more about bond markets

Understand the major U.S. economic reports
 

If you own a broadly diversified portfolio that includes stocks from all segments of the U.S. market, increases in the market will likely translate into increases in your balance. Of course, the reverse is also true.

It's the relationship between what's reported on the news and what happens to your personal finances that makes following the markets so irresistible.

But don't get too caught up in day-to-day financial market news. Over long periods of time, ups and downs tend to smooth out.

See how risk, reward & time are related