Module 1 of 6 in Stock market foundations
Money, risk and return
Why people invest at all, what inflation does to savings, how risk and return are linked, and the percentage and compounding maths later lessons use.
5 lessons in this module. Progress is saved in your browser as you go.
Before the stock market, the money itself. This module explains why savings kept as cash slowly lose value, why investments that can earn more also carry more risk, and the handful of calculations you will use in every later lesson: percentage changes, compounding, CAGR and real returns after inflation.
If you are already comfortable with percentages, skim the worked examples and take the module test. If not, take your time here; it makes everything after it easier.
By the end of this module you should be able to
- Explain the difference between saving and investing, and how inflation reduces what money can buy.
- Describe how risk, return, liquidity and time horizon trade off against each other.
- Calculate percentage changes and tell a percentage change from a change in percentage points.
- Calculate compound growth and a compound annual growth rate (CAGR).
- Convert a nominal return into a real return after inflation.
Lessons in order
Module test
10 questions, chosen at random from a bank of 40 questions and balanced across this module's learning goals and difficulty levels. Every question comes with an explanation. You need 80% to pass, and you can retake it as often as you like with a fresh set of questions.