Investing
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Investing. Making money with money Investing = Saving It involves risk—you can lose your $$. Remember our 3 tools to save?. Savings Account Money Market Account Certificate of Deposit (CD). Stocks Bonds Mutual Funds. Currency Real Estate. What are some ways to invest?.

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Investing

Investing

  • Making money with money

    • Investing = Saving

  • It involves risk—you can lose your $$


Remember our 3 tools to save

Remember our 3 tools to save?

  • Savings Account

  • Money Market Account

  • Certificate of Deposit (CD)


What are some ways to invest

Stocks

Bonds

Mutual Funds

Currency

Real Estate

What are some ways to invest?


Unique investments

Unique Investments…

  • Collectables


Rule of 72 s

Rule of 72’s

  • The time or the interest rate you need to double your money

    • 72/t=int

    • 72/int=t


Simple interest vs compound interest

Simple Interest Vs. Compound Interest

  • Simple – Interest paid only on principle amount

  • Compound- Interest paid on principle and also on previously earned interest

*See Interest Worksheet


Retirement plans

Retirement Plans

  • Pension Plans

    • A retirement plan set up by your employer

  • IRA’s

    • Must wait until 59 ½ to access money

    • Special tax benefits

    • Used if employer does not offer a pension plan


Retirement plans1

Retirement Plans

  • 401K

  • 403B

  • SEP Plans

    • Plan if you worked for a small business


Mutual funds

Mutual Funds

  • A collection of investments

    • Diversification

    • Minimize risk

  • Professional manager

  • Many investors


Liquidity

Liquidity

  • Ability to convert your assets to cash quickly

    • Cash

    • Stocks

    • Houses/Cars/Jewelry


Investing

Dollar Cost Averaging

Letting your money work for you over time

Diversification

Spreading your money out over different investments

Ie: stocks, bonds, mutual funds, etc.

Investing Choices


Now what

Now What?

  • How does diversification help limit risk?

  • How does age and financial situation affect how you make investment decisions?


The stock market

The Stock Market


Stock

Stock

Represents ownership in a corporation


Market value

Market Value

  • The amount of money you can sell your investment at in the market place.


Stock exchanges indexes

NYSE

AMEX

Nasdaq

London, Japan, etc

S&P 500

Dow

Nasdaq Composite

NIKKEI in Japan

Stock ExchangesIndexes


Dow jones

Dow Jones


Dividends

Dividends

  • Share of the profits from a corporation

  • Receive dividends for each share


How are earnings made on stocks

How are earnings made on stocks?

  • Dividends.

    • Dividend are usually paid quarterly

  • Buy Low & Sell High


Advantages of stock investments

Advantages of Stock Investments

  • If the market value goes up, the gain can be considerable

  • Liquid

    • Money is easily accessible


Disadvantages

Disadvantages

  • If the market value goes down, the loss can be considerable

  • Time


Stocks

Stocks

  • A block of stock is one hundred (100) shares.

  • Preferred

  • Common

    • Blue Chip

    • Growth


Stock line

Stock Line

Yahoo Finance - Apple Inc.


Who protects the interest of investors by regulating companies that sell stock

Who protects the interest of investors by regulating companies that sell stock?

SEC


Bonds

Bonds

Carry less risk than a stock

is an IOU, certifying that you loaned money to a government or corporation and outlining the terms of repayment


How bonds work

How Bonds Work

  • Buyer purchases bond

  • Fixed interest rate

  • Fixed period of time

  • When matured it is redeemed for full face value


Bond types

Bond Types

  • Federal Government

  • Municipal

  • Corporate


Federal bonds

Federal Bonds

  • The federal government issues bonds to pay for services; military, roads, infrastructure.

  • Virtually NO RISK!!

    • Savings bonds, Series EE & HH


Municipal bonds

Municipal Bonds

  • State or local governments issue bonds for the construction of buildings, roads, schools, etc.

  • Moderate, if any, risk


Corporate bonds

Corporate Bonds

  • Issued by a Business to raise money for a capital venture.

  • Higher risk

  • Better rates of interest


Investing

Risk?

  • US savings bond least risk

  • Corporate bond

  • Preferred stock

  • Common stock most risk


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