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Investments

Investments. Getting started - Choosing a Broker. Full Service Broker ex. AG Edwards, Meryll Lynch, Edward D. Jones Gives advice, makes trades, account maintenance Discount Broker- ex. Charles Schwab, Fidelity Brokerage Provides some advice, account maintenance Deep Discount Broker

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Investments

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  1. Investments

  2. Getting started - Choosing a Broker • Full Service Broker • ex. AG Edwards, Meryll Lynch, Edward D. Jones • Gives advice, makes trades, account maintenance • Discount Broker- • ex. Charles Schwab, Fidelity Brokerage • Provides some advice, account maintenance • Deep Discount Broker • ex. E-Trade • No advice, order execution via email or phone

  3. 5 steps to portfolio evaluation • Assess your financial situation • Define your goals • Determine the amount of investment capital required to meet your goals • Implement the changes necessary to achieve your objectives • Monitor your portfolio

  4. Reward/Risk Rule Bigger the reward - higher the risk Safer the money - less return

  5. Mutual Funds Pooling the investments of many small investors and putting that money to work in a a variety of ways

  6. Why mutual funds? • Managed by professional money managers • Diversifies investments • Cost may be lower

  7. Fundamentals of Mutual Fund Investing • Talk to a professional • Invest for the long term • Invest on a regular basis • Diversify- • Don’t put all your eggs in one basket

  8. Dollar Cost Averaging • Easiest/Safest method of investing • Invest a fixed amount in the same investment • Buy more shares when the price is low/fewer shares when price is high • Reduces errors

  9. Factors to consider • Performance • Liquidity • Safety • Minimum deposit • Convenience • Charges

  10. Factors to consider cont. • Other services • Fund objectives • Expenses • Sales load • No load funds • Front end load funds • Back end load funds • Ongoing expenses • Management fee • Rule 12b-1 fee

  11. Mutual Fund Mistakes • Does not know how much of investment will go toward the selling commission • Does not know how much money will be invested • Does not keep close account of the monthly statement

  12. Mutual Fund Checklist • NOT guaranteed or insured • AWLAYS carry investment risks • Higher rate of return involves higher risk of loss • Past performance not a reliable indicator of future performance • all mutual funds have costs that lower investment returns • Can buy some mutual funds directly

  13. IRA’s • Traditional IRA - tax deferred • Roth IRA - tax free

  14. IRA Contributions The 2001 Tax Law changed contribution amount

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