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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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Presentation Transcript
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?
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
slide11
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?
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
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.

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
slide31
Risk?
  • US savings bond least risk
  • Corporate bond
  • Preferred stock
  • Common stock most risk
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