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Investments: Simplified. Adult Living. What is investing?. Investing is a way to make money with your money. First you have to make money Try to SAVE some money in a highly liquid account. NEXT, make your money grow through investing. Why should I invest?. Two main reasons:
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Investments: Simplified Adult Living
What is investing? • Investing is a way to make money with your money. • First you have to make money • Try to SAVE some money in a highly liquid account. • NEXT, make your money grow through investing.
Why should I invest? • Two main reasons: • To stay ahead of inflation • To achieve financial goals
When should I invest? THE SOONER THE BETTER!!!! Let the “snowball” work for you!!!
What are the risks? • Losing money • Risk normally works proportionately with reward…. the lower your risk (conservative investments) the lower your reward the bigger your risk… the more the possible reward
Who? • Everyone who is making money should be investing AFTER setting up a savings account with 3-6 months worth of income saved. • There are different types of investors – conservative (low-risk takers) and more aggressive (risky) YOU may be one of these or a combination throughout your life depending on your goals.
Savings Accounts • 1st “investment” • Set up at a bank • Should have 3-6 months worth of income in it • Highly liquid • No risk- FDIC • LOW interest
CDs • Certificates of deposits • YOU decide the length of time (3mon- 15yrs) YOU decide the amount ($100-$250,000) • Bank determines interest rate for your CD. • GREAT first investment!!
Treasury Bills • Backed by the U.S. government • Range in price from $1,000-5 million • Avaliable in 1 month, 3 month, and 6 month maturities • Low risk (FDIC) • Low return (BUT over short time)
Bonds • Corporate or Government bonds- they sell bonds- you loan them money- they repay in a set period of time (usually LONG-5-25 yrs) • Higher interest (compared to savings or CD) • Not liquid- penalized if “cashed” early • If the company bankrupts- you MAY not get paid (but will be paid before stockholders)
Stocks • You own a little piece of the company • If the company does well… your little piece of it does well (profits) • If the company bankrupts you lose you money • Risk & reward depends on the companies you choose to invest in. • Not very liquid- need to sell your piece before you get the $
Real Estate • Purchasing property or land for the purpose of resale • Time consuming • Expensive initial investment • Potential rewards- HIGH, risk-HIGH • Takes some knowledge of the R.E. “market”- when/where to buy and possibly “flipping” knowledge/ability
Commodities • Oil, gold, silver, metals • Investing in our future need for this product- can be speculitive • Low interest but steady income
Collectables • Items that increase in value due to time/ demand • Coins, stamps, baseball cards, beanie babies, etc • Can’t count on future demand for these items • Usually need to preserve the item for best value • Can make $ off “things” you don’t need/want anymore
Mutual Funds • A “bucket” of stocks or bonds • Professionally managed • Diversification reduces risk • Risk depends on what is in your “bucket” • Liquidity depends on what is in your “bucket” • Great for an investor who doesn’t want to constantly monitor your investment