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Investment Planning. #11. Learning Goals. The Objectives & Rewards Of Investing. Investing usually long-term expect future value and return to increase over time. Speculating usually short-term future value and return highly uncertain.
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The Objectives & Rewards Of Investing Investing usually long-term expect future value and return to increase over time Speculating usually short-term future value and return highly uncertain Adequate insurance coverage and cash/savings are investment prerequisites
How Do I Get Started? PAY YOURSELF FIRST!
What Are Your Investment Objectives? Current Income appropriate for retired persons Major Expenditures college education, down payment on a home, or starting a business Retirement live comfortably in "golden years" Shelter from Taxes preserve more of your earnings
Coming Up With the Capital Investment plan provides direction to help attain goal
Different Ways to Invest 1. Common Stock 2. Bonds 3. Preferreds and Convertibles 4. Mutual Funds and Exchange Traded Funds 5. Real Estate
1. Common Stock Different Ways to Invest
2. Bonds Different Ways to Invest
Different Ways to Invest 3. Preferred Stock Equity security that behaves like debt Fixed dividend paid before dividend to common stockholders Convertible Bonds Special type of fixed income security Allows conversion into common stock Provides income and possible price appreciation Hybrid Securities
Different Ways to Invest 4. Mutual Funds Professionally managed portfolio by an investment company Returns and risk depend on portfolio Exchange Traded Funds Track a basket or index of securities
5. Real Estate Different Ways to Invest
Securities Markets “Arenas” where financial instruments trade
Securities Markets Primary market new issues available for first time Investment bank underwrites Issuing company gets proceeds Prospectus Secondary market trading previously issued securities Securities exchanges NASDAQ OTC Market
Broker and Dealer Markets Broker Market buyer and seller come together, direct trade takes place between them Party A sells securities directly to Party B Dealer Market buyer and seller never meet buy/sell orders are executed separately through securities dealers acting as market makers
Dealer Markets Bid Price price at which investor can sell a security Ask Price price at which investor can buy a security
Foreign Securities Markets Manila Tokyo
Bear Market Falling securities prices for extended time period Investor pessimism Economic downturn Bull Market Rising securities prices for extended time period Investor optimism Favorable economy Market Trends
Historical Performance of US Stock Markets Measured by NYSE Returns
Odd or Round Lots Round Lot 100 shares of stock or multiples thereof Odd Lot fewer than 100 shares Odd-lot differential
Securities Investor Protection Corp. (SIPC) Arbitration settles disputes between broker and client Investor Protection
Executing Trades Market orders often take less than two minutes!
Annual Stockholder Reports Here’s what to read….
Investor Objectives high current capital incomeappreciation Trade-off between