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Investing 101

Investing 101. By Christian Gabis. What kind of investor are you?. Active Investors. Investing is something you can understand and that is enjoyable to you You want to learn or already know how to understand financial statements

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Investing 101

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  1. Investing 101 By Christian Gabis

  2. What kind of investor are you?

  3. Active Investors • Investing is something you can understand and that is enjoyable to you • You want to learn or already know how to understand financial statements • You have time to commit to researching and learning about companies • You have the patience to wait for good investments • You are in control of your own emotions

  4. Passive Investors • Prefer to have others research and find good investments • Typically own mutual funds or Exchange Traded Funds (ETFs) • Are willing to accept a market return (on average) • Are willing to pay others to manage their money

  5. Speculators • Make trades based on market movements or other indicators they think are important • Buy a security because it has “gone up” • Don’t rely on underlying fundamentals of a company to dictate its value (think CMG) • Try to predict market movements or outcomes • Technical analysis, day-trading, etc.

  6. A Closer Look At Passive Investing

  7. Typical Investments • ETFs: • More tax efficient than mutual funds • More liquid • Also charge an expense ratio • Better choice most of the time (especially for a lump sum investment) • Mutual Funds: • Hold a large number of stocks to diversify, • Active and Passively managed • Expense ratio (Fees) • Tax Consequences • Performance LAGS MARKET 80% OF THE TIME FOR ACTIVE MANAGEMENT

  8. Some names of Mutual Funds and ETFs • S&P 500 tracking ETFs: IVV • S&P 500 tracking Mutual Funds:VFINX • Actively managed Mutual Funds: LLPFX • Longleaf • Third Avenue Funds • Dodge and Cox • REMEMBER TO LOOK AT THE EXPENSE RATIO!!!

  9. Start Investing NOW! • Don’t try to “time” the market…it does not work • Open a brokerage account • As little as $100 will do for a start • The more $$$ you can commit the more options you will have when starting out • You could start buying individual stocks with as little as $500( but more is better)

  10. For Passive Investing • Open a brokerage account • Buy either and ETF or Mutual Fund (low cost) • Keep adding money • COMMON MISTAKE: You only need ONE fund. Don’t think you need to diversify with a bunch of S&P 500 mutual funds or ETFs!

  11. Other Investments • CDs • Savings Bonds • Municipal Bonds • Corporate Bonds • Brokered CDs • Treasury Securities • Speculations: Oil, Gas, Gold, Silver, etc. • Real Estate

  12. Other Investments • Capital Requirements • Real Estate- High- but you could buy a REIT • Commodities-High- but there are ETFs that track the underlying commodity • CDs- Around $1000- subject to interest rate changes and inflation • Bonds- High-$10,000- can buy funds that expose you to bonds • Savings Bonds- Low- $25- Generally Poor Investment- subject to inflation risks

  13. Active Investors • This is where CCIG comes in • Finding undervalued securities • Finding arbitrage situations • Sharing ideas • Experiences (failures and successes) • Support and information resource • Attempting to beat the market • Meeting other investors

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