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INVESTMENTS 101

Explore the fundamentals of investments, including stocks, bonds, and mutual funds, to build wealth, secure retirement, and maximize returns. Learn about different types of investments, risk vs. reward, and how companies finance operations. Discover popular investment options like savings, money markets, CDs, and retirement plans. Gain insights into the history of stock markets, regulations, and key players in the industry. Start your journey to financial success and investment literacy today!

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INVESTMENTS 101

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  1. INVESTMENTS 101 • STOCK MARKET SUMMARY • What is an INVESTMENT? • Short term sacrifice long term gain • HISTORY- • Stock Market Crash (1929) resulted in regulations of banks GSA in 1933. • Deregulation began in 1999

  2. INVESTMENTSWhy do people invest? • Wealth accumulation • Comfortable retirement • Maintain purchasing power

  3. Factors of INVESTING • RISK/ REWARD- the higher the risk, the higher the potential reward • Time Factor- length of time (short term vs long term)

  4. BANK INVESTMENTS • Savings • Money Markets • CD (Certificate of Deposit)

  5. STOCK MARKETFundamentals of Investing 2 Main Types: Stocks & Bonds

  6. How do companies finance business activities? By issuing: • Stocks (Equities) • Shares of stock represent ownership interest in company • Shareholders participate in profits of company through growth in value of stock

  7. Stocks- 3 Types • Preferred Stock- Stocks with priority and preference. • Common Stock- Most stocks are common unless specified otherwise. Prices changes with the market on a constant daily variation. • Treasury Stock- Company issued stock to employees usually in retirement plans (internally held shares of the company’s stock).

  8. Companies also issue… • Bonds (Fixed Income) • The purchaser of a bond is lending money to the company at a set interest rate specified at the time of purchase • Ownership of a bond makes them a creditor of the company • If a company bankrupts due to financial difficulty, bond holders have priority claims on assets before stock holders

  9. Bonds- 3 Types • Government/ Govt backed- Government issued bonds or secured by the government (FEDERAL GOVT) • Municipal- Local government issued bonds (Example- School bonds) • Corporate- Company issued bonds

  10. In what do people generally invest? • Stocks • Bonds • Mutual Funds

  11. Mutual Fund?!? What is a Mutual Fund? • Investors pool their money together into a fund, a “mutual fund” • A professional money management team is hired to manage the fund • The management team decides which stocks and/or bonds to buy and sell and when

  12. POOL OF FUNDS

  13. WHY Mutual Funds are popular? • By design mutual funds are less risky than individual stocks and even bonds because of DIVERSIFICATION. • You can purchase multiple stocks and bonds to spread out the risk. • Mutual funds are a very popular way for people to invest due to their features and benefits

  14. OTHER INVESTMENTS • Annuities • Options- Derivatives of Stock • Calls- • Puts- • Foreign Exchange (FOREX) • Commodities-

  15. Saving for retirement • Saving for retirement is the primary reason most people invest • RETIREMENT PLANS • IRA- Individual Retirement Plan (Tax Deferred Earnings) • ROTH IRA- Tax Free Earnings • 401k- Company Sponsored Plan

  16. THE MARKET • INDEX- • DJIA- • S&P 500 MARKETS- NYSE- NASDAQ-

  17. Careers in the investment industry • Financial Advisor • Financial Analyst • Portfolio Manager • Investment Banker

  18. THE END

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