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Investing

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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Investing

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  1. Investing • Making money with money • Investing = Saving • It involves risk—you can lose your $$

  2. Remember our 3 tools to save? • Savings Account • Money Market Account • Certificate of Deposit (CD)

  3. Stocks Bonds Mutual Funds Currency Real Estate What are some ways to invest?

  4. Unique Investments… • Collectables

  5. Rule of 72’s • The time or the interest rate you need to double your money • 72/t=int • 72/int=t

  6. 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

  7. 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

  8. Retirement Plans • 401K • 403B • SEP Plans • Plan if you worked for a small business

  9. Mutual Funds • A collection of investments • Diversification • Minimize risk • Professional manager • Many investors

  10. Liquidity • Ability to convert your assets to cash quickly • Cash • Stocks • Houses/Cars/Jewelry

  11. 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

  12. Now What? • How does diversification help limit risk? • How does age and financial situation affect how you make investment decisions?

  13. The Stock Market

  14. Stock Represents ownership in a corporation

  15. Market Value • The amount of money you can sell your investment at in the market place.

  16. NYSE AMEX Nasdaq London, Japan, etc S&P 500 Dow Nasdaq Composite NIKKEI in Japan Stock ExchangesIndexes

  17. Dow Jones

  18. Dividends • Share of the profits from a corporation • Receive dividends for each share

  19. How are earnings made on stocks? • Dividends. • Dividend are usually paid quarterly • Buy Low & Sell High

  20. Advantages of Stock Investments • If the market value goes up, the gain can be considerable • Liquid • Money is easily accessible

  21. Disadvantages • If the market value goes down, the loss can be considerable • Time

  22. Stocks • A block of stock is one hundred (100) shares. • Preferred • Common • Blue Chip • Growth

  23. Stock Line Yahoo Finance - Apple Inc.

  24. Who protects the interest of investors by regulating companies that sell stock? SEC

  25. 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

  26. How Bonds Work • Buyer purchases bond • Fixed interest rate • Fixed period of time • When matured it is redeemed for full face value

  27. Bond Types • Federal Government • Municipal • Corporate

  28. Federal Bonds • The federal government issues bonds to pay for services; military, roads, infrastructure. • Virtually NO RISK!! • Savings bonds, Series EE & HH

  29. Municipal Bonds • State or local governments issue bonds for the construction of buildings, roads, schools, etc. • Moderate, if any, risk

  30. Corporate Bonds • Issued by a Business to raise money for a capital venture. • Higher risk • Better rates of interest

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

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