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Unit 5: Saving and Investing

Unit 5: Saving and Investing. Section 3: How to invest?. I CAN. Explain how to invest Define capital gains, commissions, stockbroker, maturity date, market value Evaluate the pyramid of investment. Investing in Stock. To invest in a stock, you have to use a stockbroker

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Unit 5: Saving and Investing

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  1. Unit 5: Saving and Investing Section 3: How to invest?

  2. I CAN • Explain how to invest • Define capital gains, commissions, stockbroker, maturity date, market value • Evaluate the pyramid of investment

  3. Investing in Stock • To invest in a stock, you have to use a stockbroker • This is a professional licensed to trade stocks. • You will pay him a COMMISSION for investing on your behalf • The first think your broker will do is to advise you on risk. Unlike banks that are FDIC insured you can LOSE all of your money investing in stock. • The HIGHER the risk, the MORE money you could MAKE/LOSE • The LOWER the risk, the LESS money you could MAKE/LOSE

  4. Don’t LOSE your MONEY • Invest at the appropriate risk. If you are investing for your retirement start at a higher risk and reduce risk as you near retirement • DIVERSIFY: put your money in many places. Rather than putting all of your money in 1 stock, invest in mutual funds, which often include 100 stocks of varying risk. • Its unlikely that all 100 companies will go out of business and you’ll lose everything!!

  5. When you invest, you should know: • Capital gains are: An increase in the value of an investment that gives it a higher worth than the purchase price. YOU MADE $$$$ • Dividends are: A distribution of the profits of companies you have invested in. • Market Value refers to: the price stock is being sold for • Maturity date is: the date at which your loan is paid in full or your money can be removed without penalty from its account

  6. CAN I? • Explain how to invest • Define capital gains, commissions, stockbroker, maturity date, market value • Evaluate the pyramid of investment • I can prove this by completing the 5.6 worksheet • Look over the 5.7 information sheet to help you with your performance event.

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