Investing: Taking Risks With Your Savings

1. Investing: Taking Risks With Your Savings 6-2

2. Where do people keep their savings? • What other options might you have? • Benefits? • Disadvantages?

3. Stocks and Bonds • What are stocks? • Corporations are formed by selling shares of stock • How does that work? • A person who buys into stock entitle them to future profits and assets of the corporation • Proof of ownership: Corporation issues stock certificates

5. Stockholders • People who invest in a corporation and own some of its shares of stock • Benefit from stock in two ways: • Dividends • Return a stockholder receives on the amount that he or she invested in the company • Typically paid out when the company makes a profit • Selling your stock • When would you want to buy stock? • When would you want to sell it?

6. What is capital gain? • Profit a person makes • What is capital losses? • Losses a person suffers

7. Bonds • What is a bond? • Certificate issued by a company or the government in exchange for borrowed funds • Why might this be a good way to invest? • Receive interest • Money is invested for a certain amount of time • After that is over- bond’s maturity • Differences than stock?

8. Tax-Exempt Bonds • What is a tax exempt bond? • Bonds sold by government where your interest is paid on the bond and is not taxed by the government • Good investments for the wealthy, why?

9. Savings Bonds • Bonds that are purchased at half value and increase every six months until full face value is reached • Interest rates on the bonds depend on the economy • If you take out a savings bond early, you are guaranteed a fixed rate of interest

10. T-Bills, Notes, and Bonds • Treasury Bills- • Minimum investment is $1,000 • Mature quickly- A few days-26 weeks • Treasury Notes- • Minimum investment of $1,000 • Maturity range is 2-10 years • Treasury Bonds- • Minimum investment of ???? • Maturity range is 30 years • Exempt from state and local taxes; but not federal

11. What is a stock broker? • Person who acts as a middle man for buyers and sellers of stocks and bonds • What are some ways you can buy and sell stocks and bonds? • Call the brokerage firm • Interest firms • Over 100 online brokerage firms • Estimated 20 million investors through the internet each year

12. Stock Exchanges • What is the largest stock exchange company in the stock market? • NYSE • New York Stock Exchange • Regional Branches • International Branches • How might businesses be on these large exchanges? • Good financial standing • Usually the biggest companies in the world

15. Over-the-Counter Markets • NASDAQ? • National Association of Securities Dealers Automated Quotations • Electronic purchase and sale of stocks and bonds • Usually deals with smaller companies

17. Stock Market Indexes • What is the most well known stock market index? • Measures of what is happening to a given set of stock prices for a specified list of companies • Dow-Jones Industrial Average- The “DOW” • Involves 30 major companies in the United States

19. Bond Markets • New York Exchange Bond Market and the American Exchange Bond Market- two largest in the world • Who can you hire to help you out with investing in bonds? • Financial Adviser

20. Mutual Funds • Investment company that pools the funds of many individuals to buy stocks, bonds, or other investments • Put money into many different stocks • What is the advantage to that? • What might be a disadvantage?

21. Money Market Funds • Type of mutual fund that uses investors’ funds to make short term loans to businesses and banks • Federal government insures them against loss • What FRA regulates to stock market? • SEC! • SEC was created in 1929, why is that significant?