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University of Palestine Faculty of Finance &Business Administration. Prepared By Rasha Anan 120050146 Supervised By Mr. Ibrahim Sammour. Company Accounting Investment. Definition Investment Types A Good Investment The 6 Basic Principles of Successful Investing Two Strategies to Avoid
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University of Palestine Faculty of Finance &Business Administration Prepared By Rasha Anan 120050146 Supervised By Mr. Ibrahim Sammour Company AccountingInvestment
Definition • Investment Types • A Good Investment • The 6 Basic Principles of Successful Investing • Two Strategies to Avoid • Investment Risk • The Twenty Golden Rules of Investing Outlines
Investment refers to an asset which is purchased with the expectation that it will generate income in the future or its’ value will appreciate in future so that it will be sold at a higher price. There are usually three participants in an investment: The Issuer The Investor The Broker Definition
Cash Savings Accounts Debt Instruments Stocks Collectibles Precious Metals Real Estate Investment Portfolio Mutual Fund Investment Types
Four characteristics should be serve as helpful guidelines in the search for a good investment. • What is the price of the entire company? • Is the company buying back shares? • What are your reasons for investing in the company? • Are you willing to own the stock for the next ten years? A Good Investment
The 6 Basic Principles of Successful Investing Diversification Asset Class Investing Asset Allocation Rebalancing Compounding Time Basic Principles of Successful Investing
Stock picking • Market timing Two Strategies to Avoid
In investing parlance, risk refers to the probability of a monetary loss or actual returns from an investment being lower than the expected returns. • Types of Risks • Capital risk • Currency risk • Liquidity risk Investment Risk
Credit risk Inflation risk Interest rate risk Market risk Legal risk Counterparty risk Investment Risk
The Twenty Golden Rules of Investing Understand the difference between investing and speculating Do not borrow, do not buy on margin, do not leverage yourself and do not sell short Decide whether you invest for income or for growth Bet on the challenger, but do not buy at peaks Invest only in stocks quoted in big boards Golden Rules of Investing
Observe the 5 percent rule about assets at risk • Look at homework as a better guide than advice by other experts • Learn how to do fundamental analysis and technical analysis • Learn how to detect and analyze market trends • Never chase the return of shares you did not buy Golden Rules of Investing
Always listen to contrarian opinion • Appreciate the need for rigorous risk management • Accept responsibility of your own decisions • Never hesitate to cut losses • Do damage control through limits and profit targets Golden Rules of Investing
Consider flexibility as one of your best friends Use mathematical models, but understand they are not fail-safe1 Factor-in the impact of market liquidity and volatility Appreciate the impact of business risk Look at conflicts of interest as part of daily life Golden Rules of Investing