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The Risk and Return of Growing Money

The Risk and Return of Growing Money. Human Capital. Capital Assets. Two Types of Capital. You work for money. Your money works for you. Cash Flow. Four Choices for Cash Flow. Spend it. Donate it . Hold it. Invest it. Two Basic Investment Choices. OWN. LEND. Two Basic Positions.

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The Risk and Return of Growing Money

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  1. The Risk and Return of Growing Money

  2. Human Capital Capital Assets Two Types of Capital You work for money Your money works for you Cash Flow Four Choices for Cash Flow Spend it Donate it Hold it Invest it Two Basic Investment Choices OWN LEND Two Basic Positions PASSIVE ACTIVE FINANCIAL RETURNS The Path of Money

  3. Two Investment Choices • Lending • Those in which you lend your money to an organization which typically pays you a fixed rate of interest • Ownership • Those that you own a piece of some asset or company and have the ability to generate revenue and future profits

  4. ConsiderationsLending versus Ownership Investments

  5. PASSIVE ACTIVE “Others Control It” “You Control It”

  6. Balancing Risk and Return Less Risk Less Return More Risk More Return Sources: National Institute of Consumer Education – Eastern Michigan University/AIG KW Research 6

  7. A Closer Look at a Few Investment Options Futures Collectibles More Risk More Return Junk Bonds Speculative Common Stocks Precious Metals Less Risk Less Return Owning Your Own Business RE Investment Properties Puts And Calls Blue Chip Common Stocks Growth Mutual Funds High Grade Preferred Stock Balanced Mutual Funds High Grade Convertible Securities High Grade Municipal Bonds High Grade Corporate Bonds Fixed Annuities Money Market Mutual Funds Treasury Securities Certificates of Deposits Money Market Accounts Insured Checking and Savings Accounts Note: Any uninsured investment vehicle is a risk Source: Adapted from Investment Pyramid – Essex Corporation

  8. Questions for Your Financial Advisor • Does my investment appreciate in value? • Will it generate income through interest or dividends? • Is it likely to outperform inflation? • What are some risks I might encounter? • Are there any tax advantages? • What fees and charges are involved? • Can I borrow against it? • Can I sell it quickly? • What are some economic factors that should affect my decision to buy, hold or sell? • Should I consider diversification?

  9. Please read: All information and investment strategies presented herein are intended and should be used for educational purposes only.  Nothing herein should be construed as investment advice.  You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.  All investments involve some degree of risk. All information provided herein is believed to be reliable, but may be subject to errors and omissions.  Keller Williams Realty, Inc. ("KWRI") does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind.  KWRI will not be liable for any loss or damage caused by your reliance on information contained in this presentation.  You are solely responsible for your own investment decisions.

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