Terms Returns/Dividends The money you get from investing You
get a percentage of the companys net profit Shares A portion of
company (what you buy) Principal The amount YOU invest
Slide 4
Risk POTENTIAL RETURN RISK Risk The uncertainty regarding the
outcome of a situation or event Investment Risk The possibility
that an investment will fail to pay the expected return or fail to
pay a return at all
Diversification Reduces risk by spreading investment money
among a wide array of investment tools Creates a collection of
investments that will provide an acceptable return with an
acceptable exposure to risk Assists with investment risk reduction
Referred to as Building a Portfolio.
Stocks Common Stock You own a percentage of the company (if
they have 100 shares and you own 1 share, then you own 1/100 of the
company) Preferred Stock Given back a specific amount of $
each
Slide 11
Bonds A form of lending to a company or the government (city,
state, or federal) The company or government pays annual interest
to the investor until the maturity date is reached The specified
time in the future when the principal (or initial investment)
amount of the bond is repaid to the bondholder Bonds are less risky
than stocks but do not have the potential to earn as much as a
stock.
Slide 12
Stocks You own part of a company Stockholder or shareholder
Owner of the stock If you own one share and there are 100 shares,
you own 1/100 of the company Get returns in 2 ways: Company
growshow much each share is worth Dividends Return varies
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Individual Stocks When you own shares in only one company Can
make higher returns HIGH risk! Only put 10% of investment portfolio
into individual stocks
Slide 14
Mutual Funds Mutual fund- A portfolio of stocks in many
different companies. Managed by someone who knows a lot about the
stock market Always research the fees charged by a mutual fund.
Reduces investment risk by helping people diversify their portfolio
Fees can be high Saves investors time
Slide 15
When Buying Mutual Funds Look for long track record Check
average return over a long period of time (20+ years) Examples of
companies to buy mutual funds through: Vanguard Goldman Sachs
Fidelity
Slide 16
Index Funds Mutual funds that are generated by a computer
Follows a formula (i.e. top 500 companies in U.S., or types of
companies, certain range of income, etc.) No (or low) management
fees AWESOME for beginners or passive investors Lower end of risk
with fewer fees
Slide 17
Examples of Index Funds S&P 500 (measurement tool, cant
invest in) Largest 500 companies in U.S. Vangaurd 500 (copies the
S&P 500, you can buy shares) Average return = 8%
Slide 18
Choosing Index Funds Long track record Reasonable return
(8-12%)
Slide 19
Hard Assets Investments with intrinsic value Oil, natural gas,
gold, silver, farmland, diamonds, commercial real estate Negatively
correlated with the market
Slide 20
Real Estate Includes any residential or commercial property or
land and the rights accompanying that land A family home is not
considered an investment asset Can be risky and more time consuming
but has potential for large returns Examples of real estate
investments include rental units and commercial property.
Slide 21
Slide 22
14 year old Investor
https://www.youtube.com/watch?v=6X9vjADsg0I
Slide 23
Investing Booklet Title pagename and period Bonds Stocks Mutual
Funds Index Funds Real Estate Hard Assets Diversification
Slide 24
Next time Long-term vs. Short term investing Dollar Cost
Averaging How to research investments (more on what to look for)
What you have to do to start investing (where/who to go to) IRAs
401Ks
