Investing

1
Investing

• Chapter 9

2
Essentials Of Investing
3
Investing

• Means going beyond savings, and planning for the
  future.
• Making Money with Money.

4
Some Ways to Invest

• IRAs Individual Retirement Acct.
• Stocks/Bonds.
• Mutual Funds.
• Real Estate buy/sell, rent.
• SAVINGS ACCOUNTS.
• Money Market Accounts/Funds invest in
  short-term securities.
• Certificates of Deposits (CD).

5
Sources of Financial Information

• Newspapers (Financial Pages)
• Financial Magazines
• Bus. Week, Fortune, Money
• Financial Advisors
• Advice based on goals/age/occupation/lifestyle
• Annual Reports
• History, data, future growth plans, lawsuits,
  competition (req. SEC)

6
If you invest 1,000 each year
Interest Rate 5 yrs. 10 yrs. 15 yrs. 20 yrs.
5 5,525 12,578 21,578 33,065
6 5,637 13,181 23,276 36,786
7 5,751 13,816 25,129 40,995
8 5,867 14,487 27,152 45,762
9 5,985 15,193 29,361 51,160
10 6,105 15,937 31,772 57,257
11 6,228 16,722 34,405 64,203
12 6,353 17,548 37,279 75,052
7
Rule of 72s
72
72
72

• Determine how long it will take you to double
  your money
• Take 72 and divide it by the amount of time you
  have to save. The number calculated will
  determine the interest rate you need to double
  your money in that time period
• Take 72 and divide it by the interest rate you
  are earning. The number calculated will provide
  you with the amount of time needed to double your
  money

72
72
72
72
72
72
72
72
72
8
What is a Stock?
9
Investing in a Corporation. Buying its
stock. Share of stock. Stockholder Dividend
10
What is a Stock Exchange?
11
A location where orders to buy and sell
stock are sent and carried out.
12
Stock Exchange NASDAQ Brokerage Firm Round
Lot Odd Lot
13
NASDAQOTC

• N- National
• A - Association
• of
• S - Securities
• D - Dealers
• A - Automated
• Q - Quotation System

14
Types of Stocks

• Growth - Reinvests profits into Co.
• Penny - Less than 5 per share
• Blue Chip - Well established Co.
• Income - Consistently pays a dividend
• Cyclical - Up and Down with Economy
• Defensive - Remains stable even during economic
  decline

15
Common Vs. PreferredCan only lose what you put in

• COMMON
• Vote - policy decisions - more shares more votes
  (Proxy)
• Receive Dividends if Co. is doing well
• Paid 2nd
• Risky

• PREFERRED
• No voting rights
• Dividends are fixed
• Paid first
• Less Risky

16
BULL VS. BEAR

• BULL - Is a stock market with rising stock prices
  over an extended time.
• BEAR - Is a stock market with falling prices over
  an extended period of time.

17
Commission

• Front-end pay commission up front
• Back-end pay commission when you sell
• No-load when purchased from mutual fund co., No
  salespeople

18
Vocabulary

• Prospectus how fund operates, distributed by
  law, co. Must provide
• Trustee individual that manages assets for
  someone else
• Dow Jones Industrial Average

19
Bonds

• Pays interest at maturity.
• Face value/par value-amount bond holder is paid
  when comes due.
• Savings risk free, 50 10,000. Up to 15,000
• Corporate sold thru brokers on open market just
  like stocks.
• Junk risky, low investment rating, higher
  rating the lower the interest. (Ba/BB)
• Municipal issued by state and local government,
  min 5,000, exempt from Fed. Taxes.

20
Mutual Funds

• Growth fund invest in established co. And
  industries, aggressive new co. and industries
  (risky).
• Income fund consistently pay good dividend
  (moderate risk).
• Balanced fund invest in mixture of stocks and
  bonds (low risk) want income with growth and
  safety.