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Chapter 11 - Investing for Your Future Part 2: Exploring Investment Options By Scott Feil January 3, 2006
Overview <ul><li>Sources of Financial Information </li></ul><ul><li>Investment Options </li></ul>
Sources of Financial Information <ul><li>Newspapers </li></ul><ul><ul><li>Contain financial pages </li></ul></ul><ul><ul><...
Sources, cont. <ul><li>Brokers </li></ul><ul><ul><li>Full-service brokers </li></ul></ul><ul><ul><ul><li>Provide opinions ...
Sources, cont. <ul><li>Financial Advisers </li></ul><ul><ul><li>Professional investment planners </li></ul></ul><ul><ul><l...
Investment Options <ul><li>Low Risk/Low-to-Medium Return </li></ul><ul><ul><li>Corporate and Municipal Bonds </li></ul></u...
Investment Options, cont. <ul><li>Low Risk/Low-to-Medium Returns, cont. </li></ul><ul><ul><li>Treasury Securities </li></u...
Investment Options, cont. <ul><li>Medium Risk/Medium Return </li></ul><ul><ul><li>Mutual Funds </li></ul></ul><ul><ul><ul>...
Investment Options, cont. <ul><li>Medium Risk/Medium Returns, cont. </li></ul><ul><ul><li>Self-managed Retirement Acccount...
Investment Options, cont. <ul><li>High Risk/High Return </li></ul><ul><ul><li>Stocks and Trading Instruments </li></ul></u...
Investment Options, cont. <ul><li>High Risk/High Return, cont. </li></ul><ul><ul><li>Options </li></ul></ul><ul><ul><ul><l...
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  1. 1. Chapter 11 - Investing for Your Future Part 2: Exploring Investment Options By Scott Feil January 3, 2006
  2. 2. Overview <ul><li>Sources of Financial Information </li></ul><ul><li>Investment Options </li></ul>
  3. 3. Sources of Financial Information <ul><li>Newspapers </li></ul><ul><ul><li>Contain financial pages </li></ul></ul><ul><ul><li>The Wall Street Journal </li></ul></ul><ul><ul><li>Barron’s </li></ul></ul><ul><li>Investor Services and Newsletters </li></ul><ul><ul><li>Standard and Poor’s Reports </li></ul></ul><ul><li>Financial Magazines </li></ul><ul><ul><li>Business Week , Forbes , Money , The Economist , Kiplinger’s Personal Finance </li></ul></ul>
  4. 4. Sources, cont. <ul><li>Brokers </li></ul><ul><ul><li>Full-service brokers </li></ul></ul><ul><ul><ul><li>Provide opinions and analysis </li></ul></ul></ul><ul><ul><ul><li>Fidelity, Merrill Lynch, Piper Jaffray </li></ul></ul></ul><ul><ul><li>Discount brokers </li></ul></ul><ul><ul><ul><li>Buy and sell only </li></ul></ul></ul><ul><ul><ul><li>Does not provide advice </li></ul></ul></ul><ul><ul><ul><li>Charles Schwab, Ameritrade, E*Trade </li></ul></ul></ul>
  5. 5. Sources, cont. <ul><li>Financial Advisers </li></ul><ul><ul><li>Professional investment planners </li></ul></ul><ul><ul><li>Sell stocks, bonds, insurance, retirement, etc. </li></ul></ul><ul><li>Annual Reports and Financial Statements </li></ul><ul><ul><li>Annual Report - A summary of a corporation’s financial results for the year </li></ul></ul><ul><ul><li>Required by the SEC (Securities and Exchange Commission) </li></ul></ul><ul><li>Online Investor Education </li></ul><ul><ul><li>Ex. The Motley Fool </li></ul></ul>
  6. 6. Investment Options <ul><li>Low Risk/Low-to-Medium Return </li></ul><ul><ul><li>Corporate and Municipal Bonds </li></ul></ul><ul><ul><ul><li>Bonds: Represent money borrowed from an investor </li></ul></ul></ul><ul><ul><ul><li>Earn a fixed interest </li></ul></ul></ul><ul><ul><ul><li>Repaid first if company goes broke </li></ul></ul></ul><ul><ul><li>U.S. Government Savings Bonds </li></ul></ul><ul><ul><ul><li>Discount bond (Series EE savings bond): buy it for less than its maturity value </li></ul></ul></ul><ul><ul><ul><li>$50 bond for $25, get $50 in 10 years (maturity) </li></ul></ul></ul><ul><ul><ul><li>Exempt from taxes </li></ul></ul></ul><ul><ul><ul><li>Can be cashed for current value at any time </li></ul></ul></ul>
  7. 7. Investment Options, cont. <ul><li>Low Risk/Low-to-Medium Returns, cont. </li></ul><ul><ul><li>Treasury Securities </li></ul></ul><ul><ul><ul><li>Treasury bills (t-bills): $10,000+, up to 1 year </li></ul></ul></ul><ul><ul><ul><li>Treasury notes: $2,000-$5,000, 2-10 years </li></ul></ul></ul><ul><ul><ul><ul><li>Higher rate than t-bills </li></ul></ul></ul></ul><ul><ul><ul><li>Tresury bonds: $1,000+, 10-30 years </li></ul></ul></ul><ul><ul><ul><li>Interest is taxed by federal govt, but not state/local </li></ul></ul></ul>
  8. 8. Investment Options, cont. <ul><li>Medium Risk/Medium Return </li></ul><ul><ul><li>Mutual Funds </li></ul></ul><ul><ul><ul><li>Pools money of many investors to buy large selection of securities </li></ul></ul></ul><ul><ul><ul><li>Automatic diversification, personalize </li></ul></ul></ul><ul><ul><ul><li>Allows small investors a way in </li></ul></ul></ul><ul><ul><li>Annuities </li></ul></ul><ul><ul><ul><li>Buy from insurance company and get regular monthly payments (usually after retirement) </li></ul></ul></ul><ul><ul><ul><li>“Opposite of life insurance” </li></ul></ul></ul>
  9. 9. Investment Options, cont. <ul><li>Medium Risk/Medium Returns, cont. </li></ul><ul><ul><li>Self-managed Retirement Acccounts </li></ul></ul><ul><ul><ul><li>401k, 403b (non-profit), 503b (govt) </li></ul></ul></ul><ul><ul><ul><li>IRA - Individual Retirement Account </li></ul></ul></ul><ul><ul><ul><ul><li>Tax Deductible </li></ul></ul></ul></ul><ul><ul><ul><li>Keogh Plan </li></ul></ul></ul><ul><ul><ul><ul><li>Similar to IRA but for self-employed </li></ul></ul></ul></ul><ul><ul><li>Real Estate </li></ul></ul><ul><ul><ul><li>Large, non-liquid investment </li></ul></ul></ul>
  10. 10. Investment Options, cont. <ul><li>High Risk/High Return </li></ul><ul><ul><li>Stocks and Trading Instruments </li></ul></ul><ul><ul><ul><li>Stock: A unit (share) of ownership in a corporation </li></ul></ul></ul><ul><ul><ul><li>Return on Investment: Increased value, dividends </li></ul></ul></ul><ul><ul><ul><ul><li>Companies give profits to stockholders as dividends </li></ul></ul></ul></ul><ul><ul><li>Futures </li></ul></ul><ul><ul><ul><li>Buy and sell commodities (stuff) </li></ul></ul></ul><ul><ul><ul><li>Betting that the price will go up </li></ul></ul></ul><ul><ul><ul><li>Very risky </li></ul></ul></ul>
  11. 11. Investment Options, cont. <ul><li>High Risk/High Return, cont. </li></ul><ul><ul><li>Options </li></ul></ul><ul><ul><ul><li>The right to buy or sell at a specific price </li></ul></ul></ul><ul><ul><ul><ul><li>Limited to specific time period </li></ul></ul></ul></ul><ul><ul><li>Penny Stocks </li></ul></ul><ul><ul><ul><li>Low priced stocks of small companies </li></ul></ul></ul><ul><ul><ul><li>Companies have no track record, few assets, no earnings, no revenues </li></ul></ul></ul><ul><ul><ul><li>Many will fail, Dot-com bust </li></ul></ul></ul><ul><ul><li>Collectibles </li></ul></ul>
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