Many choices for Investments: easy introduction Savings and Investment Sandy G

Parable of the ten talents Ten talents = ten more Five talents = five more One talent = hid in the ground A...Gilles

Ten talents = ten more

Five talents = five more

One talent = hid in the ground

Bury the talent in the ground Gold Diamonds Buried Treasure Sunken ship Cash flows or residual value A...Gilles

Gold

Diamonds

Buried Treasure

Sunken ship

Cash flows or residual value

Display it in a glass case Auction profits Antiques Collectibles Paintings A...Gilles

Auction profits

Antiques

Collectibles

Paintings

Development of money or capital Money can be exchanged with goods Money becomes desirable Money can be borrowed or stolen, like goods or precious stones. A...Gilles

Money can be exchanged with goods

Money becomes desirable

Money can be borrowed or stolen, like goods or precious stones.

Deposit in a bank with interest. What returns are available? Time deposits Money-market funds Guaranteed double in five years?? A...Gilles

What returns are available?

Time deposits

Money-market funds

Guaranteed double in five years??

Value is worn away by inflation If inflation goes up 6%, your asset “loses money” by 6%. A...Gilles

If inflation goes up 6%, your asset “loses money” by 6%.

Rule of 72 if x= 6% 8% 12% 72/x = 12 9 6 100 29 29 29 200 41 38 35 400 53 47 41 800 65 56 47 1,600 65 53 3,200 65

if x= 6% 8% 12%

72/x = 12 9 6

100 29 29 29

200 41 38 35

400 53 47 41

800 65 56 47

1,600 65 53

3,200 65

Opportunity cost if competing assets make money, your buried asset “loses money” if competing assets make 10%, your buried asset “loses 10%” A...Gilles

if competing assets make money, your buried asset “loses money”

if competing assets make 10%, your buried asset “loses 10%”

Investment universe Local Overseas Global Long-term, short-term A...Gilles

Local

Overseas

Global

Long-term, short-term

Global Investment Choices Fixed-Income Instruments Savings Accounts Capital Market Instruments Treasury securities Government agency securities Municipal bonds Corporate bonds Preferred stock A...Gilles

Fixed-Income Instruments

Savings Accounts

Capital Market Instruments

Treasury securities

Government agency securities

Municipal bonds

Corporate bonds

Preferred stock

Global Investment Choices Fixed-Income Instruments (continued) Eurobonds International Domestic Bonds A...Gilles

Fixed-Income Instruments (continued)

Eurobonds

International Domestic Bonds

Global Investment Choices Equity Instruments Preferred stock Common stock domestic equities listed, unlisted. Owning 100% of a company, or 50%, or 20% equities worldwide depository receipts shares Convertible bonds A...Gilles

Equity Instruments

Preferred stock

Common stock

domestic equities

listed, unlisted.

Owning 100% of a company, or 50%, or 20%

equities worldwide

depository receipts

shares

Convertible bonds

Global Investment Choices Derivative Instruments Options: puts and calls Warrants Futures Contracts commodity futures currency futures financial instrument or index futures A...Gilles

Derivative Instruments

Options: puts and calls

Warrants

Futures Contracts

commodity futures

currency futures

financial instrument or index futures

Global Investment Choices Investment Companies (mutual funds) money market bonds stock mixed hedge funds A...Gilles

Investment Companies (mutual funds)

money market

bonds

stock

mixed

hedge funds

Global Investment Choices Real Estate real estate investment trusts (r.e.i.t.s) comingled real estate funds (c.r.e.f.s) direct real estate investment development Raw land … to subdivision lots build-and-sell housing units investment build-and-rent out buy-and-lease-out A...Gilles

Real Estate

real estate investment trusts (r.e.i.t.s)

comingled real estate funds (c.r.e.f.s)

direct real estate investment

development

Raw land … to subdivision lots

build-and-sell housing units

investment

build-and-rent out

buy-and-lease-out

Global Investment Choices Low-Liquidity Investments antiques art coins and stamps diamonds Low-liquidity, yes, but they can make money and multiply in value. A...Gilles

Low-Liquidity Investments

antiques

art

coins and stamps

diamonds

Low-liquidity, yes, but they can make money and multiply in value.

Personal Savings Savings & Investment Workshop Inflation Savings accounts A...Gilles

Savings & Investment

Workshop

Inflation

Savings accounts

Savings and investment Food Clothing Shelter Transport Energy A...Gilles

Food

Clothing

Shelter

Transport

Energy

Income Salary + Income Budget Spend only 2/3 Save 1/3 A...Gilles

Salary + Income

Budget

Spend only 2/3

Save 1/3

Exercise Savings of 1/3 Additional Income No borrowings Personal debt? Credit cards: 3% a month. A...Gilles

Savings of 1/3

Additional Income

No borrowings

Personal debt?

Credit cards: 3% a month.