Notes/Content

1. 5.03

2. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 2
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Investments
-assets purchased
with the goal of
providing
additional income
from the asset
itself but with the
risk of loss

3. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Investments have the potential for higher returns

4. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 4
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Savings Tools = Monetary Assets
(liquid – quickly and easily
converted to cash)
Savings Tools = Monetary Assets
(liquid – quickly and easily
converted to cash)
Investment Tools = Investment Assets
(may not be easily converted to cash or
penalties charged to access the funds
early)
Investment Tools = Investment Assets
(may not be easily converted to cash or
penalties charged to access the funds
early)
Investments
are less
liquid than
savings
tools

5. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
It is
recommended
that at least
10% of net
income is
dedicated to
savings and
investments
each time
income is
received

6. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
What types of feelings result from saving and investing?
Saving vs. Investing
Saving Investing
Emergencies Long-term goals
More liquid Less liquid
Limited risk Higher risk
Lower returns (0-4%) Higher returns (8-12%)
Financial security Net worth

7. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Total return on investment expressed as a
percentage of the amount of money saved

8. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Mandy saved $2,200 in a money market
deposit account. After one year, she has a
return of $110.
What is Mandy’s rate of return?
Mandy’s rate of return on investment is 5%

9. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Inflation
Rise in the general level of prices
Inflation Risk
The danger that money won’t be worth
as much in the future as it is today
Strive to have
the rate of
return on
investment be
higher than the
rate of inflation
How does inflation relate to investing?

10. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
What do you already know about each investment tool?

11. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 11
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Maturity date – specified time in the future when the
principal amount of the bond is repaid to the bondholder

12. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
A share of
ownership in
a company
Owner of the
stock
Usually a stockholder owns a very
small part of a company

13. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

14. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

15. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 15
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Ownership of residential or commercial property or land
Real estate can be time consuming but the
potential for returns is high

16. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 16
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Futures Options Collectibles
Type of return depends on the investment

17. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
When a company combines the funds of many different
investors and then invests that money in a diversified portfolio
of stocks and bonds

18. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Reduces
investment
risk
Fees may be
high
Saves
investors
time

19. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 19
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Ariana invests in
one company’s
stock
Company C has
had a bad year
and their market
price drops
significantly.
Ariana may lose
her $150
investment

20. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 20
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
• Market price of
companies C
and F
decreased
• Market price
increased for
all other
companies
Ariana has
reduced her
investment risk
and may still earn
money

21. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 21
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

22. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 22
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
When investing, consumers either lend money to the
company/organization or they own the asset
Examples Returns

23. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 23
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Lending Owning
Type of
return
Type of
Investment
Increased potential for high returns
Increased investment risk
Decreased
inflation risk

24. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 24
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Order cards from lowest to highest
Investment Risk
Order cards from lowest to highest
Potential Returns
Order cards from lowest to highest
Inflation Risk

25. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 25
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
If someone was an aggressive investor, what types of investment
tools would they primarily have in their portfolio?

26. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 26
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Investing in a
mutual fund is
an automatic
form of
portfolio
diversification

27. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 27
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Investments are purchased from a stock exchange
(except for real estate and some speculative investments)

28. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 28
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Brokerage firms facilitate the buying and selling of investments
on the stock exchange

29. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 29
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Will usually charge a fee for completing a buy/sell transaction
Additional fees may include:
Total fees are
often lower, but
an individual
must have the
knowledge and
time to monitor
their
investments

30. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 30
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Financial advisors are
compensated for the
time and knowledge
they provide
investors.
Most charge fees
using one of these
methods.
In addition to
fees, financial
advisors may
earn
commissions
paid by the
company.

31. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 31
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Important to research the financial advisor and firm he/she
works for

32. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 32
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
Government encourages people to invest in certain
types of investments
Tax-advantaged
investments
reduce, defer or
adjust the current
year tax liability
Most common:
•Retirement
•Education
Savings and
investments
are a form
of unearned
income and
therefore
subject to
income tax

33. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 33
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
OR

34. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 34
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona

35. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 35
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
The trade-
off to tax
advantages
is most
accounts
have
penalties if
money is
withdrawn
early
There are many other types of plans available

36. 2.4.4.G1
© Take Charge Today – August 2013 – The Fundamentals of Investing– Slide 36
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona