This document provides an overview of various financial concepts for young adults including types of investors, stocks, bonds, real estate, liabilities, and assets. It discusses the benefits of starting to invest early, different types of investment portfolios for varying risk tolerances, and questions for individuals to consider regarding their investment goals and timeline. Key details about stocks such as owning a portion of a company, shareholder rights, and daily stock market hours are also summarized.

1. Bits of Financial Advice for
Smart, Young Adults.
HANDSWORTH INVESTMENT CLUB
By Sam Purcell
Introduction to Types of
Investors

2. TODAY’S AGENDA:
• Recap From Last Meeting
• Liabilities and Assets
• Types of Investing
• More on Stocks
Discussion Outline

3. Last Meeting

4. Inflation
• Rise in price of goods and services over time or the decline in
purchasing power of money over time.
• Examples: Housing is more expensive now than it was 20 years ago.
• Wages are a cause of inflation (more people have more money to
spend, increasing demand in goods).
• If prices rise, people can’t afford things.

5. Interest
• Interest is the cost for borrowing money (charged as an annual percentage
rate).
• Banks charge interest but also pay interest to customers.
• Examples when banks pay interest: Savings Account, High Interest Savings,
GIC.

6. Guaranteed Investment Certificate (GIC)
• Banks issue GICs so they can use the money to lend out to other
customers.
• These are safe investments because the interest rate does not change.
• I.e.) 1% remains 1%.
• Only way to lose money is if the bank collapses.
• They are a safe investment because they are guaranteed by the
government up to 100k.
• Some financial institutions insure up to 150k (credit unions).
• From 30 days-5 years.

7. Real-Estate
• Real-Estate is an investment in property and rises with inflation.
• When you buy residential real estate, you need a mortgage (loan from
bank).
• Money is made through appreciation and renting.

8. Real-Estate
• Residential Real-Estate: Any property used for residential purposes.
Examples include single-family homes, condos, cooperatives, duplexes,
townhouses, and multifamily residences with fewer than five individual
units.
• Commercial Real-Estate: Any property used exclusively for business
purposes, such as apartment complexes, gas stations, grocery stores,
hospitals, hotels, offices, parking facilities, restaurants, shopping
centers, stores, and theaters.

9. Bonds
• Bonds are loans but are referred to as a type of fixed income investment
representing a loan made by an investor to a borrower.
• Investors give companies, governments, or banks a sum of money which is
called principal.
• Borrowers must pay interest to the investor while the principal is being
used.
• When the bonds mature (finish), the company/
entity must pay back all the principal.
• You can trade bonds.

10. EPICALLY COOL TOTALLY
AWESOME FINANCIAL TERMS

11. Liabilities:
• A liability is something a person or company owes.
• Normally owed to a financial institution or third-party lender.
• Liabilities tend to be of monetary value (dollars).
• Liabilities are settled over time.
• Referred to the “term of the loan”.
• Examples of liabilities include loans
and mortgages.

12. Assets
• An asset is anything of value or a resource of value that can be converted
into cash.
• Individuals, companies, and governments own assets.
• For companies, assets may generate revenue.
• Company assets are anything the company can use to benefit in some way
from owning or using the asset.
• Tangible assets (not including money in your
account) depreciate in value over time.

13. Examples of Assets
Individual:
• House, car, investments, artwork, home goods.
Corporate:
• Property, machines, raw materials, and inventory.
Government:
• Military equipment, roads, buildings.

14. Personal Assets:
• Things of present or future value owned by an individual or household.
• Examples include physical cash, chequing and savings accounts,
property or land, vehicles, furniture, jewelry, and investments.
• Your net worth (how much you are worth) = assets – liabilities.
• Assets are everything you own, and liabilities are everything you
owe.
• Positive net worth means your assets are
greater in value than your liabilities.
• Negative net worth means your liabilities exceed your assets.

15. Business Assets
• Things of value that assist production or growth.
• Examples include machines, property, raw materials, and inventory.
• A company’s balance sheet lists its assets and shows how they are financed.
• A balance sheet is a financial statement that provides
a company’s assets, liabilities, and shareholders’ equity.
• A balance sheet provides a snapshot of how well a
company’s management is using its resources.
• In other words, it shows what a company owns and owes, as well as the
amount invested by shareholders.

18. Types of Investors

19. Why is it Good to Start Investing Early?
• Many surveys and studies show that the earlier you invest, the richer you
get.
• You get more recovery time to make up for a loss on investment.
• Why will it help YOU?
• It will help pay for student loans and tuition fees.
• You can build your portfolio to save up for future purchases
• I.e. house, car, etc.
• We are all human and make mistakes, so
investing early gives you time to learn and
recover from your losses.

20. Types of Investment Portfolios
• Low risk portfolio
• More bonds than stocks.
• I.e. 80% of $ in savings bonds and preferred stocks.
• Preferred stock: gives no voting rights to shareholders.
• Balanced portfolio
• Equal number of bonds and stocks.
• I.e. 50% of $ in GIC’s and 50% of $ in Air Canada stocks.
• High risk portfolio
• More stocks than bonds.
• I.e. 80% of $ in cryptocurrency, which is very volatile.
• Volatile: fluctuates drastically.

22. Questions to Ask Yourself
• How much do I want to make?
• How much am I willing to lose?
• What’s the amount of liquid assets (money) I have in my account?
• Liquid: easily accessible/not locked in.
• I.e. money in a cashable savings account.
• How long is my timeline (1 year? 5 years? 10 years?)
• When do I need these funds liquid by?
• What is my goal for investing? WHY?????

23. Risky Investor
VS.
Safe Investor

24. Safe Investors
• You want to make $10,000 within 10 years.
• You are willing to invest $5000.
• You are okay with losing a maximum of $1000.
• Safe investors should stick to low risk and balanced portfolios.

25. Risky Investors
• You want to make $10,000 within the year.
• You are willing to invest $5000.
• You are okay with losing the entire $5000 invested for the potential gain
you might see.
• Risky investors will see the most gain in high-risk portfolios.

28. Recap on Stocks
• Stocks are an investment that represents an ownership share in a company.
• You own a portion of the company and participate in growth and profit, or
losses.
• Investors will buy shares of public companies (companies whose shares
trade on a stock exchange).
• Private companies go public though an initial public offering (IPO).
• Some companies pay dividends which are payments of profits made by a
company to its shareholders.

29. More on Stocks
• Corporations issue stock to raise funds to operate
their business.
• A shareholder has now bought a piece of the corporation and they may
have a claim to a part of its assets and earnings.
• The shareholder is now an owner of the issuing company.
• Ownership is determined by the number of shares a person owns relative
to the number of OUTSTANDING SHARES.
• Outstanding shares are a company’s stock held by all its shareholders,
including institutional investors and restricted shares owned by the
company.

30. More on Stocks
• A company has 1000 shares of stock outstanding
and one person owns 100 shares.
• That person would own and have claim to 10%
of the company’s assets.
• Let’s make this real:
• Amazon has 504 million shares outstanding.
• You own 1% of the shares of Amazon.
• This means you will own 5,040,000 shares.

31. Even MORE on Stocks
• Owning stock gives you the right to vote in shareholder meetings, receive
dividends (company profits), and the right to sell your shares to someone
else.
• Stocks are the most volatile of all investments.
• Principle is not guaranteed.
• Rate fluctuates every minute.
• Stock market is open from 9:30am EST to
4:00pm EST.

32. Some things to Note:
• Stockholders do not OWN corporations.
• They own the shares issued by corporations.
• If you own 20% of the shares of a company, it is incorrect to say that you
own one fifth of that company.
• It is correct to say you own 100% of one fifth of the company’s shares.
• Corporations are a special type of organization because the law treats them
as legal persons.
• So, a corporation can file taxes, borrow, own property, and be sued.

33. Some things to Note:
• Separation of ownership and control:
• Shareholders cannot do as they please with a corporation or its
assets.
• A shareholder can’t walk out with a chair because the corporation
owns that chair, not the shareholder.

35. Questions?