Investing 101 provides an overview of basic investing concepts. It defines investing as committing money with the goal of profit or income. The document explains key investing vehicles like bonds, stocks, and mutual funds. It also covers important strategies like compound interest, diversification, and building portfolios. The summary emphasizes that investing allows money to grow over time, there are various asset classes with different risk profiles, and balancing risk is important through diversification across one's portfolio.
Ammad awan glasgow - how to make your money work for youAmmadAwanGlasgow
Ammad Awan Glasgow finance accounting services makes sure that the regulatory changes are integrated with the existing software and databases and the penalties arising from non compliance can be safely avoided.
Investing 101 provides an overview of different investment types and strategies. It defines investing as committing capital with the goal of making a profit. Compounding allows earnings to generate additional returns over time. Investors should consider their risk tolerance based on factors like how much they can afford to lose and time horizon. Common investment vehicles include stocks, which represent company ownership; bonds, which are loans paid back with interest; and mutual funds, which provide diversified access to markets through fund managers. The document emphasizes starting early and maintaining a balanced portfolio tailored to individual risk preferences.
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.
This document provides an overview of various investment options ranging from low to high risk. It discusses the importance of saving and having an emergency fund. It explains differences between stocks, bonds, and mutual funds. Low risk options include savings accounts, CDs, money markets, and government bonds. Medium risk options are mutual funds, IRAs, real estate, and annuities. High risk options involve direct stock investing, futures/commodities, and peer-to-peer lending. The document also covers retirement planning, taxes, and diversifying investments to reduce risk.
This document discusses different stages of investing including putting money in savings accounts, beginning investing in low-risk stocks, systematic monthly investing, strategic portfolio management, and speculative investing. It also covers reasons for investing such as beating inflation, increasing wealth, the fun and challenge of investing, and diversifying risk. Finally, it outlines characteristics of stocks, different types of stocks, factors that influence stock prices, and short-term and long-term investment techniques.
Introduction to the Stock Market and CompaniesSamPurcell4
This document provides an overview of financial concepts for young adults, including investments in stocks, mutual funds, and ETFs. It defines key terms like assets, liabilities, common stock, preferred stock, and expense ratios. It describes major stock exchanges like the NYSE, Nasdaq, and TSX. It explains that the stock market is where investors can buy and sell shares of public companies. ETFs and mutual funds allow investors to buy a basket of many stocks through a single investment. While ETFs typically have lower fees than mutual funds, both can be good options depending on the individual investor and fund manager. Overall, the document aims to introduce young adults to basic investing principles and different investment vehicles.
Clueless about investments? They are not as hard as you think. This workshop was created to help participants understand the basics of the financial instruments that they can use to achieve their goals.
Investing 101 - A beginner's guide to investing and investment conceptsWealthminder
Everything (important) you need to know about investing and investment related concepts. We'll walk you through the basics of everything from a financial plan to different types of investment accounts and different types of investment assets.
This is the internal presentation we give to all new employees of Wealthminder. They thought we should share it with everyone.
Ammad awan glasgow - how to make your money work for youAmmadAwanGlasgow
Ammad Awan Glasgow finance accounting services makes sure that the regulatory changes are integrated with the existing software and databases and the penalties arising from non compliance can be safely avoided.
Investing 101 provides an overview of different investment types and strategies. It defines investing as committing capital with the goal of making a profit. Compounding allows earnings to generate additional returns over time. Investors should consider their risk tolerance based on factors like how much they can afford to lose and time horizon. Common investment vehicles include stocks, which represent company ownership; bonds, which are loans paid back with interest; and mutual funds, which provide diversified access to markets through fund managers. The document emphasizes starting early and maintaining a balanced portfolio tailored to individual risk preferences.
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.
This document provides an overview of various investment options ranging from low to high risk. It discusses the importance of saving and having an emergency fund. It explains differences between stocks, bonds, and mutual funds. Low risk options include savings accounts, CDs, money markets, and government bonds. Medium risk options are mutual funds, IRAs, real estate, and annuities. High risk options involve direct stock investing, futures/commodities, and peer-to-peer lending. The document also covers retirement planning, taxes, and diversifying investments to reduce risk.
This document discusses different stages of investing including putting money in savings accounts, beginning investing in low-risk stocks, systematic monthly investing, strategic portfolio management, and speculative investing. It also covers reasons for investing such as beating inflation, increasing wealth, the fun and challenge of investing, and diversifying risk. Finally, it outlines characteristics of stocks, different types of stocks, factors that influence stock prices, and short-term and long-term investment techniques.
Introduction to the Stock Market and CompaniesSamPurcell4
This document provides an overview of financial concepts for young adults, including investments in stocks, mutual funds, and ETFs. It defines key terms like assets, liabilities, common stock, preferred stock, and expense ratios. It describes major stock exchanges like the NYSE, Nasdaq, and TSX. It explains that the stock market is where investors can buy and sell shares of public companies. ETFs and mutual funds allow investors to buy a basket of many stocks through a single investment. While ETFs typically have lower fees than mutual funds, both can be good options depending on the individual investor and fund manager. Overall, the document aims to introduce young adults to basic investing principles and different investment vehicles.
Clueless about investments? They are not as hard as you think. This workshop was created to help participants understand the basics of the financial instruments that they can use to achieve their goals.
Investing 101 - A beginner's guide to investing and investment conceptsWealthminder
Everything (important) you need to know about investing and investment related concepts. We'll walk you through the basics of everything from a financial plan to different types of investment accounts and different types of investment assets.
This is the internal presentation we give to all new employees of Wealthminder. They thought we should share it with everyone.
financial management - long term (strategic) decisionZenn Vanrim Lopez
This document discusses strategic decisions, characteristics of strategic decisions, and compares strategic decisions to administrative and operational decisions. Some key points:
- Strategic decisions are long-term decisions that deal with an organization's entire resources, environment, and future planning. They involve major changes and risks.
- Strategic decisions harmonize organizational capabilities with opportunities and threats. They determine the organization's overall activities and range.
- Strategic decisions differ from administrative decisions, which are routine and facilitate strategic decisions, and operational decisions, which are technical and help execute strategic decisions.
- The document provides an overview of strategic decisions, administrative decisions, and operational decisions to highlight their differences.
1. The document covers topics related to financial management including time value of money, risk and return, bond valuation, stock valuation, working capital management, cost of capital, and capital structure.
2. It defines key concepts such as annuities, perpetuities, different types of bonds and stocks, and provides examples of solved problems related to these topics.
3. Various ratios used to analyze financial statements are also discussed along with the importance of analyzing sources and uses of funds for business finance.
Financial markets bring together savers and investors through financial intermediaries like banks. Investing carries risk but also potential returns that can fuel economic growth. Common financial assets include bonds, stocks, and mutual funds. Bonds are loans that pay interest, while stocks are shares of company ownership. Investors consider risk versus return when choosing assets. Well-established stock markets let people trade assets, but crashes like in 1929 can have severe economic impacts.
This document provides an overview of investing in the stock market. It discusses the basics of investing, including why people invest to earn returns and save for the future. It recommends investing early and regularly for the long term. The document describes different investment options like physical and financial assets, as well as short and long term options. It also discusses the primary and secondary stock markets, how companies issue shares, and the difference between the two markets. The document provides explanations of common stock market terms and types of investors.
This document provides an overview of investing in the stock market. It discusses the basics of investing, including why people invest to earn returns and save for the future. It recommends investing early and regularly for the long term. The document describes different investment options like physical and financial assets, as well as short and long term options. It also discusses the primary and secondary stock markets, how companies issue shares, and the difference between the two markets. The document provides explanations of common stock market terms and types of investors.
In this web conference we will learn about mutual funds as a tool for long-term savings for families.
We will discuss the elements of a fund and costs associated with funds. We will discuss ways in which mutual funds fit into a military families’ financial plan. We will also learn about performance measures and important characteristics of mutual funds highlighted in the prospectus. Finally we will learn about ways in which we can make decisions using fund screeners. We will use several case studies to illustrate.
Christopher Browne authored The Little Book of Value Investing to teach the principles of value investing he used throughout his career. The book discusses finding companies trading at a discount to their intrinsic value and holding them until the price reflects the true worth. It emphasizes buying when others are fearful and prices are low, having a long-term perspective through market fluctuations, and avoiding overpaying for growth. The key is thorough analysis of financials and patience to allow investments to appreciate over time.
An investment is defined as committing funds with the expectation of earning a positive return in the future. It involves sacrificing present consumption for future benefits and always carries some degree of risk that the actual return may be lower than expected. The key elements of any investment are expected return, risk, safety, liquidity, and potential tax benefits. Common avenues of investment include bonds, gold, mutual funds, real assets, equities, insurance policies, and financial derivatives. Factors like current events, currency valuations, production costs, and economic/political uncertainty can influence fluctuations in gold prices over time.
The document provides an overview of key considerations for entrepreneurs and investors in establishing a realistic valuation for a startup company. It discusses the capital life cycle stages from concept to growth, and how valuation requires a holistic view of the interests of the company, founders, and investors. Key aspects of valuation covered include quantitative and qualitative advantages, dilution, down rounds, sources of capital, arrival at a value using market forces and financial models, deal structure, and common terms in investment agreements.
This document discusses various capital market instruments. It defines capital markets as dealing with medium to long term funds and describes primary roles as raising funds for governments, banks and corporations through stocks and bonds. It then discusses types of capital market instruments including equity (common/preferred stocks), debt (bonds, mortgages), hybrids (convertible bonds) and insurance instruments. The document provides details on features and types of these various capital market instruments.
Saving regularly, even small amounts, and allowing interest to compound over many years is the key to becoming a millionaire through investing. The document recommends starting a savings plan as early as possible, ideally in one's 20s, and contributing regularly to take advantage of compound interest. It describes different investment vehicles like savings accounts, CDs, bonds, stocks and mutual funds, and notes the average annual returns and risks associated with each. The main message is that diversifying investments and maintaining a long-term perspective are important for achieving financial goals.
This document provides an overview of the basics of investing in the stock market. It discusses why investment is needed, when to start investing, and where to invest. The key points are:
1. Investment allows individuals to earn returns from idle savings and prepare for future goals and uncertainties. The sooner one starts investing, the longer investments have to grow.
2. Individuals can invest in physical assets like real estate or financial assets such as stocks, bonds, mutual funds, etc. Short-term options include savings accounts while long-term options include mutual funds and bonds.
3. The stock market provides a secondary market for trading shares of publicly listed companies. It allows individuals to invest with minimal funds and time
The document provides information on why learning about stocks is important and some basics of how the stock market works. It discusses different types of stocks like common and preferred stocks. It also defines key stock market terms like book value, earnings per share, price-earnings ratio, and beta that investors use to evaluate stocks. The document aims to educate readers on the stock market and different aspects of investing in stocks.
The document provides an overview of basics of investing in the stock market. It discusses why investment is needed, benefits of starting early and allowing more time for investments to grow. Some key investment options mentioned are physical assets like real estate and financial assets such as stocks, bonds, mutual funds traded in the securities market. Both short term options like savings accounts and long term options like PPF are outlined. The document also explains primary and secondary stock markets, why companies issue shares to the public, important terms like bull/bear markets and types of investors that participate in the stock market.
The document outlines a plan to expand knowledge of the stock market and investing through various lessons and activities. It defines common stock and preferred stock, explains how stock prices are represented through ticker symbols, and how initial public offerings work. It also summarizes how the primary and secondary markets function, major stock exchanges, market indices, and how investors can make money through price appreciation or dividends. The reading provides an overview of factors that influence stock prices and why people invest in the stock market. It offers tips on how to get started investing and the importance of diversification and managing risk tolerance.
Want to use InvestNextDoor, or another returns-based crowd-funded money-raise? You'll need to issue a "security" to do so. Get the essentials here! Pt. 2 in our Securities series.
Investment is defined as committing funds for a period of time in order to derive future payments that compensate for the time committed, expected inflation, and uncertainty. An investor has several investment alternatives including shares, bonds, bank deposits, mutual funds, life insurance, real estate, gold/silver, commodities, and derivatives. Shares represent ownership in a company and offer higher returns but also higher risk since prices fluctuate daily. Bonds are lower risk as they represent loans that pay fixed interest, but returns are also typically lower. Bank deposits provide liquidity but generally the lowest returns of the options.
Among all top 10 stock advisory company Indore Trade Nivesh is the best financial platform to get daily intraday stock market recommendations and market calls
The document provides an overview of basics of investing in the stock market. It discusses why investment is needed, benefits of starting early and allowing more time for investments to grow. Some key investment options mentioned are physical assets like real estate and financial assets such as stocks, bonds, mutual funds traded in the securities market. Both short term options like savings accounts and long term options like PPF are outlined. The document also introduces important concepts like primary and secondary markets, equity investment and types of investors before defining some common stock market jargon.
Beyond the Basics of A/B Tests: Highly Innovative Experimentation Tactics You...Aggregage
This webinar will explore cutting-edge, less familiar but powerful experimentation methodologies which address well-known limitations of standard A/B Testing. Designed for data and product leaders, this session aims to inspire the embrace of innovative approaches and provide insights into the frontiers of experimentation!
financial management - long term (strategic) decisionZenn Vanrim Lopez
This document discusses strategic decisions, characteristics of strategic decisions, and compares strategic decisions to administrative and operational decisions. Some key points:
- Strategic decisions are long-term decisions that deal with an organization's entire resources, environment, and future planning. They involve major changes and risks.
- Strategic decisions harmonize organizational capabilities with opportunities and threats. They determine the organization's overall activities and range.
- Strategic decisions differ from administrative decisions, which are routine and facilitate strategic decisions, and operational decisions, which are technical and help execute strategic decisions.
- The document provides an overview of strategic decisions, administrative decisions, and operational decisions to highlight their differences.
1. The document covers topics related to financial management including time value of money, risk and return, bond valuation, stock valuation, working capital management, cost of capital, and capital structure.
2. It defines key concepts such as annuities, perpetuities, different types of bonds and stocks, and provides examples of solved problems related to these topics.
3. Various ratios used to analyze financial statements are also discussed along with the importance of analyzing sources and uses of funds for business finance.
Financial markets bring together savers and investors through financial intermediaries like banks. Investing carries risk but also potential returns that can fuel economic growth. Common financial assets include bonds, stocks, and mutual funds. Bonds are loans that pay interest, while stocks are shares of company ownership. Investors consider risk versus return when choosing assets. Well-established stock markets let people trade assets, but crashes like in 1929 can have severe economic impacts.
This document provides an overview of investing in the stock market. It discusses the basics of investing, including why people invest to earn returns and save for the future. It recommends investing early and regularly for the long term. The document describes different investment options like physical and financial assets, as well as short and long term options. It also discusses the primary and secondary stock markets, how companies issue shares, and the difference between the two markets. The document provides explanations of common stock market terms and types of investors.
This document provides an overview of investing in the stock market. It discusses the basics of investing, including why people invest to earn returns and save for the future. It recommends investing early and regularly for the long term. The document describes different investment options like physical and financial assets, as well as short and long term options. It also discusses the primary and secondary stock markets, how companies issue shares, and the difference between the two markets. The document provides explanations of common stock market terms and types of investors.
In this web conference we will learn about mutual funds as a tool for long-term savings for families.
We will discuss the elements of a fund and costs associated with funds. We will discuss ways in which mutual funds fit into a military families’ financial plan. We will also learn about performance measures and important characteristics of mutual funds highlighted in the prospectus. Finally we will learn about ways in which we can make decisions using fund screeners. We will use several case studies to illustrate.
Christopher Browne authored The Little Book of Value Investing to teach the principles of value investing he used throughout his career. The book discusses finding companies trading at a discount to their intrinsic value and holding them until the price reflects the true worth. It emphasizes buying when others are fearful and prices are low, having a long-term perspective through market fluctuations, and avoiding overpaying for growth. The key is thorough analysis of financials and patience to allow investments to appreciate over time.
An investment is defined as committing funds with the expectation of earning a positive return in the future. It involves sacrificing present consumption for future benefits and always carries some degree of risk that the actual return may be lower than expected. The key elements of any investment are expected return, risk, safety, liquidity, and potential tax benefits. Common avenues of investment include bonds, gold, mutual funds, real assets, equities, insurance policies, and financial derivatives. Factors like current events, currency valuations, production costs, and economic/political uncertainty can influence fluctuations in gold prices over time.
The document provides an overview of key considerations for entrepreneurs and investors in establishing a realistic valuation for a startup company. It discusses the capital life cycle stages from concept to growth, and how valuation requires a holistic view of the interests of the company, founders, and investors. Key aspects of valuation covered include quantitative and qualitative advantages, dilution, down rounds, sources of capital, arrival at a value using market forces and financial models, deal structure, and common terms in investment agreements.
This document discusses various capital market instruments. It defines capital markets as dealing with medium to long term funds and describes primary roles as raising funds for governments, banks and corporations through stocks and bonds. It then discusses types of capital market instruments including equity (common/preferred stocks), debt (bonds, mortgages), hybrids (convertible bonds) and insurance instruments. The document provides details on features and types of these various capital market instruments.
Saving regularly, even small amounts, and allowing interest to compound over many years is the key to becoming a millionaire through investing. The document recommends starting a savings plan as early as possible, ideally in one's 20s, and contributing regularly to take advantage of compound interest. It describes different investment vehicles like savings accounts, CDs, bonds, stocks and mutual funds, and notes the average annual returns and risks associated with each. The main message is that diversifying investments and maintaining a long-term perspective are important for achieving financial goals.
This document provides an overview of the basics of investing in the stock market. It discusses why investment is needed, when to start investing, and where to invest. The key points are:
1. Investment allows individuals to earn returns from idle savings and prepare for future goals and uncertainties. The sooner one starts investing, the longer investments have to grow.
2. Individuals can invest in physical assets like real estate or financial assets such as stocks, bonds, mutual funds, etc. Short-term options include savings accounts while long-term options include mutual funds and bonds.
3. The stock market provides a secondary market for trading shares of publicly listed companies. It allows individuals to invest with minimal funds and time
The document provides information on why learning about stocks is important and some basics of how the stock market works. It discusses different types of stocks like common and preferred stocks. It also defines key stock market terms like book value, earnings per share, price-earnings ratio, and beta that investors use to evaluate stocks. The document aims to educate readers on the stock market and different aspects of investing in stocks.
The document provides an overview of basics of investing in the stock market. It discusses why investment is needed, benefits of starting early and allowing more time for investments to grow. Some key investment options mentioned are physical assets like real estate and financial assets such as stocks, bonds, mutual funds traded in the securities market. Both short term options like savings accounts and long term options like PPF are outlined. The document also explains primary and secondary stock markets, why companies issue shares to the public, important terms like bull/bear markets and types of investors that participate in the stock market.
The document outlines a plan to expand knowledge of the stock market and investing through various lessons and activities. It defines common stock and preferred stock, explains how stock prices are represented through ticker symbols, and how initial public offerings work. It also summarizes how the primary and secondary markets function, major stock exchanges, market indices, and how investors can make money through price appreciation or dividends. The reading provides an overview of factors that influence stock prices and why people invest in the stock market. It offers tips on how to get started investing and the importance of diversification and managing risk tolerance.
Want to use InvestNextDoor, or another returns-based crowd-funded money-raise? You'll need to issue a "security" to do so. Get the essentials here! Pt. 2 in our Securities series.
Investment is defined as committing funds for a period of time in order to derive future payments that compensate for the time committed, expected inflation, and uncertainty. An investor has several investment alternatives including shares, bonds, bank deposits, mutual funds, life insurance, real estate, gold/silver, commodities, and derivatives. Shares represent ownership in a company and offer higher returns but also higher risk since prices fluctuate daily. Bonds are lower risk as they represent loans that pay fixed interest, but returns are also typically lower. Bank deposits provide liquidity but generally the lowest returns of the options.
Among all top 10 stock advisory company Indore Trade Nivesh is the best financial platform to get daily intraday stock market recommendations and market calls
The document provides an overview of basics of investing in the stock market. It discusses why investment is needed, benefits of starting early and allowing more time for investments to grow. Some key investment options mentioned are physical assets like real estate and financial assets such as stocks, bonds, mutual funds traded in the securities market. Both short term options like savings accounts and long term options like PPF are outlined. The document also introduces important concepts like primary and secondary markets, equity investment and types of investors before defining some common stock market jargon.
Beyond the Basics of A/B Tests: Highly Innovative Experimentation Tactics You...Aggregage
This webinar will explore cutting-edge, less familiar but powerful experimentation methodologies which address well-known limitations of standard A/B Testing. Designed for data and product leaders, this session aims to inspire the embrace of innovative approaches and provide insights into the frontiers of experimentation!
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2. Subject Layout
• What is investing?
• How does it work? (Compounding)
• Risk Tolerance: Know Yourself
• Types of Investments
• Portfolios and Diversification
3. What is Investing?
• Definition: The act of committing money or capital to an endeavor with the
expectation of obtaining an additional income or profit.
• Why is this important?
• Letting your money work for you
• Investing is NOT gambling
• Why might it be important for you to invest?
4. Why Invest?
• Retirement – would you like to retire
early? At all? At your current lifestyle?
• Pension programs - employer puts
money into a pool of funds that is
invested on the employee’s behalf
• Becoming a thing of the past
• Social security – government program
paid for by income tax and given to
retirees /disabled
• funds under pressure due to aging
population in the US
What money can you depend on for
retirement?
5. Why Invest?
• Investing money now allows financial flexibility for your future
• The earlier you start investing, the easier it will be to establish a large amount
of money
6. How does investing work? Compounding 101
• Compound interest - interest calculated on the
initial principal and also on the accumulated
interest of previous periods
• Allows you to make money on the money you’ve made
• For example, you invest $100.00 at 5% interest,
compounded yearly. After the first year, you have
$105.00 (100*1.05). In the second year, you will have
$110.25 (105*1.05). Because of compound interest, you
have made $5.25 in interest, compared to $5.00 in the
first year
• Formula: 𝑃[(1 + 𝑖)𝑛], where P = principal, i =
interest rate, n = number of compounding periods
8. Time and Compounding
• The more time you have, the more money you can
make
• Example: Jim invests $15,000.00 at age 20, and
Sally invests $15,000.00 at age 35. They both
earn 5% interest, compounded yearly, and both
plan on taking this money out at age 65.
• Jim earns 𝑃[(1 + 𝑖)𝑛
], 15000[(1 + .05)^(45)] = $134,775.12
• Sally earns 15000[(1 + .05)^(30)] = $64,829.14
• That is $69,945.98 difference!!!
9. Time and Compounding
• Compounding accelerates your
earning power
• Compounding maximizes your
earing potential of your investments
• You must leave the initial
investment and interest earned
alone for this to happen
10. Knowing Yourself: Risk Tolerance
• A measure of how much risk you can
handle as an investor
• Factors which determine your risk
tolerance?
• Amount of money you have to lose
• Your time frame
• Emotional ability to handle risk
• Determines what kinds of investments you
should pursue
• There is no right or wrong way to invest
12. Types of Investments - Bonds
• Definition: an interest-bearing security that
obligates the issuer to pay the bondholder a
specified sum of money, usually at specific
intervals (known as a coupon), and to repay
the principal amount of the loan at maturity
• Wait, what? A bond is basically a loan given by you
to another entity which is paid back with interest
over the life of the bond.
• Interest is paid throughout the bond life
• Principal is paid back at the end of the life of the
bond
13. Types of Investments - Bonds
• For Example:
• Your hometown decides to
issue municipal bonds with
a $100 face value to be
paid back in ten years.
This bond will pay 2.5% per
year.
• $100 * .025 = $2.50
• $2.50 * 10 = $25.00
• Total paid back to you:
$100 + $25 = $125
14. Types of Investments - Bonds
• There are many different types of bonds:
• U.S. Treasury Bonds – issued by the U.S.
government, considered a safe investment
• Agency Bonds – issued by agencies of the
U.S. government or government
sponsored enterprises
• Municipal Bonds – issued by states, cities,
counties, etc. to fund public projects
• Corporate Bonds – issued by corporations
• High Yield Bonds – issued by entities that
have a low investment grade (they have a
weaker ability to pay back the bond);
generally results in a higher interest rate
and higher yields
15. Types of Investments - Bonds
• Bond Ratings
• Definition – a grade given to a particular bond that indicates its credit quality
• Range from AAA (the highest rating) to C or D (called “junk” bonds, the
lowest ratings)
• Private, independent services provide ratings, so indications may vary for
the same rating
• Major rating agencies in the U.S.: Moody’s, Standard & Poor’s, and Fitch
16. Types of Investments - Bonds
Bond Rating
Grade Risk
Moody’s S&P/Fitch
Aaa AAA Investment Highest Quality
Aa AA Investment Strong Quality
A A Investment Strong
Baa BBB Investment Medium Grade
Ba, B BB, B Junk Speculative
Caa/Ca/C CCC/CC/C Junk Highly Speculative
C D Junk In Default
17. Types of Investments - Bonds
• Bonds are generally a very safe investment. What is the drawback?
• Payback on bonds is usually lower than other types of investments
• Bonds are a great investment for people who are risk averse
• An investor who prefers an investment with lower risk.
• Pay attention to grades; bonds can be as risky/riskier than stocks
18. Types of Investments - Stocks
• Definition: A term used to describe the
ownership certificates of any company
• Also called: equities, shares
• Stocks are volatile; their value fluctuates
frequently (on a daily basis)
19. Types of Investments - Stocks
• Why do companies issue stocks?
• To raise money
• Sell part of the company (AKA issuing stocks) – equity financing
•Do not have to pay money back or make interest payments
• Shareholders make money when the stock is worth more than they paid
20. Types of Investments - Stocks
• Why do stocks make money?
• You (as an owner) are entitled to a portion of
the company’s profits
• Paid out in the form of dividends
• A sum of money paid regularly by a
company to its shareholders out of profits
(or reserves).
• Where is the risk?
• If the company goes bankrupt, there are no
assets to claim
21. Types of Investments - Stocks
• Risk
• Shareholders are not guaranteed any return if the
company goes bankrupt
• No guarantee that shareholders will receive
dividend payments
• With no dividends, investors make money only
through an increase in stock price
• The bright side?
• Stocks generally outperform other investments due
to their higher risk
• Historically, stocks average 10-12% returns
22. Types of Investments - Stocks
• Two Main Types of Stock: Common and Preferred
• Common stock – most commonly referred to
• Represent ownership in a company and claim
on profits
• One vote per share
• Higher Yields
23. Types of Investments - Stocks
• Preferred Stock
• Guaranteed a fixed dividend
• In the event of liquidation, preferred shareholders are paid first
• Do not have the same voting rights as common stockholders
• May be callable (company can purchase shares from shareholders at any
time for any reason)
24. Types of Investments - Stocks
• Companies can also customize different classes of stock in any way they
would like
• Reasons for this may include wanting voting power to remain with certain
people
• Traditionally noted as Class A, Class B, etc.
25. Types of Investments - Stocks
• Most stocks are traded on exchanges
• Physical – trades are carried out on a
trading floor
• Virtual – composed of a network of
computers
• Purpose of the stock market – facilitate
the exchange of securities between
buyers and sellers
• Reduces risk of investing because it
brings buyers and sellers together
26. Types of Investments - Stocks
• Different markets: Primary and Secondary
• Primary market –securities are created and stocks are initially issued
through IPO
• Secondary Market – investors trade previously-issued stocks
• What people refer to when talking about the stock market
• Trading of a company’s stock does not directly involve that company
• Examples: NYSE, Nasdaq, AMEX
27. Types of Investments - Stocks
• Why do stock prices change?
• Stocks are volatile and can change in price rapidly
• Fundamentally, supply and demand determine the price of stocks
• Earnings predominately affect investor evaluation of stocks, but there are other
factors
• There is no one theory that can explain stock prices
28. Types of Investments - Stocks
• There are two ways to buy stocks:
• Through a brokerage
• Most common
• Full-service brokers - expensive but manage
your account
• Discount brokerages - less expensive and
provide less assistance
• DRIPs & DIPs
• Dividend reinvestment plans (DRIPs) and
direct investment plans (DIPs) allow
shareholders to purchase stock directly from
the company
29. Types of Investments - Stocks
• Buying stocks through a brokerage:
• Step 1: Obtain a stock quote. This shows the bid (buy) price and the offer or
ask (sell) price.
• Step 2: If you are interested in buying a stock, you make a bid. If you are
interesting in selling a stock, you would submit an offer or an ask.
• Step 3: When a bid and offer match, a trade occurs.
30. Types of Investments - Stocks
• How to read a stock table or stock quote
Week high and low price:
highest and lowest prices
stock has traded at in 52
weeks
Company name and type of stock:
with no symbols following company
name, stock is common stock.
Ticker: Alphabetic name unique to the stock
that identifies it on exchanges
31. Types of Investments - Stocks
• How to read a stock table or stock quote
Dividend per share:
Annual dividend
payment per share
Dividend Yield: Annual
dividends per share
divided by price per
share
Price to Earning Ratio:
Current stock price divided by earnings
per share from the last four quarters
32. Types of Investments - Stocks
• How to read a stock table or stock quote
Total number of
shares traded for
the day (in
hundreds)
Daily High and Low:
range of prices that
stock has traded at
throughout the day
Close – last
price traded at
upon market
closing for the
day
Net change – change
in stock price in dollars
from previous day’s
close
33. Types of Investments - Stocks
• How to value a stock: very complicated and differs
from person to person. Four principles impact value:
• Supply and demand determine the price of stocks
from moment to moment
• Do not compare the value of individual stocks;
rather, compare values of companies
• Multiply the value of a stock by the shares
outstanding to
• Earnings are a major factor, but they are not the
only factor
• There is no one theory that can explain how
stocks are valued.
34. Types of Investments – Mutual Funds
• What is a mutual fund?
• An investment vehicle that consists of a ‘pool’ of funds contributed by many
investors in order to invest in stocks, bonds, and other assets.
• These funds are managed by money managers
35. Types of Investments – Mutual Funds
• Advantage of mutual funds:
• Give small investors access to professional
investment help by allowing them to invest in
diversified portfolios
• Disadvantage of mutual funds
• Fees, which can limit profit
36. Types of Investments – Mutual Funds
• Pooled Funds:
• Aggregated investment from many individuals
• Examples: mutual funds, pension funds
• Advantages: Economies of scale - lower trading costs and professional
management
• Disadvantages: management fees/capital gains are spread evenly among
investors, what is best for the group may not be what is best for an
individual
37. Types of Investments - ETFs
• Definition: exchange-traded funds (ETFs) are an alternative to mutual funds
that allow for more flexibility.
• Trade on exchanges
• Priced and available for trading throughout the business day
• Generally have a slightly lower expense ratio than their mutual fund equal
38. Types of Investments - Alternative
• Several other types of investment vehicles available
• Options, futures, FOREX, commodities, etc.
• Usually very high risk and require specialized knowledge to be successful
• First, create a good financial platform in lower-risk investments
39. Portfolios and Diversification
• Important for long-term goals such as retirement
• Portfolio: a conglomerate of different financial assets which balances risk and
return
• Diversification: a risk management tool that mixes a large amount of
investment mediums within a portfolio
• Portfolios and diversification go hand-in-hand
40. Portfolios
• What do portfolios include?
• Any asset you own: tangible assets, equities, bonds, etc.
• Think of like a pie chart
• The asset mix should meet your risk tolerance and time horizon
41. Portfolios
• Aggressive investment strategies: aim to make the highest returns
• Investor should have high risk tolerance
• Investor should have a longer time horizon
• Generally have many equities
Equities
75%
Fixed Income
10%
Bonds
15%
Aggressive Investment Portfolio Mix
70-85% Equities
5-10% Fixed Income
5-15% Bonds
42. Portfolios
• Conservative investment strategies: puts safety over returns
• Investors should be risk averse
• Investors should have a shorter time horizon
• Consists mainly of cash and cash equivalents
• Goal is to combat inflation to protect the value of the portfolio
75%
15%
10%
Conservative Investment Portfolio Mix
70-75% Fixed Income Securities
15-20% Equities
5-15% Cash and Cash
Equivalents
43. Portfolios
• Moderately Aggressive Portfolio: Balances risk and return
• Investor should have an average risk tolerance
• Investor should have a longer time horizon
• Moderate amounts of equities, bonds, and cash and cash equivalents
55%
35%
10%
Moderately Aggressive Portfolio Mix
50-55% Equities
35-40% Fixed Income Securities
5-10% Cash and Cash
Equivalents
44. Diversification
• Two categories of risk affect investments:
• Systematic Risk: inherent to a market that
is unpredictable; impossible to avoid
• The Great Recession
• Measured by a security’s beta:
• >1 - more risk than the market
• <1 - less risk than the market
• Unsystematic Risk: company- or industry-
specific risk inherent in all investments
• Reduced by DIVERSIFICATION
45. Diversification
• Using diversification to combat unsystematic risk
• Portfolios include investments in unrelated industries
• EXAMPLE: as an employee of United Airlines, you receive
company stock every year. You realize that your portfolio
is susceptible to risk if the airline company fails. What
investments might you use to balance this risk?
• Avoid investing in the airline industry or companies
that do business with airline industries. Instead,
invest in healthcare, clothing companies, or other,
non-related industries.
46. Diversification
• There are a lot of complicated ratios and opinions that allow for portfolios to be
diversified
• Understanding the basics of diversification is enough to invest safely
47. Conclusion
• Compounding allows your money to make money
• There is no wrong way to invest
• Risk tolerance is a measure of how much risk you can withstand as an
investor, and should be considered when choosing an investment
48. Conclusion
• Bonds: a loan paid by you to a company that will be paid back with interest
• Stocks: ownership in a company and rise in value with the company
• Mutual funds: shared access of diversified investment mediums, may include
fees
• Portfolios should be diversified to combat risk