Methods of investing

1. CHAPTER 12:
METHODS
OF
INVESTING

2. • LEARNING OBJECTIVES
• Understand the reasons for investing
• Describe the process of investing in stocks,
bonds, and mutual funds
• Explore other options for investing

3. INVESTMENT
Is something that you acquire with the goal of
making money.
WHY INVEST
• To outpace the rate of inflation
• To achieve financial goals
• To increase current income
• To gain wealth and a feeling of financial security
• To have funds available during retirement years.

4. Types of Investment
•Stocks
•Bonds
•Mutual funds
Alternative Investment
• Real Estate
• Owning a Business

5. INVESTING IN STOCKS
Stocks
Are certificates that represent pieces of ownership in a
company.
Stock Exchange
Is a marketplace where you buy stocks, bonds, and other
securities.
• Primary market
Initial Public Offering (IPO)
• Secondary market

6. THE BEHAVIOR OF
INVESTORS
1.Institutional investors
2. Individual / Retail investors
Dividends
- Are another way some stockholders make
money in the stock market.
Securities and Exchange Commission ( SEC)
-A government agency that regulates and
monitors the stock markets

7. STOCK TRANSACTION
Stock Transaction is the process that occurs
when stocks change ownership.
Brokerage – a firm that provides you
access to the stock markets.
Commission – a fee for carrying out a
transaction.

8. INVESTING IN BONDS
BONDS
Is basically promissory note, or a promise to repay a
certain amount of money at some point in the future .
HOW BONDS WORK
Maturity date or bond’s maturity refers to the due
date on which a borrower must pay back an
installment loan in full.
Coupon Rate – a bond’s interest rate.

9. 1.Treasury bonds
2.Federal agency bonds
3.Municipal bonds
4.Corporate bonds
Types of Bonds
Buying Bonds
Investors can buy and sell bonds in much the same
way they trade stocks. They may use a broker,
including discount brokers, to arrange transactions.
They can also buy different types of Bonds.

10. MUTUAL FUNDS
Mutual funds is a company that pools money
from many investors and invest the money in
securities such as stocks, bonds, and short-term
debt.
Diversification – the process of reducing risk
by spreading investment money among several
investment opportunities.

11. ALTERNATIVE
INVESTMENT
1. Real Estate
is defined as the land and any
permanent structures, like a
home, or improvements attached
to the land, whether natural or
man-made.
2. Owning a Business
Owning restaurants, retail stores,
and services all provide
opportunities for someone who
works hard to generate wealth.

12. THANK YOU!