Personal Personal FinanceFinance

Chapter 7Chapter 7

Only rich people invest money in the stock market.

© EMC Publishing, LLC

Stocks and bonds are always risky places to put your money.

© EMC Publishing, LLC

People generally begin saving for retirement around the age of 50.

© EMC Publishing, LLC

Social Security was designed to be a primary source of retirement income.

© EMC Publishing, LLC

Before investing in a company or mutual fund, you should follow the progress of the stocks to determine how successful your investments I likely to be.

© EMC Publishing, LLC

Today, many companies automatically enroll their employees in retirement plans.

© EMC Publishing, LLC

© EMC Publishing, LLC

• Kinds of stocks– Common - voting

– Preferred - safer

Investment OptionsStocks

© EMC Publishing, LLC

• Profit from stocks– Dividends

– Capital gain / loss

Investment OptionsStocks

© EMC Publishing, LLC

• Stock markets– New York Stock Exchange (NYSE)

– NASDAQ (tech stocks)

Investment OptionsStocks

© EMC Publishing, LLC

• Stock market newspaper listing

Investment OptionsStocks

© EMC Publishing, LLC

• Evaluating stocks– Blue-chip

– Dow Jones

– Bull market

– Bear market

– S&P 500

– Fortune 500

Investment OptionsStocks

© EMC Publishing, LLC

• Commodities– Futures (contract)

– Options (rights)

• Penny stock

Investment OptionsHigh-Risk Investments

© EMC Publishing, LLC

What do we call a stock that is considered a safe investment in a large corporation?

A. Red-hot stock

B. Blue-chip stock

C. Bear stock

D. Dividend stock

E. NASDAQ

© EMC Publishing, LLC

What do we call a stock that is considered a safe investment in a large corporation?

A. Red-hot stock

B. Blue-chip stock

C. Bear stock

D. Dividend stock

E. NASDAQ

© EMC Publishing, LLC

• IOUs– Corporate

– Municipal / state

– Federal• Savings

• Treasury (bonds, notes, and bills)

Investment OptionsBonds and Securities

© EMC Publishing, LLC

• Pool money / shared risk– Portfolio

– Diversify

Investment OptionsMutual Funds

© EMC Publishing, LLC

• Load v. no-load funds

• Index funds

Investment OptionsMutual Funds

• Sheila and Bob – start at different ages

© EMC Publishing, LLC

Investment OptionsTime Value of Money

• Real estate

• Collectibles

© EMC Publishing, LLC

Investment OptionsOther Kinds

What do you think?Discussion

© EMC Publishing, LLC© EMC Publishing, LLC

• How is the real estate market lately? Is it a good investment today?

• Do you collect valuables? Why?

• What kinds of collectibles provide the best chance of long-term success? Why?

• Should investments be evaluated on short-term or long-term results? Why?

• Retirement

• Estate

© EMC Publishing, LLC

Investment OptionsPlanning

• Start planning now!

© EMC Publishing, LLC

Investment OptionsPlanning

• Sources of retirement income– Social Security (supplemental)

© EMC Publishing, LLC

Investment OptionsRetirement

• Sources of retirement income– Social Security (supplemental)

– Company-sponsored• Pension

• Profit-sharing / stock-bonus

• 401(k) / 403(b) plan

© EMC Publishing, LLC

Investment OptionsRetirement

• Sources of retirement income– Social Security (supplemental)

– Company-sponsored

– Other• IRA

• Roth IRA

• SEP-IRA

© EMC Publishing, LLC

Investment OptionsRetirement

© EMC Publishing, LLC

When should you start planning for retirement?

A. When you are in your 60s

B. When you are in your 50s

C. When you are in your 40s

D. When you are in your 30s

E. Right now

© EMC Publishing, LLC

When should you start planning for retirement?

A. When you are in your 60s

B. When you are in your 50s

C. When you are in your 40s

D. When you are in your 30s

E. Right now

• Broker

• Financial adviser

© EMC Publishing, LLC

InvestmentBrokers, Advisers, and Planners

• Research a company– Newspapers

– Online sources

© EMC Publishing, LLC

InvestmentGetting Started

• Online trading – High-risk

– Fees per transaction

© EMC Publishing, LLC

InvestmentGetting Started

What do you think?Discussion

© EMC Publishing, LLC© EMC Publishing, LLC

• Will you be able to live on Social Security when you retire? Explain.

• How can you get additional income for retirement?

• Are investments for the rich only?

• How might you start investing now?

© EMC Publishing, LLC