Types of InvestmentsSavingsTreasury BillsBonds

Government

Municipal

Corporate

EducationMutual FundsReal EstateCommoditiesSecurities

Investment Pyramid Page 500

Speculation

Growth

Safety

Security

Level 1 - Financial Security –

Cash - 0% interestSavings account - 3 to 5 %CD - 3%money market - 4 to 4.5 %government bonds

Level one is used when you have very little disposable income or need to have your assets liquid.

Level 2 - Safety and Income - U.S Treasury securities,corporate bonds, income and utility stocks

Level 3 - Growth - Income and growth stocks, mutual funds, real estate, convertible bonds

Level 4 - Speculation – options, commodities, precious metals and gems, speculative stocks, junk bonds, collectiblesTrading Places - commoditites

Trading Places - Trading in the pits

Notes for videoStock market started in 1792 - Buttonwood Tree agreementMarket value of all traded stocks is over 8 trillionNasdaq - National association of securities dealers automated quotations

NYSE - Wall Street - “The Big Board”Started in 1817DJIA -30 stocks Only one still traded today is GES & P 500 - top 500 stocks

Vocab

stock

yield

dividends

capital gain/loss

common stock

preferred stock

blue-chip stocks

speculative stock

Two Types of Returns

Dividends - share of profits

Capital gain - selling stocks for a profit

Preferred and Common Stock?

Preferred stockholders get a share of the assets if the company fails.

Usually gets better dividend rates and is paid first.

Could be board members or large capital clients.

No voting privileges

Common Stockholders are everyday people

Do not receive any money if the company goes bankrupt or stocks fall.

Can invest as little as a few pennies to get started

Vote on board members

Advantages Buying and Selling Stock on the Market.

Level of risk - different levels

Liquidity

Disadvantages of Buying and Selling Stock on the Market.

Day trading

Inflation

What do you watch when investing?

Analyst opinions - Chartist, FundamentalistLeading Indicators -GDP (Gross Domestic Product)

New orders for consumer goods - retail inventory Building permits - housingOrders for equipment - manufacturingunemployment

Day Trading?

Very risky!!

Buying and selling over the internet based on minute by minute changes

Mutual Funds videoMutual funds are stocks grouped together which have like tendencies. Your goals and needs are matched with the funds purposesIndividuals may purchases small percentages of a stock because there are many investors. This creates less risk.A fund manager or portfolio manager is in charge of the funds performance.

Vocab

Bondsjunk bondsreal estateincome propertyundeveloped property

A Bond or A Stock?

Bonds are loans with a set return on investment

Stocks are shares in a company with no guarantee of return on investment

Federal Bonds

Savings BondsEE Bonds - pay half of face value

I Bonds - interest rate fluctuates, pay face value and earn interest.

Treasury Bills, Treasury Notes, Treasury Bonds

What Is a Junk Bond?

Low or speculative rating, high rate of interest and high rate of risk.

Home Ownership

AdvantagesValue usually increasesDeduct interest on taxesNo further debt once paid off

DisadvantagesDown payment

Less mobility

Least liquid of investments

Repairs

Income Property

Property used to generate an income.

Farmland for producing and selling crops

Apartments, rental properties

Undeveloped Property

Land intended only for investment purposes

Inexpensive to buy

Hope for investment to increase

Vocab

Bull Market

Bear Market

Dow Jones Index

Nasdaq

NYSE

Securities

Insider Trading

Market Order

Limit Order

IPO

SEC

Stock Certificate

Vocab

money management

budget

gross pay

net pay

fixed expenses

variable expense

Money Management?

The process of planning to get the most from your money.

Five Steps In Planning A Budget.Set GoalsEstimate IncomeEstimate ExpensesPlan for SavingsBalance and Adjust (make equal)

Fixed and Variable Expenses.

Fixed Expenses occur regularly with the same amount needed (Rent, car insurance)

Variable Expenses - change for week to week (groceries, gas, entertainment)