Investing 101•How to grow your money wisely

What’s an investment?•An investment

is something you buy with the expectation that it will increase in value over time.

What are the different types

of investments?

Real Estate

•Land, office buildings, houses, warehouses, rental property

Tangible Assets•Coins, bullion, collectibles (classic cars, trading cards figurines, antiques)

EQUITIES• STOCKS, MUTUAL FUNDS,

COMMODITIES, FUTURES CONTRACTS

Debt Instruments

•Corporate Bonds, Treasury Bills, Municipal Bonds, Mortgage Securities, Personal Loans

All You Need to Know About Stocks!

• Common stock–Undivided, voting, ownership in a

corporation

• Preferred Stock–Undivided, non-voting, ownership in a

corporation, pays dividends before common stock

All You Need to Know About Stocks!• Dividends

–Profits paid to shareholders• Capital Gains

–Profits reinvested in the corporation which increase the value of your stock

All You Need to Know About Stocks!

• Pros–Stock Market

outpaces inflation

–Better rates of return in the long run over other investments

• Cons–Investment risk–Price

Fluctuations–Difficult to

time investments

BONDS!!!!

•Corporate–Balances yield with risk

•Junk–High yield High risk

•Municipal–Tax Free

•Treasury–Backed by the full faith and credit of The United States

Characteristics of Bonds

•Face Value–The printed value of the bond

•Maturity–The time at which the bond is redeemed for its face value

Pros and Cons of Bonds•Pros-

– provides current income– maintains asset value–liquidity

•Cons-–Inflation risk–Investment risk–Early Call

MUTUAL FUNDS•What are they?

–An investment tool which allows small investors to hold a diverse portfolio of stocks without the associated costs and time

MUTUAL FUNDS•Where do I get them?–Brokers–Direct Sales

–Internet

•How can I tell a good one from a bad one?–Newspaper–Financial magazines

–Rates of return

MUTUAL FUNDS• Pros–Easy to buy and sell–Easy to manage–Allows small investors the advantage of a diverse portfolio

• Cons– Investor has little control over mutual fund investment decisions

–High rates of return in some stocks are counteracted by low rates of return on others

Want to Buy Some Land?

•Real Estate–Land

•Real Estate Investment Trust

Pros and Cons of Real Estate

• Pros–Easy to

understand–Useful–Generally

increases in value

• Cons

–Not liquid

–Relatively Expensive

–Prices don’t always go up

Commodities•Hogs, pork bellies, frozen concentrate o.j., corn, soybeans, gold, silver–ProHigh Returns–ConDifficult to Understand, You can lose your shirt!

Options AND Futures• Options

–Certificate which allows you to purchase stock at a predetermined price• Generally below market level

• Futures–Contracts which allow businesses to

lock in prices for currencies and commodities

Protecting Your Investment From

Uncle Sam• IRA-individual retirement account• ROTH IRA-after tax IRA• SEP- simplified employee pension• 401(k)- retirement plan with matching• 403(b)- retirement plan for teachers, professors• TSA- Tax Sheltered Annuity• Pension- Retirement package from company