Unit 4: Saving and Investing

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Unit 4: Saving and Investing. Discuss how saving contributes to financial well- being Explain how investing builds wealth and helps meet financial goals . Evaluate investment alternatives. Describe how to buy and sell investments. - PowerPoint PPT Presentation

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<p>Unit 4: Saving and Investing </p> <p>Unit 4: Saving and Investing Discuss how saving contributes to financial well-beingExplain how investing builds wealth and helps meet financial goals. Evaluate investment alternatives. Describe how to buy and sell investments. Explain how taxes affect the rate of return on investments. Preparing for an investment programEstablishing Your Investment GoalsGoals should correspond with your valuesMiddle of the road = wisestQuestions:What will I use money for?How much money do I need to satisfy my goal?How will I get the money?How long will it take me to get the money?How much risk am I willing to take when I invest?Performing a financial checkupTIPS:1. Balance your budget!!!Spend less money than you make, stay out of debt, and limit your credit card use.</p> <p>2. When youre on your own, you should have enough insurance to cover financial losses from events, such as a car accident, a medical emergency, or a theft.Obtaining the money you need to get started1. Pay Yourself First2. Take Advantage of Employer-Sponsored Retirement Plans3. Participate in an Elective Savings Program4. Make a Special Savings Effort One or Two Months Each Year5. Take Advantage of Gifts, Inheritances, and Windfalls</p> <p>The value of long-term investment programs</p> <p>Factors that affect your choice of investmentsSAFETY &amp; RISKSafety the chance of losing your money in an investment is fairly smallRisk you cannot be certain about the outcome of your investment5 COMPONENTS OF THE RISK FACTORINFLATIOIN RISK Inflation rate interest rate = loss of buying power (5%- 3% = 2% loss)INTEREST RATE RISKBUSINESS FAILURE RISKFINANCIAL MARKET RISKGLOBAL INVESTMEST RISK</p> <p>INVESTMENT INCOMESavings accounts, certificate of deposits, bonds, etc.INVESTMENT GROWTHgrowth = investment increase in valueRetained earnings = profits that are reinvestedINVESTMENT LIQUIDITYAbility to buy or sell an investment quickly without substantially affecting its value</p> <p>An Overview of investment alternativesTypes of Investments:1. Stock or Equity FinancingMoney that a business gets from its owners in order to operate2. Corporate and Government BondsWritten pledge to repay a specified amount of money along with interest3. Mutual fundsInvestors pool their money to buy stocks, bonds, and other securities based on the selections of professional managers who work for an investment company.4. Real Estate</p> <p>Evaluating investment alternativesDiversification:The process of spreading your assets among several different types of investments to lessen risk. Developing a personal investment planSteps:Establish goalsHow much money to achieve goal by particular dateAmount of money to investList of investments to evaluateEvaluate risk and return on eachReduce list to reasonable numberChoose 2 investments to give some diversityRecheck investment program periodically</p>

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