Investing Notes
Why Invest? Give 2 Reasons!
__________________________ _______________________________
What are Investments?
_____________ purchased with the goal of providing __________ __________
from the asset itself but with the ______ of ________.
SAVING vs INVESTING
Saving
Emergencies
More Liquid
Limited Risk
Lower returns (0-4%)
Financial Security
Investing
Money invested is usually used for long-term goals:
_________________ ________________________ ____________________
Time Value of Money and Inflation
Time Value of Money means money you receive ________ is worth _________
than the same amount of money received in the future
Inflation-
Inflation Risk
Rate of Return-
Strive to have the _______ of ____________ on the investment be ____________
_______ the rate of inflation.
Generally, the ____________ the risk, the ____________ _____________ for
return on the investment. This also means the __________ the potential for
________________ a partial or _______________ _____________.
Types of Investments:
_________________
_________________
_________________
__________________
________________
Bonds are ________ financing instruments.
Stocks are __________ financing instruments.
What does that mean??
1. When you buy a bond (invest in a bond), you are _____________ money to the
company or government issuer. They need to pay it back to the owner plus
interest!!!
2. When you buy stock, you are _________________ a small piece of the
company. They do not have to pay it back and you are not going to receive
_____________ either!!
BONDS
Is a form of lending to a _______________ or government.
•
Organization pays ____________ to the lender (purchaser) until the maturity date is reached.
•
people who buy the bonds are called the _____________ __________________________.
The date the issuer must pay back the amount of money borrowed is _______________ _________.
The interest rate is also called the __________________ ________________.
Bonds issued by local governments and their agencies are called _______________ ____________.
Examples :______________________ _____________________ _____________________
Interest on municipal bonds are often exempt from __________________ ______________.
Series EE Savings bonds are safe, low risk bonds that at maturity are double the original purchase
price
Stock
• A ________________ of ____________________ in a company.
• A ___________________________ or ___________________________ is owner of the
stock
• A company can ___________________ stock after registering their shares (filing a
prospectus) with the SEC _______________ _______ ______________ _____________.
• The shareholders meet _______________ at the _________________ meeting to
discuss the company’s performance and to ____________ on company policy and to
make changes or elect a ______________ ____ _____________________.
A _________ ____
is when a company votes to split the number of shares
outstanding. Most common type is __________. After the split, owner had double the
number of shares, but the stock is worth half the price
• Dividends
o ___________________ share of profits distributed (usually in cash) to stockholder
o ______________ the dividend is when the cash received is used to buy more of
the company’s stock.
• Capital Gain/Loss
o ______________ ___________ = current price buyer is willing to pay
o Gain
 You sold it for ____________ than you ___________ for it
 Long-term gains are usually taxed at a _____________ tax rate.
o Loss
 You sold it for _____________________ than what you paid for it.
Real Estate Ownership of _______________ or ________________property or land
2 Types of Returns
_____________________________
____________________________
Mutual Funds
When a company combines the funds of many different investors and then invests that
money in a _________________ _____________ of stocks and bonds
Advantages
Disadvantages
Portfolio diversification – _____________ ________ by ________________money
among a wide array of investments
Stock Exchange
Stock exchange provides an organized, central service to buy and sell all stocks, bonds
and other investments that are traded.
 Worldwide, there are many different stock exchanges:
___________ is the largest equities exchange
Brokerage Firms ____________ the buying and selling of investments on the stock
exchange
Discount Broker
Full Service Broker
Retirement Accounts
Employer Sponsored



Personal Retirement
Traditional IRA
Roth IRA