VII. OTHER TYPES OF INVESTMENTS

1
VII. OTHER TYPES OF INVESTMENTS

• The Pros and Cons of Alternative Investment
• They can diversify your overall portfolio
• provide some tax advantages
• provide strong cash flow and/or appreciation.
• - your liquidity is very limited until the
  program goes full cycle and returns your
  principal along with whatever gain or loss it
  generated.
• - As with all investments, the return of your
  principal is not guaranteed.  

2
Certificates of Deposit (C.D.s)

• Time sensitive accts. where investors can invest
  for as little as 100 at a higher rate than
  regular savings acct.
• Investors can vary the term of the CD
• Penalty paid on early withdrawals

3
MONEY MARKET MUTUAL FUNDS

• SHORT TERM FINANCIAL ASSETS ARE PURCHASED
  (LIQUIDITY)
• RATE OF RETURN IS HIGHER THAN A REGULAR SAVINGS
  ACCOUNT AND MOST C.D.S
• HIGHER RISK FOR HIGHER RETURN

4
The IRA (Individual Retirement Account)

• 1)Basic IRA
• 2) Educational IRA
• 3) Roth IRA
• 4) 401 plan

5
INDIVIDUAL RETIREMENT ACCOUNT

• http//www.youtube.com/watch?v2K0ubOpyZt8
• http//www.youtube.com/watch?vmovFGvSBkF8

6
FINANCIAL ASSET MARKETS

• BASED UPON THE LENGTH OF TIMES THAT FUNDS ARE
  LENT.
• A. Capital MarketsWhere investments last more
  than 1 year
• B. Money Markets-Where investments reach maturity
• (Money is lent) for less than 1 year.

7
FINANCIAL ASSET MARKETS

• ) BASED UPON HOW ASSETS ARE SOLD TO OTHER BUYERS
• Primary MarketsFinancial assets that can be
  redeemed ONLY by the original owner
• Secondary marketsA market where the assets can
  be traded

8
SECTION 3THE STOCK MARKET

• 1. BUYING / INVESTING IN STOCK
• 1) PURCHASING STOCK IN THE MARKET
• a) Each stock represents a share of ownership
• b) Also called Equitiesbased on ownership.

9
2) BENEFITS OF STOCK PURCHASESPROFITS

• A) Dividendsshare of a profit made by a
  corporation.
• B) Capital Gains-selling stock at more that you
  paid for it.
• C) Net Worth--increase the overall financial
  standing of your portfolio

10
TYPES OF STOCK

• 1) COMMON STOCK
• a) A share of ownership
• b) One corporate vote per share
• 2) PREFERRED STOCK
• a) Nonvoting share of stock
• b) Receive dividends before common stockholders
• 3) INCOME STOCK
• a) Pays dividends when a profit is shownat
  regular intervals
• 4) GROWTH STOCK
• a) Pays no dividendsprofit is reinvested into
  the company
• b) Stock value rises over time.
• 5) WHEN A STOCK SPLITS
• a) Purchase price so high that investors are
  discouraged
• b) Price lowered so that more investors can
  afford stock.
• c) Each previously owned share now splits into
  two.
• d) More investing will drive stock prices back
  up.

11
SELLING STOCK

• 1) STOCKBROKERSLINK COMPANIES TO INVESTORS
• a) Work for Brokerage firms
• b) Sell products as OTC Over the Counter stock
• c) Also buy / sell on the major markets like the
• New York Stock Exchange (NYSE) or
  electronically (NASDAQ.)

12
SELLING STOCK

• DAY TRADERS
• a) Buy and sell stock by the hour or less
• b) Quick profit on price changes
• c) High risk trading!
• http//www.youtube.com/watch?v7JtCF2i2r2M
• http//www.youtube.com/watch?vALn0GBkM_5cfeature
  related

13
FUTURES AND OPTIONS

• a) Futurescontracts to buy or sell stocks at a
  set future date.
• 1) Listed on the New York Mercantile Exchange and
  the Chicago Board of Trade.
• b) Optionscontracts to buy or sell stocks at a
  future date based on a set price, but with the
  option to buy or sell at a better price and
  bypass the contract.
• 1) Put OptionThe option to sell stocks at a
  specified time in the future.
• 2) Call Option-- The option to buy stocks at
  a specified time in the future.

14
Call Options
15
Put Options
16
THE BULL AND BEAR MARKETS

• 1) THE BULL MARKET
• Refers to any Market that shows a prolonged
  rise in prices or sales.
• 2) THE BEAR MARKET
• Refers to the market that shows a decrease
  in prices and sales.
• May lead to a recession or depression!

17
THE GREAT CRASH OF 1929 BEYOND

• 1) CAUSES OF THE GREAT CRASH
• a) Inequal distribution of wealth
• b) Overproduction caused demand to drop and
  unemployment to rise
• c) Credit buying of consumer goods
• d) Buying stocks on MarginSPECULATING
• 2) MARGIN CALLS--Demands to repay borrowed money
  used to purchase stocks.
• Margins not met--money not repaid!

18
EFFECTS OF THE CRASH

• a) High Unemployment-25
• b) Homes and Lands lost
• c) Hoovervilles erected
• d) New Deal programs established
• http//www.youtube.com/watch?v-b1dTvNaL0Q

19
THE STOCK MARKET IN MODERN TIMES.

• a) 1930s thru the 1980s people lost confidence
  in market.
• b) Market now highly regulated by the Government
• c) Oct, 1987Black Monday. Market crashes, loses
  23 of value but rebounds with government help.

20
STOCK MARKET FLUCTUATIONS AFFECTED BY

• 1) Technology stocksDot.com stocks
• 2) Sept. 11 terrorist attacks
• 3) Enron Bankruptcy
• 4) Corporate buyoutscollapse of the housing
  market