Investments: Simplified

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Investments Simplified

• Adult Living

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What is investing?

• Investing is a way to make money with your money.
• First you have to make money
• Try to SAVE some money in a highly liquid
  account.
• NEXT, make your money grow through investing.

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Why should I invest?

• Two main reasons
• To stay ahead of inflation
• To achieve financial goals

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When should I invest?

• THE SOONER THE BETTER!!!!
• Let the snowball work for you!!!

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What are the risks?

• Losing money
• Risk normally works proportionately with reward.
• the lower your risk (conservative investments)
  the lower your reward
• the bigger your risk the more the possible
  reward

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Who?

• Everyone who is making money should be investing
  AFTER setting up a savings account with 3-6
  months worth of income saved.
• There are different types of investors
  conservative (low-risk takers) and more
  aggressive (risky) YOU may be one of these or a
  combination throughout your life depending on
  your goals.

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Savings Accounts

• 1st investment
• Set up at a bank
• Should have 3-6 months worth of income in it
• Highly liquid
• No risk- FDIC
• LOW interest

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CDs

• Certificates of deposits
• YOU decide the length of time (3mon- 15yrs) YOU
  decide the amount (100-250,000)
• Bank determines interest rate for your CD.
• GREAT first investment!!

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Treasury Bills

• Backed by the U.S. government
• Range in price from 1,000-5 million
• Avaliable in 1 month, 3 month, and 6 month
  maturities
• Low risk (FDIC)
• Low return (BUT over short time)

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Bonds

• Corporate or Government bonds- they sell bonds-
  you loan them money- they repay in a set period
  of time (usually LONG-5-25 yrs)
• Higher interest (compared to savings or CD)
• Not liquid- penalized if cashed early
• If the company bankrupts- you MAY not get paid
  (but will be paid before stockholders)

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Stocks

• You own a little piece of the company
• If the company does well your little piece of it
  does well (profits)
• If the company bankrupts you lose you money
• Risk reward depends on the companies you choose
  to invest in.
• Not very liquid- need to sell your piece before
  you get the

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Real Estate

• Purchasing property or land for the purpose of
  resale
• Time consuming
• Expensive initial investment
• Potential rewards- HIGH, risk-HIGH
• Takes some knowledge of the R.E. market-
  when/where to buy and possibly flipping
  knowledge/ability

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Commodities

• Oil, gold, silver, metals
• Investing in our future need for this product-
  can be speculitive
• Low interest but steady income

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Collectables

• Items that increase in value due to time/ demand
• Coins, stamps, baseball cards, beanie babies, etc
• Cant count on future demand for these items
• Usually need to preserve the item for best value
• Can make off things you dont need/want
  anymore

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Mutual Funds

• A bucket of stocks or bonds
• Professionally managed
• Diversification reduces risk
• Risk depends on what is in your bucket
• Liquidity depends on what is in your bucket
• Great for an investor who doesnt want to
  constantly monitor your investment