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Investing Opportunities

Investing Opportunities. Using Investment Opportunities as a Means to Increase Individual Wealth. BIG IDEA. Banks, brokerages and insurance companies provide access to investments such as certificates of deposit , stocks , bonds and mutual funds

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Investing Opportunities

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  1. Investing Opportunities Using Investment Opportunities as a Means to Increase Individual Wealth

  2. BIG IDEA • Banks, brokerages and insurance companies provide access to investments such as certificates of deposit, stocks, bonds and mutual funds • Used as a means to achieve personal financial goals

  3. Certificates of Deposit • Purchased through banks or brokerage firms • Fixed-income investments for a term with a fixed amount of interestpaid by the financial institution • End of the term = financial institution pays principal and interest earned • Insured by the federal government

  4. Certificates of Deposit • Tips from the FDIC(Federal Deposit Insurance Corporation)

  5. Certificates of Deposit Provide a guaranteed return on your investment May not have a high rate of interest – depends on rate set by banks (FED) A secure way to save money and increase wealth Must wait until the term limit is up to “cash out” the CD

  6. Stocks • Shares of a company that can be purchased by investors through brokerage firms • Investors are paid dividend and can make a profit if sold higher than the purchased price • Can purchase into companies that are listed in different stock markets • Domestic and International stock markets exist

  7. Stocks Available only through brokerage firms Firms usually require a fee for each transaction May yield a high return on investment – opportunity for tremendous wealth gain (principal amount plus interest) May yield no return on investment = opportunity to lose every cent invested (principal amount plus interest) Allows an individual to “own” a piece of an industry

  8. Bonds • Investment instruments that are generally low-yield and low-risk • Offered by private organizations and governmental units • Basically – the bond “seller” borrows the money of the investor and offers a return on the investment after a prescribed term

  9. Bonds Guaranteed return on investment Low investment return Typically insured by the government – especially if it is a government bond May be “cashed in” at private financial institution

  10. Mutual Funds and Annuities • Hold diversified investments in stocks, bonds, and money market accounts to limit investor risks – How? ….why is it good to diversify? • Purchased through brokerage firms or insurance companies • Mutual Fund – firm invests contribution along with the contributions of other people = ability to purchase more expensive or larger shares of stocks • Annuity – fixed payment over time with an established termination date • http://www.investopedia.com/video/play/understanding-an-annuity/

  11. Mutual Funds and Annuities Annuity – Guaranteed payment – Often used for retirements: investor deposits unlimited amounts of money into a tax-free account - Often has high fees or penalties for cashing out early Mutual Fund – Reduces individual risk Diversifies investments Professionally managed Often expensive Not always reliable performance

  12. Generalized Information - All listed investments involve a fee from the financial institution Brokerage Firms Banks and Credit Unions • Provide the services of financial professionals who have the time and expertise to guide and monitor an individual’s investments • Investors with time and knowledge can monitor and make investments online using online brokerage firms (E-Trade) • provide basic financial services • savings, investing, loans, and other fundamental forms of money management • Readily accessible • Credit Union?....

  13. As soon as you deposit funds into a credit union account, you become a partial owner • and participate in the union's profitability. • Credit unions are formed by large corporations and organizations for their employees and members.

  14. Unlike banks that are open to anyone, laws require credit unions to have a defined field of membership, • which means you'll have to be a member of that group to access the credit union and its services. • The field of membership can be broad, including an employer, church, school, community and employee group.

  15. "Out of the 8,000 credit unions, almost 25 percent are community-based • Churchgoers are eligible to join their church's credit union • as are students and faculty of a college and university.

  16. The not-for-profit financial institutions, • which offer everything from savings accounts to automobile loans, • are attractive to consumers because they offer competitive rates on loans and have money to put to work. • Credit unions have enjoyed a nice spurt in growth since the financial crisis and are flush with cash and want to make loans

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