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  1. Please… Log into Moodle and complete today’s Bell Ringer When you finish, please open Investment and Stock Notes #3 We will finish all investment notes today!!
  2. Rule #2: Buy and Hold In order to leave money in savings or investments, you have to do these things: Spend less than you receive. How? Perhaps you could…. Earn more by improving your formal education or job skills. Spend less by using a budget to keep track of where your money is going. Become connected to financial institutions. How? Open and maintain accounts at mainstream financial institutions – banks, credit unions, and brokerages. Manage your credit responsibly. How? Limit the number of credit cards you have. Limit your purchases to what you can pay off each month. Apply for loans when you are confident that your current income, will allow you to repay the loan.
  3. Rule #3: DiversifyDon’t Put All Your Eggs in One Basket If you put all your money in one stock and a disaster occurs -- it will hit you hard. With your money spread out across a variety of assets you are not hurt as badly when any one asset does poorly. Mutual funds provide one means by which investors can easily diversify. Pools investor’s money Allows people in effect to own small amounts of many different assets Enable investors to avoid the risk that comes from owning any one asset
  4. Forms of Saving and Investing Savings Accounts Provide a small but steady return. Certificates of deposit (CD’s) Lending money to a bank for a certain amount of time. Very safe, but instant access carries a penalty. Bonds Lending money to a corporation or government for a certain amount of time, with a promise of higher returns than those offered by bank savings accounts and CD’s. Stocks Part ownership in a company, offering higher risks, and potentially higher returns than some other investments. Real Estate The risk and benefits of being a landlord.
  5. Risks and Rewards Highest Risk – Highest Potential Return or Loss Lowest Risk – Lowest Potential Return or Loss
  6. Advantages and Disadvantages of Alternative Forms of Saving and Investing Savings Accounts Pro – safe investment Con – small return Certificates of Deposit Pro – safe investment Con – penalty if you withdraw the money early; small return Bonds Pro – safe investment Con – return on money takes many years
  7. Advantages and Disadvantages of Alternative Forms of Saving and Investing Stocks Pro – chance of higher return Con – higher risk Real Estate Pro – almost always good investment with chance of a high return Con – duties that come with a landlord; small chance of loss (if a landfill opens up near your property; market tanks, etc)
  8. Vocabulary for Investing(what you should consider before you invest) Liquidity – the ease with which savings or investments can be turned into cash Risk – the chance of losing some or all of the money invested Return – Earnings from an investment