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Investment Planning

Investment Planning. #11. Learning Goals. The Objectives & Rewards Of Investing. Investing usually long-term expect future value and return to increase over time. Speculating usually short-term future value and return highly uncertain.

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Investment Planning

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  1. Investment Planning #11

  2. Learning Goals

  3. The Objectives & Rewards Of Investing Investing usually long-term expect future value and return to increase over time Speculating usually short-term future value and return highly uncertain Adequate insurance coverage and cash/savings are investment prerequisites

  4. How Do I Get Started? PAY YOURSELF FIRST!

  5. What Are Your Investment Objectives? Current Income appropriate for retired persons Major Expenditures college education, down payment on a home, or starting a business Retirement live comfortably in "golden years" Shelter from Taxes preserve more of your earnings

  6. Coming Up With the Capital Investment plan provides direction to help attain goal

  7. Different Ways to Invest 1. Common Stock 2. Bonds 3. Preferreds and Convertibles 4. Mutual Funds, Exchange Traded Funds, and Exchange Traded Notes 5. Real Estate

  8. 1. Common Stock Different Ways to Invest

  9. 2. Bonds Different Ways to Invest

  10. Different Ways to Invest 3. Preferred securities Equity security that behaves like debt Fixed dividend paid before dividend to common stockholders Convertible securities Special type of fixed income security Allows conversion into common stock Provides income and possible price appreciation Hybrid Securities

  11. Different Ways to Invest 4. Mutual Funds Professionally managed portfolio by an investment company Returns and risk depend on portfolio Exchange Traded Funds (ETFs) Designed to track a basket or index of equity securities. Exchange Traded Notes (ETNs) • Senior, unsecured, unsubordinated debt securities. • ETNs face market risk and the risk of the issuing bank defaulting.

  12. 5. Real Estate Different Ways to Invest

  13. Securities Markets “Arenas” where financial instruments trade

  14. Securities Markets Primary market new issues available for first time Investment bank underwrites Issuing company gets proceeds Prospectus Secondary market trading previously issued securities Securities exchanges NASDAQ OTC Market

  15. Broker and Dealer Markets Broker Market buyer and seller come together, direct trade takes place between them Party A sells securities directly to Party B Dealer Market buyer and seller never meet buy/sell orders are executed separately through securities dealers acting as market makers

  16. Broker and Dealer Markets

  17. Dealer Markets Bid Price price at which investor can sell a security Ask Price price at which investor can buy a security

  18. Foreign Securities Markets Manila Tokyo

  19. Regulating the Securities Markets

  20. Regulating the Securities Markets

  21. Bear Market Falling securities prices for extended time period Investor pessimism Economic downturn Bull Market Rising securities prices for extended time period Investor optimism Favorable economy Bull Market or Bear?

  22. Making Transactions in the Securities Markets

  23. Historical Performance of US Stock Markets Measured by NYSE Returns

  24. Types of Brokers

  25. Odd or Round Lots Round Lot 100 shares of stock or multiples thereof Odd Lot fewer than 100 shares Odd-lot differential

  26. Securities Investor Protection Corp. (SIPC) Arbitration settles disputes between broker and client Investor Protection

  27. Executing Trades Market orders often take less than two minutes!

  28. Types of Orders

  29. Becoming an Informed Investor

  30. Annual Report Here’s what to read….

  31. Online Investing

  32. Managing Your Investment Holdings

  33. Investor Objectives high current capital incomeappreciation Trade-off between

  34. Asset Allocation and Portfolio Management

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