Basic Personal Investment using Financial Instruments How businesses raise money and how you can profit from them.

Why Invest? Make money off your money Make money off your money Retirement purposes Retirement purposes Creates more options for future Creates more options for future

Concerns with Investing Risk (Safety) Risk (Safety) The possibility of losing your money The possibility of losing your money Return Return The money that is earned off of your investment The money that is earned off of your investment Liquidity Liquidity The availability of your money to you The availability of your money to you Simplicity (Ease of Maintaining) Simplicity (Ease of Maintaining) How easy it is to understand the process of an investment How easy it is to understand the process of an investment

Types of Safe Investments using banks Savings Account Savings Account A bank account to deposit money that may be needed in a short period of time A bank account to deposit money that may be needed in a short period of time Ex: A low yielding basic savings account that can be opened at any financial institution (banks, credit unions, etc…) (banks, credit unions, etc…) Both Savings accounts and CD’s are insured by the FDIC to $250,000

A Fun Fact The rule of 72 The rule of 72 To figure how long it takes your $ to double in an interest bearing account: To figure how long it takes your $ to double in an interest bearing account: 72 / interest rate = amount of time (years)

Types of Investments cont… Certificate of Deposit (aka. CD) Certificate of Deposit (aka. CD) Deposit into an interest bearing account with a time commitment Deposit into an interest bearing account with a time commitment Ex: Taking a lump sum of money and placing it into a higher yielding account for a set period of time

Types of Investments using debts of government or businesses Bonds Bonds Loan to business/government Loan to business/government Ex: Purchasing an EE bond at any financial institution at half the face value in the hope to double their money in a set period of time (like an I.O.U. with interest)

Types of Investments using partial ownership of a business Stocks Stocks Partial ownership of a company Partial ownership of a company Ex: Utilizing an internet site or broker to purchase shares of a publicly traded company such as Starbucks

Types of Investments using partial ownership of a business Mutual Funds Mutual Funds A fund that pools the savings of many individuals & invests this money in a variety of stocks and bonds A fund that pools the savings of many individuals & invests this money in a variety of stocks and bonds EX: Hiring a mutual fund manager from Charles Schwab to set up and run your mutual fund

Alternative Investments Real-estate (land, housing, buildings) Real-estate (land, housing, buildings) Start-up companies Start-up companies Insurances Insurances Professional development and tools (Human Capital) Professional development and tools (Human Capital)