Investment 101 What is an investment?

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Presentation transcript:

Investment 101 What is an investment? What types of investments are available? Is it risky to invest money? What is diversification?

What is an Investment? Anything that is purchased with the hope that it will produce more income or be more valuable at a future date is called an investment. Some investments are almost guaranteed. For example, a bar of gold will almost definitely be worth more in ten years than it is now. A U.S. Savings Bond will definitely be worth more in the future, because it is guaranteed by the government. Other investments are more risky (less safe). That means there is a chance that they become less valuable, instead of more valuable, over time. Stocks are one example.

What Types of Savings Plans and Investments Are Available? Checking accounts Savings accounts Certificates of Deposit U.S. Government Bonds Municipal Bonds and Special Purpose Bonds Corporate Bonds Mutual Funds Stocks Real Estate Collectibles Commodities

3. certificates of deposit Which Savings Plans and Investments are the Safest? Which Have the Most Risk? Highest Risk at Top, Lowest Risk at the Bottom 4. government bonds 3. certificates of deposit 5. corporate bonds 6. mutual funds 7. stocks 8. real estate 9. collectibles 1. checking accounts 2. savings accounts 10. commodities

What is Diversification? Diversification means to invest in various kinds of investment instruments in order to reduce your risks. If you place all of your money in a single savings or investment instrument, such as a single company's stocks or bonds, and that company fails, you could lose everything.

Diversification means… Do not put all of your eggs in one basket!

Simple Rules for Investing Never invest money you cannot afford to lose. Remember that investing always involves risk. With investing, there’s always a risk of losing some or even all of your money if the investment doesn’t perform well. Invest in different types of investment instruments to reduce your risk. Diversify! Invest at your comfort level. Invest according to your age and income.