Investments

Investments Investments Inflation: The best time to start planning for your future is today! When setting up investment account it is important to: Balance Your Budget Establish a line of credit Start an emergency fund Inflation: Prices rise faster than the rate of interest earned on investments Monitor investments at least once per year

Stocks and Equities Equities and Stocks have historically been the investment that has earned the most money over time. Stocks (NYSE, NASDAQ) Purchase equity interest in companies in the form of stocks. Share in companies profits Common Stock (most common) Allows voting rights Preferred Stocks Guarantee larger dividend payment that common stocks No voting rights

Stocks/Commodities Dow Jones Industrial Average Blue Chip Stocks Average 30 stocks traded on NYSE/NASDAQ Blue Chip Stocks Well established large company that has operated for many ears Market capital in billions blue-chips have a record of paying stable or rising dividends for years, if not decades Futures Trading Investment Certain specific asset is traded at a future date Commodities: corn, oil, beef, etc…

Bonds Bonds Debt investment Issue Date Coupons Rate Maturity Date Investor loans money to entity (corporate or government) which borrows funds for a period of time Typically pay interest every 6 months Issue Date Date in which bond holder receives interest Coupons Rate Sum of annual coupon payment divided by par value (face value) Maturity Date Date in which principle of Bond is due When interest rise, bond prices fall When interest falls, bond prices rise

Risks Types of Risks (some) Inflation Risk Market Risk Credit Risk Chance cash flows of investment may be less in future Market Risk Experience loss due to performance of financial market Credit Risk Risk of default on debt Liquidity Risk Inability to covert security into cash w/out loss of value Interest Risk Arises from fluctuating interest rates

Diversification and Asset Allocation Reduce investment risk by diversifying portfolio Invest among a number of different types of investments Asset Allocation Protecting your investment b balancing the risk versus rewards Considers investors risk tolerance, age, and goals

Retirement Planning IRA Roth IRA Employer Sponsored Retirement Plan Individual Retirement Account Savings account with large tax breaks Roth IRA Expect tax rate to be higher during retirement than current rate Ideal for young, lower income workers Employer Sponsored Retirement Plan Pension Plans Employer sponsored defined benefits plan 401K, 403B