Chapter 14 Investing in Mutual Funds, Real Estate, and Other Choices MYPF Chapter 14 13-Sept-2001 Chapter 14 Investing in Mutual Funds, Real Estate, and Other Choices Investing in Mutual Funds Investing in Real Estate and Other Choices © South-Western Educational Publishing

Lesson 14.1 Investing in Mutual Funds Explain what mutual funds are and their advantages. Discuss different types of mutual funds. Describe how to evaluate mutual funds. © South-Western Educational Publishing

What Are Mutual Funds? A mutual fund is a professionally managed group of investments using a pool of money from many investors. © South-Western Educational Publishing

Advantages of Mutual Funds Professionally managed Liquid Diversified Require only a small minimum investment $500-$3000 after that you can make regular purchases as often as you like. Ex 100$ a month © South-Western Educational Publishing

Mutual Fund Risk/ Return Categories Growth funds Whose investment goal is to buy stocks that will increase in value over time. Income funds whose investment goal s to buy bonds that produce current income in the rom of interest. © South-Western Educational Publishing

Mutual Fund Risk/ Return Categories Growth and income fund Whose investment goal is to earn returns from both dividends and capital gains. Money market funds Invest in safe, liquid securities, such as Treasury bills, bonds that mature in 3 weeks to 6 months. © South-Western Educational Publishing

Mutual Funds of Various Risk Categories Global funds Is a mutual fund that purchases international stocks and bonds as well as U.S securities. Index funds A mutual fund that tries to march the performance of a particular index by investing in the companies included in that index. Ex. Dow Jones – (blue chip stocks)

Evaluating Mutual Funds Net asset value NAV= value of portfolio-Liabilities/ number of shares outstanding of the fund. Prospectus Costs and fees Front-end load Back-end load No-load fund Print and online sources of mutual fund information

Lesson 14.2 Investing in Real Estate and Other Choices Describe direct and indirect real estate investments. Discuss some of the risks and responsibilities of owning rental property. Describe investments in precious metals, gems, and collectibles. Discuss the nature of futures and options markets. © South-Western Educational Publishing

Direct Real Estate Investments Vacant land Single-family houses Duplexes, apartments, and condominiums Recreation and retirement property © South-Western Educational Publishing

Indirect Real Estate Investments Real estate syndicates Real estate investment trusts (REITs) Participation certificates © South-Western Educational Publishing

Owning and Managing Rental Property Mortgage Depreciation © South-Western Educational Publishing

Investing in Metals, Gems, and Collectibles Precious metals Gems Collectibles © South-Western Educational Publishing

Investing in Financial Instruments Futures Option Call option Put option © South-Western Educational Publishing