Investments

Ways to Invest Safety – how risky is it? Liquidity – Return on the investment –

FDIC F FDIC insurance covers depositors' accounts at each insured bank, dollar-for-dollar, including principal and any accrued interest through the date of the insured bank's closing, up to the insurance limit. C

FDIC Coverage C S M CD’s S Bond Investments M Annuities Covered Not Covered C S M CD’s S Bond Investments M Annuities Safe Deposit Boxes and their content L

Savings & Checking Accounts Savings Accounts S Earns little interest. M Checking Account Moderately safe location for you money. E Money can be access via debit card and written checks.

Certificates of Deposit (CDs) CDs - you deposit your money, the bank gives you a certificate telling you: t h Certificates of Deposit pay

CDs Safety B Liquidity Money you invest in a CD is less liquid than the money you put in a savings account. With a CD, you are not free to take your money out whenever you want. You must invest your money for a specific time: 3 months, 6 months, 1 year, 5 years. The time all depends on the CD you choose. Yes, you can withdraw your money earlier, but then you must pay a penalty.

CDs Return Required amounts T Interest rates on bank CDs are fixed – the rate cannot change for as long as you own the CD. Typically, a CD rewards you with compound interest. That means the interest you've already earned also earns interest. Your money really multiplies. Required amounts

U.S. Bonds When you buy U.S. bonds, you're lending money to the federal government. B U.S. bonds can be purchased at banks.

U.S. Bonds Two Kinds of Bonds I Bonds These bonds are sold at their face value ($50 for a $50 bond). T Interest rises and falls –

U.S. Bonds EE Bonds T When you buy these bonds, you pay only half their "face value", the value printed on the bond. Ex. - you pay $50 for a $100 bond. Each year that you keep the bond, its value increases as interest adds up. Even after the bond reaches the value printed on it, the bond will continue to earn interest. B

U.S. Bonds Safety Liquidity The money you invest in bonds is backed by the full faith and credit of the federal government. Liquidity T Return Interest rates are lower than some other investments because there's lower risk with bonds.

The Stock Market The stock market is an everyday term we use to talk about a place where stocks and bonds are "traded" – meaning bought and sold. T I Stocks are long-term investments. But there are no guarantees.

Stocks Stocks - Companies sell stock to get money to: Research better ways to make things C Improve the products they have H Enlarge or modernize their buildings So just as the federal government sells bonds to raise money, businesses raise money by selling stock.

Stocks When you buy stock, you become a shareholder, which means you now own a "part" of the company. If the company's profits go up, you "share" in those profits. If the company's profits fall, so does the price of your stock. If you sold your stock on a day when the price of that stock falls below the price you paid for it, you would lose money. In the stock market, prices rise and fall every day. When you invest in the stock market, you are hoping that over the years, the stock will become much more valuable than the price you paid for it.

Mutual Funds T Index mutual funds invest in companies that are part of a published index like the Standard & Poor's 500. In a mutual fund, a fund manager trades the fund’s underlying securities to realize a gain or a loss and collects dividends or interest income.

Mutual Funds Safety Liquidity There is risk because no one insures your investment. If the price of the fund drops, you lose money.  But mutual funds can be safer than individual stocks. You are spreading your money around in a mutual fund – diversifying. Buying lots of different stocks and bonds lowers your risk. The theory is that if one investment drops, the other stocks and bonds will hold their value or do well enough to make up for the loss. Liquidity You can withdraw any or all of your money at any time. However, at the time you sell your shares (the number of units you own in the fund), you are paid what the shares are worth that day – calculated at the end of the trading day.

Mutual Funds Return Fees Mutual funds are professionally managed by fund managers with lots of experience investing money. They bring wisdom to what and when the fund buys and sells. As experts, they are taking care of your money, and their past performance can be measured. Fees M

Stocks Safety Liquidity With stocks, there's no FDIC to protect you against losses. No compound interest. You're on your own. Your stock can rise like a rocket or drop like a stone – or grow steadily. Liquidity Y

Stocks Return dividends Appreciation This is a payment made by a company to a stockholder to share in the company's profits. Dividends are paid according to how many shares you own – for example, a dollar a share. Dividends can be paid in cash, but they can also be "paid" in the form of additional stock that is automatically re-invested in the company. Dividends are usually paid quarterly. Appreciation If your stock appreciates, that means the price of your shares (units) rises in value. So each share of your stock is worth more than it was before. You "realize" (obtain) this gain only after you sell the stock. Companies and shareholders want stocks to appreciate, but only up to a point. Why? Read on.

Stocks Splitting I So when a stock has reached a high dollar value, the company may split the shares, lowering the per-stock price. Splitting encourages more investors to buy. Splitting actually means reducing a stock's price but increasing the number of shares each shareholder owns.

Splitting You may have 100 shares. You paid $30 each for them several years ago. Now they're worth $60 each. The company splits the shares two-for-one, which means you now own twice as many shares (200) but each is now worth $30. The amount of your investment hasn't changed. True, your shares are only worth half their former price, but you now own twice as many shares. By splitting, the company has made shares affordable again.

Collectibles T Ex - Baseball cards, action figure dolls, coins, stamps, comics, antique toys, furniture, automobiles, and art.

Collectibles Safety Collecting may sound like more fun than other kinds of investing, but there are absolutely no guarantees: 1) 2) Collecting can be very risky – Liquidity Once you've invested in collectibles, the only way to get your money back is to find a buyer willing to pay the price.

Collectibles Return Like stocks, you're betting your collections will appreciate. But there's no interest or dividends to rely on. Collecting

Options An option is a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset (a stock or index) at a specific price on or before a certain date (listed options are all for 100 shares of the particular underlying asset). An option is a security, just like a stock or bond, and constitutes a binding contract with strictly defined terms and properties.

Options vs. Stocks Similarities: Differences: Listed Options are securities, just like stocks. Options trade like stocks, with buyers making bids and sellers making offers. Options are actively traded in a listed market, just like stocks. They can be  bought and sold just like any other security. Differences: Options are derivatives, unlike stocks (i.e, options derive their value from  something else, the underlying security). Options have expiration dates, while stocks do not. There is not a fixed number of options, as there are with stock shares available. Stockowners have a share of the company, with voting and dividend rights. Options convey no such rights.

Calls & Puts A Call Option gives its owner the right, but not the obligation, to buy stock at a certain price and before a certain date. A Put Option gives its owner the right, but not the obligation, to sell stock at a certain price and before a certain date.

Strike Price The Strike Price is the price at which the underlying security (in this case, XYZ) can be bought or sold as specified in the option contract. For example, with the XYZ May 30 Call, the strike price of 30 means the stock can be bought for $30 per share. Were this the XYZ May 30 Put, it would allow the holder the right to sell the stock at $30 per share. The Expiration Date is the day on which the option is no longer valid and ceases to exist. The expiration date for all listed stock options in the U.S. is the third Friday of the month (except when it falls on a holiday, in which case it is on Thursday).

Calls & Puts Calls are mainly used when you believe a stock will go up in price. Puts are mainly used when you believe a stock will go down in price.