Investing Opportunities Using Investment Opportunities as a Means to Increase Individual Wealth

BIG IDEA Banks, brokerages and insurance companies provide access to investments such as certificates of deposit, stocks, bonds and mutual funds Used as a means to achieve personal financial goals

Certificates of Deposit Purchased through banks or brokerage firms Fixed-income investments for a term with a fixed amount of interest paid by the financial institution End of the term = financial institution pays principal and interest earned Insured by the federal government

Certificates of Deposit Tips from the FDIC (Federal Deposit Insurance Corporation)FDIC

Certificates of Deposit Provide a guaranteed return on your investment May not have a high rate of interest – depends on rate set by banks (FED) A secure way to save money and increase wealth Must wait until the term limit is up to “cash out” the CD

Stocks Shares of a company that can be purchased by investors through brokerage firms Investors are paid dividend and can make a profit if sold higher than the purchased price Can purchase into companies that are listed in different stock markets ▫Domestic and International stock markets exist

Stocks Available only through brokerage firms Firms usually require a fee for each transaction May yield a high return on investment – opportunity for tremendous wealth gain (principal amount plus interest) May yield no return on investment = opportunity to lose every cent invested (principal amount plus interest) Allows an individual to “own” a piece of an industry

Bonds Investment instruments that are generally low- yield and low-risk Offered by private organizations and governmental units Basically – the bond “seller” borrows the money of the investor and offers a return on the investment after a prescribed term

Bonds Guaranteed return on investment Low investment return Typically insured by the government – especially if it is a government bond May be “cashed in” at private financial institution

Mutual Funds and Annuities Hold diversified investments in stocks, bonds, and money market accounts to limit investor risks Purchased through brokerage firms or insurance companies Mutual Fund – firm invests contribution along with the contributions of other people = ability to purchase more expensive or larger shares of stocks Annuity – fixed payment over time with an established termination date

Mutual Funds and Annuities Annuity – Guaranteed payment – Often used for retirements: investor deposits unlimited amounts of money into a tax-free account - Often has high fees or penalties for cashing out early Mutual Fund – Reduces individual risk -Diversifies investments -Professionally managed - Often expensive -Not always reliable performance

Generalized Information - All listed investments involve a fee from the financial institution Brokerage FirmsBanks and Credit Unions Provide the services of financial professionals who have the time and expertise to guide and monitor an individual’s investments Investors with time and knowledge can monitor and make investments online using online brokerage firms (E-Trade) provide basic financial services savings, investing, loans, and other fundamental forms of money management Readily accessible