Investing in Mutual Funds or Real Estate Chapter 14 Notes Mutual Funds  This is the most popular investment alternative out there! Here are the basics:

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Investing in Mutual Funds or Real Estate Chapter 14 Notes Mutual Funds  This is the most popular investment alternative out there! Here are the basics: _____________________________________________________________________________________ __ __________________________________________________________________________________. The investment company that manages the fund ______________________________________________ ____________________________. They charge a _____________________________ for their services. Professional fund managers buy and sell based on the ______________________________________ and ______________________________________________. Why Investors Purchase Mutual Funds  ________________________________________! You don’t have to worry about following the stock and bond markets, or about looking for hot new investments. Professionals are doing the work for you.  ________________________________________! When you invest in funds, you are diversifying because mutual funds purchase numerous and diverse stock and bond issues.  ________________________________________! You can turn your money into cash whenever you need it (unless, of course, the fund is part of some type of retirement account).  ________________________________________! You can get a great rate of return without as much risk as you would have with investing in individual stocks. Types of Mutual Funds  Individual funds have different investment goals and strategies. You should choose funds that have goals and strategies that match your own.  There are many different types of funds to choose from including: Growth, income, balanced, bond, global and index funds. Growth Funds  A ___________________________________________________________________________ _________________________________. They are considered more risky but can really hit big.  An ____________________________________________________________________________. These are even more risky but can lead to massive returns if they hit.  Examples of some of the top growth funds can be seen at:  Income Funds  An _____________________________________________________________________________________ ________________________________________________________________________________________.  The goal of these types of funds is current dividend income. _______________________________________ ___________________________________.  Sometimes you see combination funds like a Growth-income fund. For example, the managers of this type of fund will be looking for companies that are growing AND paying dividends.  For examples of some of the top performing index funds check out:

Investing in Mutual Funds or Real Estate Chapter 14 Notes Balanced Funds  A ___________________________________________________________________. ____________________ __________________________________________________________________________________________.  Balanced funds are generally considered ____________________________________________.  The goal of the fund is to ______________________________________________________________________.  For an example of a balanced fund check out: Index Funds  An ________________________________________________________________________________________ ________________. Many of these funds are tied to a specific market average such as the Standard and Poor’s Index of 500 large company stocks.  The goal of these funds is to mirror the movements of certain markets, going up as they go up.  These funds are considered moderately risky. For an example of this type of fund check out: Money Market Funds  ___________________________________________________________________________________________ _________________________. These short-term maturities provided current income and maximum safety.  ___________________________________________________________________________________________.  For some of the top money market funds check out: Reading a Mutual Fund Quote  Some of the basics: _______________ – stands for Net Asset Value. It refers to the dollar value of one share of the fund. _______________ – stand for Year to Date Return. This tells you how much the fund has made or lost that year (listed as a percentage). ______________. – This tells you the objective of the fund. (Is it a growth, balanced, income etc…) Real Estate Investment  Real estate is considered one of the safest investments out there! Why? __________________________________________________________________________________. Simply put, over time property values have risen at a greater rate than inflation.  In a ______________________________________________________________________________________ _____________________________________. In an ______________________________________________ investors appoint a trustee to hold legal title to the property on behalf of all the investors in the group. Property Ownership  When buying real estate, most people make a ____________________________ and get a loan secured by a ______________________________________ to pay the balance. You borrow money to make the purchase and you pay the money back, month by month over time. Your mortgage stays fixed but the value of the house goes up over time! For example, if you buy a $200,000 house and make a down payment of $40,000 (__________________ _________________), you have to borrow $160,000 from the bank. After a five years let’s say the house is now worth $250,000 and you decide to sell it. You could pay off the $160,000 you owed on your mortgage and have $90,000 left. That extra money is called equity! _________________________________________________________ ____________________________________________________________________________________. Pros and Cons  Real-estate investment _______________________________________________________________________.  However, real-estate is one of __________________________________________________________________. Depending on the market, it can take months or even years to sell!