Intro to Business Personal Finance Unit Investors and Investments

Investment Investing

Misunderstandings A father and his daughter are having a conversation about shows. Two people are watching an NBA basketball player play very well. One says, “He’s bad!” One student says that she studies four hours a night as an investment.

Two Types of Investing Personal Investing – one type of financial investing, practiced by individuals. It involves depositing money or spending money in an effort to make a financial gain in the future. People who buy stocks or bonds are engaged in personal investing. Economic Investing – involves spending money to buy capital goods (including machinery, technology and new buildings) used to make consumer goods and services. When a company buys new computers or new delivery trucks, it is engaged in economic investing.

Activity 1 Answer questions What similarities can you find in these examples of investment? Each involves risk and payment in money or effort now in order for the investor to receive a future benefit.

Criteria for Investing Liquidity – the ease with which savings or investments can be turned into cash Risk – the chance of losing some or all of the money invested Return – earnings from an investment

Activity 2 Read the directions and complete the grid

Review Questions What is the difference between personal investing and economic investing? What are the three criteria most often used by investors to judge personal investments?