1. Investing in Mutual Funds

2. What Are Mutual Funds?  A mutual fund is a professionally managed group of investments using a pool of money from many investors.

3. Advantages of Mutual Funds  Professionally managed  Liquid  Diversified  Require only a small minimum investment

4. Mutual Fund Risk/ Return Categories  Growth funds—A mutual fund whose investment goal is to buy stocks that will increase in value over time.  Income funds—A mutual fund whose investment goal is to buy bonds that produce current income in form of interest.  Growth and income funds—A mutual fund whose investment goal is to earn returns from both dividends and capital gains.  Money market funds—Invests in safe, liquid securities such as Treasury Bills and bonds that mature in three weeks to six months  Global funds—A mutual fund that purchases international stock and bonds as well as US securities.

5. Evaluating Mutual Funds  Net asset value (NAV)—Unlike stocks, mutual fund prices are not determined by what people are willing to pay for them. Unlike stocks, mutual fund prices are not determined by what people are willing to pay for them. They are determined by their net asset value. (NAV)= Value of portfolio - Liabilities Number of shares

6. Evaluating Mutual Funds  Prospectus: A legal document that offers securities or mutual fund shares for sale.  Costs and fees  Front-end load: Sales charge paid when you buy an investment. (2-8%)  Back-end load: A sales charge paid when you sell an investment. (2-8%)  No-load fund: No sales charge because the fund is bought directly through the investment company. (no sales person is used)  Print and online sources of mutual fund information: **Forbes, Fortune, and Money regularly rank Mutual Funds.**

7. Investing in Real Estate

8. Direct Real Estate Investments  Vacant land  Single-family houses  Duplexes, apartments, and condominiums  Recreation and retirement property

9. Indirect Real Estate Investments  Real estate syndicates: A group of investors who pool their money to buy high-priced real estate.  Real estate investment trusts (REITs): Similar to a mutual fund in that money is pooled and managed…but the investments are exclusively in the real estate market.

10. Owning and Managing Rental Property  Mortgage: A loan to purchase real estate.  Depreciation: A decline in the value of property due to normal “wear and tear”. Depreciation is deductible each year, reducing your taxable income.

11. Investing in Financial Instruments

12.  Futures: Contracts to buy and sell commodities or stocks for a specified price on a specified date in the future. Futures commodities include wheat, corn, fruit crops, cattle, gold and silver.  Option: The right, not the obligation to buy or sell a commodity or stock in the future.  Call option: The right to buy stock at a set price by a certain expiration date.  Put option: The right to sell stock at a fixed price until the expiration date.