1. Chapter 13 Investing Fundamentals

2. Establish your Financial Goals  Specific  Measurable  Attainable  Realistic  Time frame

3. Performing a Financial Checkup  Work to balance your budget  Start an emergency fund (3-9 months income)  Have access to other sources of cash for emergency needs

4. Obtaining Money to Establish an Investment Program  Pay yourself first  Take advantage of employer-sponsored retirement plans  Participate in an elective savings program  Make a special savings effort one or two months each year  Take advantage of gifts, inheritances and windfalls

5. Factors that Affect your Choice of Investments  Safety and risk –Inflation risk –Interest rate risk –Business failure risk –Market risk –Global investment risk  Investment income  Investment growth  Investment liquidity

6. Asset Allocation  Stocks issued by large corporations (large cap)  Stocks issued by medium-size corporations (midcap)  Stocks issued by small, rapidly growing companies (small cap)  Foreign stocks  Bonds  Cash

7. Investment Pyramid  Level 1-Financial Security –Cash –CDs –Money market mutual funds –U.S. government bonds

8. Investment Pyramid  Level 2-Safety and Income –U.S. securities –Selected corporate and municipal bonds –Income stocks –Conservative mutual funds

9. Investment Pyramid  Level 3-Growth –Growth stocks –Growth-oriented mutual funds –Rental property

10. Investment Pyramid  Level 4-Speculation –Speculative stocks –Options –Commodities –Other high-risk investments

11. Investment Alternatives  Stock or equity financing (pays dividends) –Common –Preferred  Corporate and government bonds (pays interest)  Mutual funds  Real estate  Options, commodities, precious metals and gemstones, coins and stamps, antiques and collectibles

12. Personal Investment Plan  Establish your investment goals  Determine the amount of money you need to obtain your goals  Specify the amount of money you currently have available to fund your investments  List different investments that you want to evaluate  Evaluate the risk factor and the potential return for all investments  Reduce possible investments to a reasonable number  Choose at least two different investments  Continue to evaluate your investment program

13. Sources of Investment Information  The Internet  Newspapers and news programs  Business periodicals and government publications  Corporate reports  Investor services and newsletters