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3. Read to Learn
Describe how precious metals, precious gems, and other commodities as well as collectibles can impact an investment plan.
Discuss the advantages and disadvantages of buying and selling collectibles online.

4. The Main Idea
Investment plans should include a variety of investments. Aside from real estate, stocks, and bonds, a diversified portfolio might include commodities, such as precious metals and precious gems, as well as collectibles.

5. Key Concepts
Diversifying Your Investment Plan
Investing in Collectibles

6. Key Terms
to vary investments in order to spread risk or to expand
diversify
precious metals
valuable ores such as silver, gold, and platinum

7. Key Terms
rough mineral deposits (usually crystals) that are dug from the earth by miners and then cut and shaped into brilliant jewels
precious gems

8. Key Terms
an exchange through which investors can buy contracts for quantities of a given commodity for delivery at a future date
commodities exchange

9. Key Terms
items that appeal to collectors and investors
collectibles
the crime of obtaining money or some other benefit by deliberate deception
fraud

10. Diversifying Your Investment Plan
There are many types of investments from which to choose, allowing people to diversify their plan.
diversify
to vary investments in order to spread risk or to expand

11. Graphic Organizer Stocks Real Estate Bonds Collectibles
Diversifying Options
Gems
Commodities
Precious Metals

12. Investing in Precious Metals
Many people invest their money in precious metals as a hedge against inflation.
precious metals
valuable ores such as silver, gold, and platinum

13. Investing in Precious Metals
Precious metals are usually valued by the ounce.
The price of gold can fluctuate with war, political unrest, or inflation.

14. Investing in Precious Gems
Precious gems include diamonds, sapphires, rubies, and emeralds.
precious gems
rough mineral deposits (usually crystals) that are dug from the earth by miners and then cut and shaped into brilliant jewels

15. Investing in Precious Gems
Precious gems appeal to investors for the following reasons:
Small size
Beauty
Ease of storage
Durability
Protection against inflation

16. Risks Associated with Precious Gems
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Risks Associated with Precious Gems
Precious gems are not easily converted to cash.
Beginning investors may have trouble determining quality.
Political unrest in gem-producing countries can affect supply and prices.
You will likely have to buy your gems at higher retail prices and sell them at lower wholesale prices.
Metals and gems can fluctuate greatly in value.

17. Investing in Other Commodities
Some people like to “play the market” on the commodities exchange.
commodities exchange
an exchange through which investors can buy contracts for quantities of a given commodity at a future date

18. Investing in Other Commodities
Most investors want to sell their commodities contract at a profit before the delivery date.
An expected event can spell the difference between rags and riches when investing in commodities.

19. Commodities Exchanges
Commodities are the raw materials that producers use to create goods and food. There are about 50 different commodities handled on more than a dozen exchanges in the United States and Europe alone.

20. Investing in Collectibles
Collectibles can include rare coins and books, works of art, antiques, and stamps.
collectibles
items that appeal to collectors and investors

21. Investing in Collectibles
The Internet has made buying and selling collectibles efficient and convenient.
eBay is the biggest online auction site.

22. The Pros of Online Collection
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The Pros of Online Collection
Online collecting is easy.
Sellers can reach buyers around the world.
Comparison shopping is easy.
Most Web sites do not charge a commission.

23. The Cons of Online Collection
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The Cons of Online Collection
Prices are not necessarily lower.
Collectibles do not offer interest or dividends.
Finding a buyer on short notice is difficult.
You will have to purchase insurance.
As a buyer, you don’t know the seller.
Fraud is an ever-present danger.

24. Buyers of collectibles should be aware of the danger of fraud.
Staying Aware of Fraud
Buyers of collectibles should be aware of the danger of fraud.
fraud
the crime of obtaining money or some other benefit by deliberate deception

25. Staying Aware of Fraud
The best way to avoid fraud is to learn everything you can about the items you collect.
You should buy and sell collectibles only with reputable dealers.

26. How can precious metals, precious gems, and other commodities as well as collectibles impact an investment plan?
as hedges against inflation and possible sources of profit

27. Describe the function of a commodities exchange.
They allow investors to buy contracts for quantities of a given commodity for delivery at a future date.

28. What are some pros and cons of online investing?
pros: convenience, ability to trade worldwide; cons: possibility of fraud, inability to see items

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