1. Risk/Growth Bucket
JT Fredericks

2. What is the Risk/Growth Bucket?
Higher risk investments
Low Risk = Low Reward; High Risk = High Reward
Must be willing to risk losing a portion of your money to be able to make gains from your investments
Not guaranteed that you will make money
Not guaranteed that you will lose money
There is no limit to how much you can make from these investments
Investments options in the Risk/Growth Bucket include:
Equities
High-Yield Bonds
Real Estate
Commodities
Currencies
Collectibles
Structured Notes

3. Equities
Equities: Basic term that includes stocks, mutual funds, indexes, and exchange-traded funds (ETFs)
ETFs
Built like mutual funds or index funds in the sense that they contain a collection of assets
Can be traded just like individual stocks
Unlike mutual funds or indexes, they can be traded throughout the day– don’t have to wait until the end of the trading day
When you buy an ETF, you are not buying actual stocks, bonds, commodities, etc. but are buying shares in an investment fund that owns those assets
When you buy an ETF, the company promises that you’ll receive the same outcome as if you’d owned them yourself
Lots of diversity at a low cost

4. High-Yield Bonds AKA “Junk Bonds”
Bonds with low safety ratings but have a high interest rate
Higher risk of the bond is compensated by providing a higher rate of return
Generally, these bonds have ratings lower than BBB and are sometimes called “subinvestment grade”

5. Real Estate Many ways to invest in real estate:
Renting- buy a home and rent it out for income
“Flipping”- buy a property, fix it up and then sell it at a higher price than you bought it
You can personally engage in fixing the house or you can pay other people to do it for you Note: In order to make money off of the investment, you must be the one buying the house
Commercial Real Estate/Apartment- similar to renting but instead of a house you buy a condo, townhouse, apartment, etc. and rent it out
Real Estate Investment Trusts (REITs)- trusts (holding companies) that have ownership in commercial properties and sell shares to small investors
Trade like stocks
Can buy shares of a REIT index fund which gives you a diversity of many different REITs
When buying real estate that has income associated with it (rental, condo, apartment, etc.) you have two ways of making money: money coming from renters and, if the property increases in value, you can sell it for the appreciated amount

6. Commodities Raw materials that can be bought and sold
Includes gold, silver, oil, coffee, cotton, orange juice, livestock, soybeans, etc.
Investing in precious metals like gold and silver are a common way of protecting against uncertainty
Used to protect against inflation or currency devaluation
Many times you have to buy commodity “futures” meaning that you make the commitment to hold onto the commodity for a specific interval before selling it
During that time the commodity can either go up or down in value once that interval is up, the commodity is sold regardless of what happened to its value
Can also buy “options” which are like futures but limit your loss
Perhaps the safest way to invest in commodities is through ETFs, but the potential upside is not as high

7. Currencies Trading one standard of money for another
Also known as “forex trading”
Ex: Trading U.S. dollars for Euros
Transactions can be opened and closed instantly at the exact price shown and generally with no commissions or transaction fees
The market is so large that it is harder for people to manipulate the prices of currencies
Currency prices largely based on supply and demand
Market is open 24/7 so you can make trades whenever you want
Currency trading is very risky and should only be done by more experienced investors
To learn more about trading currencies, Investopedia has a “forex tutorial” that will teach you how trade in the forex market

8. Collectibles Anything that has a specific, niche market
Ex: Art, wine, coins, cars, antiques, etc.
To invest in collectibles, it takes significant insight and knowledge of the market to be able to make highly profitable investments
One trick that some use is to just compare their product to others found on eBay or other sites people buy and sell items
Another tips is to find an expert who can provide you with an accurate appraisal
Investing in collectibles think “Pawn Stars”

9. Structured Notes
As you may recall, structured notes were also included in the Security Bucket
That’s because there are different types of structured notes
Some have 100% protection, so they belong in the Security Bucket, assuming the bank you are getting them from is financially solid
Other kinds of notes give you higher potential returns, but only for partial protection if the index decreases in value
Ex: A note with 25% protection will protect you if the market drops 25%, but if it drops 35% you lose 10%
Some structured notes even pay you for owning them by providing 150% upside, meaning that if the market goes up 10%, you will receive a 15% return
These types of structured notes provide you with higher upside but at the tradeoff of less protection

10. Diversification
While some of these investments may be more appealing than others, it is essential that you diversify
Don’t put all your eggs in one basket as it could completely destroy all of your investments
An example of diversifying your Risk/Growth Bucket would be:
Stocks: buy shares of companies in different industries
Energy, technology, retail, finance, entertainment, etc.
Real Estate: flip houses in different neighborhoods or in different states depending on how the housing markets are in those areas; or buy different REITs with holdings in nursing homes, condos, luxury apartments, etc.
Look for places with good housing markets
Commodities: buy gold, silver, platinum, oil, coffee, cotton, etc.

11. Recap Equities (stocks, mutual funds, indexes, ETFs)
High-Yield Bonds (higher risk but higher interest rates)
Real Estate (renting, flipping, REITs)
Commodities (gold, silver, oil, livestock, “futures” and “options”)
Currencies (trading $ for Euros)
Collectibles (art, coins, cars, antiques)
Structured Notes (more upside but without the downside protection)
Most Importantly: Diversify!

12. Next Meeting!
Learn about how to allocate your money across the Security and Risk/Growth Buckets!
Maximize your money-making potential while protecting yourself from market downsides!
Investment strategies of the rich and famous!

13. Sources
Tony Robbins’ Money: Master the Game
Investopedia