1. Saving and Investing
Investment Risk

2. Key Investment Principles
_____________
________ risk, ________ potential return
________ risk, ________ return
________ the interest rate or rate of return, the _________ savings you will have

3. Types of Investment Risk
risk that the business or government will not will not be able to return your money
risk that the _____________ of an investment will go down
related to _____________________
___________ of buyers and sellers can easily change the price
_________________________
_______________ investments over a number of different vehicles
____________________ risk
Example
Liquidity
ability to turn your investments into ___________ or spendable funds
savings account vs real estate

4. Types of Investment Risk
inflation-rise in the price of goods and services
taxes-income taxes on gains
buying power – lose
Item Purchased Today
Cost in 20 Years (4.5% average annual inflation rate)
Cost in 20 Years (3.5% average annual inflation rate)
Movie Ticket for $7
$16.88
$13.93
Gas for $20
$48.23
$39.80
Airline ticket for $500
$1,205.86
$994.89
_____________ Risk
misrepresentation of investments—investigate!
Boiler Rooms

5. Investor (Personal) Risk
How much risk are you willing to take?
How much risk do you need to take?
_________________
amount of risk you WANT to take
amount of risk you NEED to take

6. Tools To Help Offset Risk
_____________________
not putting “all your eggs in one basket”
______________ your risk
key involves investing in categories or types of investments that are affected by different kinds of risk

7. Tools To Help Offset Risk
______________________
putting a set amount of money aside at regular intervals for investing
excellent for long-term investing
helps avoid buying high and selling low
Example on board

8. Review Key Investment Principles - 3 Types of Investment Risk – 5
Types of Investor Risk - 2
Tools To Help Offset Risk - 2

9. Assignment Risk Tolerance/Capacity Quizzes
Read Pgs NEFE workbook
Do Exercise 3D