1. Basics of Mutual Fund Investing
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Basics of Mutual Fund Investing
Catalogue code: B18
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Slide numbers: B18-1 to B18-21
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2. Basics of Mutual Fund Investing

3. Financial Activities Spending Saving Investing
Basics of Mutual Fund Investing
Financial Activities
Spending
Saving
Investing
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4. Financial Activities Spending Daily needs Things we want Saving
Basics of Mutual Fund Investing
Financial Activities
Spending
Daily needs
Things we want
Saving
Investing
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5. Financial Activities Spending Saving Storing money away
Basics of Mutual Fund Investing
Financial Activities
Spending
Saving
Storing money away
Used for emergencies and short-term goals
Concerned with maintaining principal and avoiding risk
Investing
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6. Financial Activities Spending Saving Investing
Basics of Mutual Fund Investing
Financial Activities
Spending
Saving
Investing
Desire to be more faithful stewards
Used for longer-term goals
Willingness to risk investment principal for the potential for higher returns
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7. Investment Asset Classes
Basics of Mutual Fund Investing
Investment Asset Classes
Cash equivalents
Bonds
Stocks
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8. Basics of Mutual Fund Investing
Cash Equivalents
Short-term debt securities that pay a modest return with an emphasis on maintaining principal
Historically, least volatile investment with lowest returns
Return is predominately from interest
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9. Cash Equivalents Factors that impact cash equivalents: Inflation
Basics of Mutual Fund Investing
Cash Equivalents
Factors that impact cash equivalents:
Inflation
Interest rates
Types of cash equivalents:
Bank savings accounts
CDs
U.S. Treasury bills
Money market accounts
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10. Basics of Mutual Fund Investing
Bonds
Loan that investors make to corporations, governments or government agencies
Historically, not as volatile as stocks but fluctuate more in value than cash equivalents
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11. Basics of Mutual Fund Investing
Bonds
If held to maturity, return is from interest payments received and payment of face value
If sold before maturity, return is from interest payments received and difference between purchase price and sale price
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12. Bonds Factors that impact bonds: Interest rates Credit/default risk
Basics of Mutual Fund Investing
Bonds
Factors that impact bonds:
Interest rates
Credit/default risk
Inflation
Market influences
Characteristics of bonds:
Maturity
Yield
Credit quality
Issuer
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13. Stocks Represent ownership in a corporation
Basics of Mutual Fund Investing
Stocks
Represent ownership in a corporation
Historically, stocks provide the highest long-term returns but with the greatest risk
Return consists of income (dividends) and appreciation or depreciation of stock price
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14. Stocks Factors that impact stock prices: News about the company
Basics of Mutual Fund Investing
Stocks
Factors that impact stock prices:
News about the company
Economic news and forecasts
Interest rates
Investor confidence
Characteristics of stocks:
Capitalization
Style
Origination
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15. Basics of Mutual Fund Investing
Mutual Funds
Companies that pool money from investors and invest in a diversified portfolio of securities
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16. Mutual Funds Professional management Diversification Affordability
Basics of Mutual Fund Investing
Mutual Funds
Professional management
Diversification
Affordability
Liquidity
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17. Mutual Funds Advantages: Professional management Diversification
Basics of Mutual Fund Investing
Mutual Funds
Advantages:
Professional management
Diversification
Affordability
Liquidity
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18. Mutual Funds Disadvantages: Lack of control Price uncertainty
Basics of Mutual Fund Investing
Mutual Funds
Disadvantages:
Lack of control
Price uncertainty
Costs despite negative returns
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19. Mutual Funds Categories: Money market funds Bond funds Stock funds
Basics of Mutual Fund Investing
Mutual Funds
Categories:
Money market funds
Bond funds
Stock funds
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20. Mutual Funds Ways funds earn money: Dividend payments
Basics of Mutual Fund Investing
Mutual Funds
Ways funds earn money:
Dividend payments
Capital gains distributions
Increase in net asset value
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