1. Risk vs Return
A World of Risk

2. Some terms….
Investment
Stock
Bond
Mutual fund
Liquidity

3. Types of Risk
Risk of principal: The risk that some or all of the original deposit or investment may be lost
Market risk: The risk that unforeseen events may affect the value of an investment adversely
Interest-rate risk: The risk that interest rates will change
Inflation risk: The risk that the return on an investment will not keep pace with inflation and the saver’s purchasing power will fall

4. Return is related to risk!
Very High Risk: Junk bonds, penny stocks
High Risk: Growth stocks, growth funds, aggressive mutual funds
Moderate Risk: Income funds, balanced mutual funds, corporate bonds, blue-chip stocks
Very Low Risk: Treasury bills, CDs, money market funds, FDIC Insured savings accounts

5. A Financial Plan A personal financial plan should include:
Financial goals
Net worth statement
Income and expense record
Insurance plan
Saving and investment plan
* Use an expert!

6. Rule of 72
To find the number of years required to double your money: Divide the interest into the # 72. The result is the approximate number of years that it will take for your investment to double.
How long it will take to double your money at 12% interest?
Divide 12 into 72 = six years
(to double your $$)