1. Investing 101

2. Why invest? What keeps people from investing?

3. Terms Returns/Dividends The money you get from investing You get a percentage of the company’s net profit Shares A portion of company (what you buy) Principal The amount YOU invest

4. Risk POTENTIAL RETURN RISK Risk The uncertainty regarding the outcome of a situation or event Investment Risk The possibility that an investment will fail to pay the expected return or fail to pay a return at all

5. Financial Risk Pyramid Wealth Accumulation- Investments Financial Security- Savings Tools Speculation Increasing potential for higher returns Increasing risk

6. Video https://www.youtube.com/watch?v=ivdd_r9NIE4

7. Diversification Reduces risk by spreading investment money among a wide array of investment tools Creates a collection of investments that will provide an acceptable return with an acceptable exposure to risk Assists with investment risk reduction Referred to as “Building a Portfolio.”

8. Lowest Risk….Cash Cash Money Market Accounts Savings Accounts CD’s Treasury Bills (T-Bill) Returns average.001 % -3%

9. Inflation Calculators http://www.buyupside.com/calculators/inflationjan 08.htm http://www.buyupside.com/calculators/inflationjan 08.htm Investing Calculator http://www.daveramsey.com/article/investing- calculator/lifeandmoney_investing/#/entry_form http://www.daveramsey.com/article/investing- calculator/lifeandmoney_investing/#/entry_form

10. Stocks Common Stock You own a percentage of the company (if they have 100 shares and you own 1 share, then you own 1/100 of the company) Preferred Stock Given back a specific amount of $ each

11. Bonds A form of lending to a company or the government (city, state, or federal) The company or government pays annual interest to the investor until the maturity date is reached The specified time in the future when the principal (or initial investment) amount of the bond is repaid to the bondholder Bonds are less risky than stocks but do not have the potential to earn as much as a stock.

12. Stocks You own part of a company Stockholder or shareholder Owner of the stock If you own one share and there are 100 shares, you own 1/100 of the company Get returns in 2 ways: Company grows—how much each share is worth Dividends Return varies

13. Individual Stocks When you own shares in only one company Can make higher returns HIGH risk! Only put 10% of investment portfolio into individual stocks

14. Mutual Funds Mutual fund- A portfolio of stocks in many different companies. Managed by someone who knows a lot about the stock market Always research the fees charged by a mutual fund. Reduces investment risk by helping people diversify their portfolio Fees can be high Saves investors time

15. When Buying Mutual Funds Look for long track record Check average return over a long period of time (20+ years) Examples of companies to buy mutual funds through: Vanguard Goldman Sachs Fidelity

16. Index Funds Mutual funds that are generated by a computer Follows a formula (i.e. top 500 companies in U.S., or types of companies, certain range of income, etc.) No (or low) management fees AWESOME for beginners or passive investors Lower end of risk with fewer fees

17. Examples of Index Funds S&P 500 (measurement tool, can’t invest in) Largest 500 companies in U.S. Vangaurd 500 (copies the S&P 500, you can buy shares) Average return = 8%

18. Choosing Index Funds Long track record Reasonable return (8-12%)

19. Hard Assets Investments with intrinsic value Oil, natural gas, gold, silver, farmland, diamonds, commercial real estate Negatively correlated with the market

20. Real Estate Includes any residential or commercial property or land and the rights accompanying that land A family home is not considered an investment asset Can be risky and more time consuming but has potential for large returns Examples of real estate investments include rental units and commercial property.

22. 14 year old Investor https://www.youtube.com/watch?v=6X9vjADsg0I

23. Investing Booklet Title page…name and period Bonds Stocks Mutual Funds Index Funds Real Estate Hard Assets Diversification

24. Next time… Long-term vs. Short term investing Dollar Cost Averaging How to research investments (more on what to look for) What you have to do to start investing (where/who to go to) IRA’s 401Ks

25. Grocery/Vehicle Analogy