1. Presented by Glendale Community Library Instructors: Chuck Milliner and Annette Fisher

2. April 25 Preparing to Invest May 2Key Investment Concepts May 9 Bank Products and US Treasury Securities May 16 Common Types of Investments, and Retirement Savings Vehicles

3. May 23 Choosing the Right Investments May 30 Managing Investment Risk June 6 Evaluating Performance June 14 Investment Professionals and Safeguarding Your Investments

4.  Return and Rate of Return  The Risk-Return Relationship  Time and Your Portfolio  Allocating Your Portfolio  Diversifying Your Portfolio  Rebalancing Your Portfolio  Dollar Cost Averaging  Investing Tax Strategies

5. Total Return = Gain or loss in value + investment earnings Rate of Return = Total return / investment amount Annualized Return = Percent return / number of years

8. How do we know if it is a good or bad return?

9.  S&P 500 Stocks – 10.5%  Long term Treasury bonds – 5.3%  Treasury bills – 3.8%  (Inflation – 3.1%)

10. http://www.1stock1.com/1stock1_141.ht m

11.  Market Risk  Interest-Rate Risk  Inflation Risk  Recession risk  Currency Risk  Political Risk

12. Low RiskHigh Risk Conservative Moderately Conservative Moderately Aggressive Aggressive Very Aggressive

14.  Capacity for risk The amount of your total assets  The higher your total assets, the more risks you can take Your financial responsibilities  The fewer your financial responsibilities, the more risk you can take Your stage in life  The younger your are, the more risks you can take

15.  Invest in higher risk/higher return investments early in life (20/80 split)  Move toward lower risk/lower return investments as you grow older (80/20 split just prior to retirement)

16. www.rce.rutgers.edu/money/riskquiz

17. Investor AInvestor B Total Investment$10,000 Average Annual Rate of Return 9%, not compounded9%, compounded yearly Total dollars generated after 20 years $28,000$56,044 Total dollars generated after 40 years $46,000$314,094

18. Investor CInvestor D Monthly Investment$200$400 Average annual rate of return, compounded yearly 9% Length of Investment40 years20 years Total value of accountAfter 40 years, $883,900After 20 years, $267,670

19. Continuous increase in cost of living Continuous decreases in the buying power of your money

20. Investor EInvestor F Starting Balance$15,000 Annual investment return 3.25%8% Length of Investment20 years Account Balance$28,438$69,914 Average annual rate of inflation 3% Real rate of return.25%5% Value after adjusting for inflation $15,768$39,799

21.  http://www.bls.gov/data/inflation_calcul ator.htm

22.  Financial goals  Personal circumstances  Asset amount  Larger economy  Age

24.  Go to online site  http://www.schwab.com/public/schwab/ home/new_to_investing/investing_basics /create_a_portfolio?cmsid=P- 2878173&lvl1=home&lvl2=new_to_invest ing

25. Reduce Risk by Diversifying Your Assets Invest some money conservatively for safety, invest some aggressively for returns

26. As you move further up the pyramid, risk and potential for return both increase

27.  Loan money to governments and corporations and get it back with interest  You purchase a bond for a set amount, and at maturity, issuer will pay back that amount plus interest  Interest is specified when you purchase the bond – so it won’t change or decrease

28.  You own ‘shares’, which are a percentage of group ownership of a company  Shares may gain or lose value, or even become worthless if the company fails  Usually considered a long-term investment and held in terms of years

29.  A combination of several stocks in joint ownership between members of the fund  Sometimes includes bonds or money market accounts for greater diversification  Safer than individual stocks and bonds  Professional fund manager makes decisions and actively invests for members

30.  Market industries and Sectors  Cyclical Stocks  Counter Cyclical Stocks  Market Capitalization  Growth Stocks  Value Stock  International Stock

31.  Large Cap Stocks The company has assets valued between $10 billion and $200 billion (Wal-Mart, GM)  Medium Cap Stocks - $2 billion to $10 billion  Small Cap Stocks - $300 million to $2 billion  Micro Cap Stocks - below $300 million

32.  Large cap stocks are also known as blue chip stocks.  Larger cap stocks are generally safer than smaller cap stocks.  Smaller cap stocks may provide opportunity for higher return that compensates for their greater risk.

34. January (market high) FebruaryMarchApril (market low) Amount invested $800 Share price$35$20 Number of shares purchased 22.8640 Average cost per share $35$20

35. January (market high) FebruaryMarchApril (market low) Amount invested $200 Share price$35$28$24$20 Number of shares purchased 5.77.158.310 Total number of shares - 31.15 Average Cost per share - $25.68

36. Doesn’t guarantee you won’t lose money You can’t buy only when the market is doing well

37.  Taxable Account  Tax-Deferred Account, Traditional IRA  Tax-Free Account: Roth IRA  Page 48 goes into Pros and Cons