Section 13



Section 13.1 Investment Strategies p. 317

Objectives:

Factors to consider when evaluating investments

Principles for investing wisely

ID ways to learn more about investing

List different types of investments:

Return:

What are three ways to get returns:

a) Some investments pay returns at_________________________________.

b) You may sell an investments for ______________________.

c) _______________________ are another type of return to consider. The investment that saves you money on __________________________ gives you a better return.

Volatility:

Risk:

Investments don’t come with ____________________. You can make choices about how much risk you’re willing to assume. ________________________ investments are lower in risk. Generally the greater the possible return, the ______________ the degree of risk you must assume.

How common is it to lose everything you invested?__________.

More often risk means your return may be ____________________________________.

How is risk associated with liquidity? Ex:

The less liquid an investment is, the ___________ the type of risk.

Inflation risk:

Principles of INVESTING:

Before you think about investing you should have 3 things in order:

_______________________________________, ____________________________,

________________________________________.

ID your objectives:

What will the money be used for?

How much can you afford to invest and how much do you hope to end up with?

What is your timeline?

The _________________ your timeline, the less ________ you can afford to take.

With a longer timeline, you can choose investments that are less liquid, more volatile and higher in ______________. Since higher-risk investments have the potential for better returns, a long timeline is to your advantage. (Hey wait, that’s you!!! You have a long timeline!! Some positive news!)

Many people have more than one investment goal. Ex:

Each has different timelines and require different mix of investments.

Three basic types of investment strategies::

INCOME: GROWTH: _____ REDUCTION:

Diversification: “Don’t put all your eggs in one basket.”

Wise investors develop a Portfolio, or ________________ of investments, that is both ________________ and ____________________________. The right balance depends on your ___________ and timeline.

_________________________is the process of developing an overall plan for balancing an investment portfolio.

How can you learn about investing? Media, courses, professional advisors such as:

If you decide to work with an advisor, check out his or her _______________ first. Evaluate all the advice you are given. After all, ___________________________.

2. Retirement planning Name_____________________________

| |401K |ROTH IRA |

|Money contributed: |Pretax taken out of gross pay. | |

|Pre-tax (before tax is taken out of your check- | | |

|gross income) | | |

| | | |

|or Post tax (after tax is deducted:net income)? | | |

|When are you taxed on the money it makes? |When you take money out. Retirement. | |

|Do you have to be employed to |YES | |

|participate? | | |

|What age can you take money out? |59.5 yrs. | |

| |EARLIER : PENALTIES | |

|Does employer “Match” what you put in? | MEET THE MATCH- FREE $ | |

|Show example: | | |

| |EX: 4% match- | |

| |Company will match your contributions upto 4%, | |

| |IF you invest 0%, they invest 0%. | |

|If you change jobs do you keep the investment? How?|PORTABLE: ROLLOVER w/o | |

|** |Penalties. | |

|Why should you participate? | | |

| | | |

|When? | | |



VESTED: having 100% ownership. Usually after a certain period of employment- ex: 5 years.

Example: 401K: You always have 100% ownership of what YOU have contributed. You have to be 100% vested before you can keep all that the company has contributed or matched.

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