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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