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Why Invest??

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Nick Pahl

on 26 September 2016

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Transcript of Why Invest??

Why Invest??
2. Increases Wealth
Increases Wealth.

Accumulate wealth faster than if you simply saved/Out pace inflation

How does this work?

" The Cycle"
- You buy stocks and bonds - companies use money to invest in business- create new and better products or pay off debt - you get dividends and interest in return.

Assignment - write down an example of the Cycle ( edmodo ws )
Risk and Return
- the chance that an investment's value will decrease

All investing involves some type of risk

Greater the risk- Greater the return

Risk Adverse
- afraid to take a risk

Best practice is to plan in between and do what feels comfortable according to your personal financial situation.

Avoiding Risk

- Minimize risk by spreading the risk among many types of investments or
. ( stocks, bonds, real estate)

Instead of investing in one
( all of your eggs in one basket) you should invest in multiple
asset classes

Diversify in the types of stocks as well - low and high risk stocks./ tech and retail
Criteria for Choosing an Investment

1. Degree of safety

2. Degree of liquidity

3. Expected dividends

4. Expected growth in value, preferably exceeding the inflation rate

5. Reasonable purchase price

With a partner
- Choose 3 companies from the list

-Tell me why it might be a good idea to invest in them (research company)

- Tell me why it might be a bad idea to invest in them ( research company/competition)

-Tell me why you should not ONLY invest in them

One Method
The rule of 72
-Finding the number of years it will take to double your money

Rate of Return
( ex. 5%) =
to double investment

#of years
( 20 -Anticipated ) =

rate you will need
to double your investment

1. Beating Inflation
- is a rise in the general prices of goods. This reduces purchasing power over time

Seek investments that out pace inflation

ex. 2015-16 the inflation rate was about 1.1% so you would likely to find an investment or portfolio that will yield more that 1.5% over time.
Choose Wisely
1. Microsoft
2. Tesla
3. Apple
4. Wal-Mart Stores
5. Target
6. General motors
7. PepsiCo
8. Coca-Cola
9. Nike
10.Bank of America
11.Red Box
12.Walt Disney
15. Chipotle

Types of Risk

Interest Rate Risk
- The risk your return on investment (ROI) wont out pace the inflation rate - Fixed interest rates

Political risk
- government regulation over bearing a company

Company or industry risk
- affects only one company or one industry
(Apple vs Black Berry )

Market Risk
- Effects
many types
of investments at once.

Non market risks
- unrelated to market trends ( terrorism/natural disaster)

Work Sheet

1. Explain the types of risk

2. Give an example of how this type of risk would have an effect on a publicly traded companies stock price for each.

3. Your examples should stem from current markets as well as examples of current publicly traded companies.

Today's to do List

1. Finish the "5 stages of investing"
As soon as you sit down!!!

2. QOTD - good companies to invest in

3. Chapter 11
-Why Invest (Prezi)

4. Risk Worksheet

Teenvester WS
9/21 - QOTD

1. What is the rule of 72?

2. Please explain the
provide an example

3. Where is the best place to put your money if you would like it to increase in value ( Safe/Bank/Invest)

9/21 Today's To Do list
2. Notes on Risk
3. Risk Worksheet
Finish Risk WS
QOTD - Using the links
1. What is a "Bond"

2. What is a "Mutual Fund"

3. Please answer this on your TEENVESTER worksheet.

What are some advantages of a "mutual fund"
2/16 Exit Slip
Explain what diversity is

What would be the problem with investing in only ...Kohls Target and JCpenny

Things to finish today!
(we will review them tomorrow)

1. Company Research
2. Teenvester WS
3. Stages of investing
4. Risk Worksheet
Full transcript