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Saving and Investing Part 2

Saving and Investing

Jared Ediger

on 5 December 2016

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Transcript of Saving and Investing Part 2

Saving and Investing Part 2
Comparison Shop For Investments
Many investors research and read newspapers such as the Wall Street Journal and Baron's
Dow Jones Industrial Average
is the oldest index. The Dow uses 30 Blue Chip Stocks
Indexes are used to measure the market or to compare personal portfolios
Common Characteristics
Balancing Risk and Return
High Risk Investments Should Have Possibility of High Return
Investments have varying degrees of
or how much it might change in value
helps weather market fluctuations from the economy, industry trends, or world events.
Someone's age should determine their risk
Smaller companies are less liquid, real estate and uncommon investments are not liquid
Saving and Investing Tools
Opportunity Costs
Evaluate Cost and Benefits of Investments
Balance Risk and Return
Shopping for Investments
Opportunity Cost
Delayed Gratification
Saving vs Investing
Investment vs Investment
Costs and Benefits of Investments in Securities
Dividends vs Capital Gains
Shareholders earn money by
Capital Gains
(Appreciation - sold for more than paid for) or
are paid periodically and taxed as income and amounts fluctuate year to year. Companies may stop paying dividends
Shareholders lose money if there is a
capital loss
in their investments.
No guarantee that stock will be worth more at a time of sale
Companies sell shares for funding or capital
Initial Public Offering (IPO): First time a company sells shares.
When you purchase stock you become a
Auctioned on the stock market at a stock exchange.
New York Stock Exchange (NYSE) is the oldest exchange
National Association of Securities Dealers Automated Quotations (NASDAQ) is the first electronic exchange
Types of Stocks
Common Stock:
Most common type, earn income mostly from capital gains, may vote in company decisions
Owners of
preferred stock
are more likely to receive dividends over time but may be purchase back by the company at anytime and cannot vote in company decisions.
Blue Chips
stocks are low risk with reliable earnings.
Penny Stocks
sell for less than a dollar and are high risk.
Growth Stocks
are growing fast and typically more expensive. Investors expect to make money on the appreciation.
Value Stocks
typically have decent earnings through dividends but have a lower price-to- earning ratio.
Mutual Funds
Money Market Fund
: Short term investments, low risk, pays dividends
Growth Fund
: Anticipate aggressive growth
Balanced Fund
: Provide both Income and Growth
: Information about the fund
No-Load Funds
: No sales fees but higher management fees
Load Funds
: Funds with a sales fee

: Treasury securities and bonds bonds to fund home purchases
: Local and state governments that pay for schools and highways.
: Expand or fund big projects, sold through brokers or banks, may be considered high yield or junk bonds if corporation doesn't have a good rating
: Sold at discount and then redeemed for full value. Does not make interest payments and with a long maturity dayte
Generally low risk
Issued to raise money for large projects
Sell debt with a promise to pay it back
Denominations of $1,000
Investor receives a note of debt with the amount loaned, term of loan, interest rate, frequency of interest payments.
May last 30 days to 30 years
If interest rates rise value of bonds drop
Bond Rating

Stock Information and Measurements
52-Week High and Low
Company Name and Type of Stock
Ticker Symbol
Dividend Per Share
Dividend Yield
Price/Earning Ratio
Trading Volume
Day High and Low
Net Change
: stocks, bonds, and mutual funds
-an investment portfolio of stocks, bonds, and other securities that is managed by a professional fund manager
Each fund share similar objectives
Approximately 8000 available
Easy and cost effective way for investors to diverse their investments
Sold by a prospectus - a document that contains information about the funds objectives, charges, risks, and the company
Less risky than a single stock but still liquid
Types of Funds
Purchasing a stock
Types of Bonds
Full transcript