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Risk, return, and types of investments

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michelle ashmore

on 13 April 2017

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Transcript of Risk, return, and types of investments

Risk & Return
3) stocks
5) mutual funds
4) Bonds
(Government Securities)
Risk, return, and types of investments
what you are willing to

what you hope to
what is a risk?

what is something you would be willing to risk? in return for what?
doing something that makes you anxious

taking a chance at doing something new

gambling for something

exposing yourself to danger
money - car
emotions - love
safety - skydiving
your life - family
money - education
long term investment

money grows over time, longer you keep=more interest earned

guaranteed return
Treasury Bonds: Treasury bonds pay interest every six months and mature in 30 years. $100 minimum

Savings Bonds: low-risk savings product that earn interest while protecting you from inflation. Sold at half face value and mature in 30 years.
.10% interest. Minimum $25
risk and return
risk - low

return - low
(guaranteed face value)
why stocks?
best long-term investment

capital gain-sell for more than paid

capital loss - sell for less than paid

dividends - money earned

owning stock = owning part of corporation

exchange - where stocks are bought and sold

Dow Jones - average of how the top 30 corporations perform each day

S&P 500 - average of how the top 500 corporations perform each day
The Boeing Company Caterpillar Inc.
Cisco Systems, Inc. Chevron Corporation
E. I. du Pont de Nemours and Company The Walt Disney Company
General Electric Company The Goldman Sachs Group,
The Home Depot, Inc. International Business Machines Corp
Intel Corporation Johnson & Johnson
JPMorgan Chase & Co. The Coca-Cola Company
McDonald's Corp. 3M Company
Merck & Co. Inc. Microsoft Corporation
Nike, Inc. Pfizer Inc.
The Procter & Gamble Company AT&T, Inc.
The Travelers Companies, Inc. UnitedHealth Group Inc
United Technologies Corporation Visa Inc.
Verizon Communications Inc. Wal-Mart Stores Inc.
Exxon Mobil Corporation

risk and return
risk: high

return: high

"earn big, or lose big"
"risk it to get it"
why mutual funds?
"bucket" that holds your investment choices

spread out your money (stocks, bonds, cash) to minimize loss and maximize gain

"don't put all your eggs in 1 basket"
combination of stocks, bonds, cash (savings/CD's)
Risk and return
depends on your diversification (how you spread out your money)

younger = riskier
older = safer
using the scale, plot what you think would be acceptable risk to take in the following times in your life.

Remember at each time your responsibilities change and so might your life goals.
1) Savings / CD
2) Retirement accounts
safe place to store your money.
choose: standard, CD, or money market based on liquidity and interest
RISK level:

Return level:
depends on which savings is chosen (higher interest or liquidity)
An Individual Retirement Account (IRA) is a type of savings account that is designed to help you save for retirement and offers many tax advantages.

relatively low
depends on how money is invested and for how long
Full transcript