Section 13.1 Investment Strategies Notes 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:
INVESTMENT CHARACTERISTICS:
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.
Liquidity:
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!)
*THE EARLIER YOU START, THE LESS MONEY YOU WILL NEED TO INVEST OVER YOUR LIFETIME.
Many people have more than one investment goal. Ex:
Each has different timelines and require different mix of investments.
FOCUS ON A STRATEGY
Three basic types of investment strategies::
INCOME:
GROWTH:
_____ REDUCTION:
DIVERSIFY YOUR INVESTMENTS
Diversification: “Don’t put all your eggs in one basket.”
Wise investors develop aPortfolio, 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 aninvestment portfolio.
LEARNING ABOUT INVESTMENTS
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, ______.
*Investment clubs are not generally recommended.
“MAD MONEY” CNBC Jim Kramer.
Yahoo Finance
Forbes.com