Managing Your Investments Chapter 11 Notes Money Management

1
Managing Your Investments Chapter 11 Notes
Money Management

• Got the Safety Net, Now What?
• Once youve got a bit of emergency cash stashed
  away in some type of conservative savings plan
  then what? _______________________________________
  __, BABY!
• Investments can run the gamut from conservative
  to risky. _____________________________
  __________________________________________________
  __________________________
• Investment Essentials
• ________________________________ is the use of
  your savings to earn a financial return.
• The overall objective, is obviously, to earn MORE
  MONEY with your money!
• __________________________________________________
  __. Once you have a safe cushion stashed away,
  __________________________________________________
  _______________.
• Reasons for Investing
• To _______________________________________
• To _____________________________________ and
  earn a better return on your savings!
• (You can do better than standard bank interest
  rates!)
• To _____________________________________ now and
  in the future!
• To _____________________________________
• To _____________________________________
• __________________________________________________
  _________________. You want to seek out
  investments that are growing faster than the rate
  of inflation!
• Risk
• Investing involves some _________________________!
  The greater the risk you are willing to take the
  greater the potential returns.
• Risk in an investment means ______________________
  _______________________________.
• On the other hand, ____________ in an investment
  means _____________________________.

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Managing Your Investments Chapter 11 Notes
Money Management

• Wise Investment Practices
• People commonly make one or more serious mistakes
  in connection with their investment practices.
  Some are minor others are serious. If you wish
  to avoid mistakes follow this advice
• _____________________________________
• _____________________________________
• _____________________________________
• _____________________________________
• _____________________________________
• _____________________________________
• Sources of Financial Information
• __________________________________________ most
  newspapers have finance sections.
• The Wall Street Journal is a top-notch daily
  resource. Barrons is a weekly newspaper that has
  great info. Both of these are available online as
  well!
• The most widely reported and followed financial
  index is the __________________________
  ____________________. Often simply called the
  __________________, it is an index of the price
  movements of thirty major industrial corporate
  stocks listed on the New York Stock Exchange.
• The New York Stock Exchange Index and the NASDAQ
  are also very widely reported. These measure the
  overall impact of EVERY stock traded on that
  exchange on a given day.
• ________________________________________ For
  Example Money, Fortune, Kiplingers
• ________________________________________
  corporations are required to provide financial
  information to potential investors once a year.
  These reports outline the financial condition of
  the company.
• ________________________________ buy and sell
  stocks for you. provide you with research and
  advice.
• ________________________________ buy and sell
  stocks for you. Usually provides little to no
  advice. _______________________________
  professional investment planners who are trained
  to give intelligent overall investment advice
  based on your goals, age, net worth, occupation,
  investment experience, lifestyle, family
  responsibilities.
• Investment Options ______________________________
  _____________________________________.
• A ____________________ of stock is
  ____________________________________.

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Managing Your Investments Chapter 11 Notes
Money Management

• _________________________________________________
  When you buy a savings bond you are, in
  effect, loaning money to the U.S. Government.
• The most common type of Bond is the
  ___________________________. These are bonds
  purchased for less than their maturity value.
• For example you pay 25 for a bond that will be
  worth 50 at maturity. You hang on to it until it
  matures (usually ten years).
• Very safe option with a decent return, better
  than most cds and traditional savings accounts.
  Also, interest earned is exempt from state and
  local taxes (you do have to pay federal tax
  though!)
• __________________________________________________
  _ U.S. Treasury Bills, Notes, and Bonds are
  available. Maturities range from a few months up
  to to10 years. Interest Rates vary but go up as
  the length of time until maturity goes up.
• Note, the interest earned on these types of
  investments is also exempt from state and local
  income taxes. (Not federal though!)
• Mutual Funds and Retirement Plans
• Suppose you have 500 to invest but do not know
  which stocks or bonds to buy, when to buy them,
  or when to sell them? You can buy shares in a
  large, professionally managed company called a
  _______________________________________.
• A mutual fund ____________________________________
  _____________________________________
  __________________________________________________
  __________________________________.
• Two major advantages of a mutual fund are
• __________________________________________________
  ________ AND
• _________________________________ which means
  investment in a wide variety of securities.
• __________________________________ are the
  fastest growing segment of the United States
  Financial Services Industry. We will go into more
  detail about Mutual Funds in Chapter 14!
• __________________________________ There are a
  wide variety of retirement plans that you can put
  money into regularly. Most of these plans have
  great tax advantages. They allow you to avoid
  paying taxes on that income until you actually
  withdraw it from the retirement account years
  later. That can be huge! We will discuss
  retirement plans in more detail in Chapter 15.
• Real Estate
• Many people like to invest in Real Estate
  ______________________________________!
• While this type of investment usually represents
  a large and often illiquid investment of cash, it
  has proven to be protection against inflation in
  most parts of the U.S.
• Real Estate investments also have great tax
  benefits. Certain costs of home ownership are
  deductible and therefore lower taxable income.
  That is huge!