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Small steps to accomplishgreat things!
Subject: Seminar & Business Communication
Faculty name: Sir. ShahbazDate: 25/05/2013
By Ahmad AmiraliGR# 2201055
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It is our attitude at the beginning of a difficult task which,
more thananything else, will affect its successful outcome.
William James
American philosopher
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Types of common investments
Risks of investing
Simple ways to minimize risk
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Types of common investments
Cash
Cash equivalents (CDs, Treasury bills)
BondsStocks
Mutual funds
Retirement accounts
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Cash
Checking account
Savings account
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The most powerful force in the universe iscompound interest.
Albert Einstein
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Cash equivalents
Certificates of deposit
Treasury bills
Money market accounts
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Bonds
Corporate bonds
Municipal bonds
Government bonds
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Stocks
Mutual Funds
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Risks of investing
Investment risk
Market risk
Liquidity risk
Interest rate risk
Credit risk
Inflation risk
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Simple ways to minimize risk
Diversification
Asset allocation
Rebalancing
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Diversification*Diversification does not assure a profit or
protect against an investmentloss.
Cash
Stocks
Bonds
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Asset allocation
*Asset Allocation does not assure a profit or protect against an
investment loss.
Younger investor Older investor
80% 50% 40%
40%20%
40%
10%10% 10%
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Rebalancing
*Rebalancing does not assure a profit or protect against an
investment loss
Stocks -$1,000
Bonds -$1,000
Stocks -$1,100
Bonds -$1,000
after one year
Stocks -$1,050
Bonds -$1,050
rebalanced
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Now that you have an understanding of the basics, Im going to
give you a practical example of how to use thisknowledge.
If for example X began by putting 5% of every paycheck into
savings account. Once he had enough, he t ook half
of his savings account and invested it in a Treasury-bill.
Liquidity was not a concern for X because he still had
some money in his savings account for a rainy day.
When the Treasury-bill matured he collected his money.
X kept putting money into his savings account after he invested
in the t-bill. Since his money had increased, he
took out half of the money in his savings account.
X also had his original investment from the t-bill and the
return that he earned from his investment.
By adding up these amounts, X decided to put money into a mutual
fund. He was concerned about keeping his
money safe, so he chose a relatively low risk mutual fund t hat
was very diversified.
He waited a few years: during this time his investment decreased
and increased but he did not worry. He knewthat investing in mutual
funds is for the long t erm and you cannot worry about the minor
fluctuations in value. He
also kept taking some money from his savings account and
invested that into the mutual fund as well.
X used his knowledge about investments, risk, and
diversification to save money for a house and he was
successful.
In time, X had enough to put a down payment on his house. He
still has money in his savings account that will
help in case he must repair something.
Putting your knowledge to use
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Thank You
