Chapter 11Chapter 11

Investing for Your FutureInvesting for Your Future

Stages of InvestingStages of Investing

Stage 1 –Stage 1 –• • • •

Stages of InvestingStages of Investing

Stage 2 – Stage 2 – Investing –Investing –

• Beginning investing moves you from Beginning investing moves you from a temporary savings to a more a temporary savings to a more permanent statuspermanent status

• Beginning investments should be Beginning investments should be _______ _______ and _________.and _________.

• Ex:Ex:

Stages of InvestingStages of Investing

Stage 3 – Stage 3 – • Investing on a regular and planned Investing on a regular and planned

basis.basis.• Goals are more long termGoals are more long term• Usually occurs when earning potential Usually occurs when earning potential

is at a peak (middle age)is at a peak (middle age)• Often investing for retirementOften investing for retirement• Ex: Ex:

Stages of InvestingStages of Investing

Stage 4 -Stage 4 -• Management of investment Management of investment

alternatives to maximize the growth of alternatives to maximize the growth of your portfolio.your portfolio.

• Portfolio – Portfolio –

• Invest in different types of securities to Invest in different types of securities to try to maximize returns try to maximize returns (diversification)(diversification)

Stages of InvestingStages of Investing

Stage 5 -Stage 5 -• • • • •

Reasons to InvestReasons to Invest

To beat To beat inflation –inflation –

Increase wealth (faster than Increase wealth (faster than savings)savings)

Fun and challengingFun and challenging

Risk and ReturnRisk and Return

Risk – Risk –

DiversificationDiversification

Diversification –Diversification –

Diversify based on Diversify based on • • •

Types of RiskTypes of Risk

Interest rate riskInterest rate risk – –

Political risk –Political risk –

Types of RiskTypes of Risk

Market risk –Market risk –

Company or industry risk – Company or industry risk –

Criteria for Choosing an Criteria for Choosing an InvestmentInvestment

Wise Investment PracticesWise Investment Practices

Sources of Financial Sources of Financial InformationInformation

NewspapersNewspapers

Investor Services Investor Services

Financial MagazinesFinancial Magazines

OnlineOnline

Sources of Financial Sources of Financial InformationInformation

Financial Advisers – Financial Advisers –

Annual Reports -Annual Reports -

BrokersBrokers• •

Investment Options Investment Options (Low to Medium Risk)(Low to Medium Risk)

BondsBonds – –

Treasury Securities Treasury Securities – –

Investment Options Investment Options (Medium Risk)(Medium Risk)

Mutual Fund Mutual Fund

StockStock – –

Investment Options Investment Options (Medium Risk)(Medium Risk)

AnnuityAnnuity – –

Real Estate Real Estate – –

Investment OptionsInvestment Options(High Risk)(High Risk)

FuturesFutures – –

OptionsOptions – –

Penny Stocks Penny Stocks – –