types investments

7/23/2019 Types Investments

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Types of Investments


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Types of Investments

Stocks

Bonds

Mutual Funds Real Estate

Savings/Certificates of eposit

Collecti!les


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Stocks

"n investment t#at representso$ners#ip in a company or

corporation%


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&o$ 'ell t#e StockMarket is oing

(verall


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) Basic Indicators

o$ *ones Industrial "verage +,('-. 0ists t#e )1 leading industrial !lue c#ip stocks

Standard and 2oor3s 411 Composite Inde5

Covers market activity for 411 stocks More accurate t#an (' !ecause it evaluates

a greater variety of stock

6ational "ssociation of Security ealers

"utomated 7uotations +,6"S"7-. Monitors fast moving tec#nology companies

Speculative stocks8 s#o$ dramatic ups anddo$ns


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9ps and o$ns

T#e term !ull market means t#e marketis doing $ell !ecause investors areoptimistic a!out t#e economy and are

purc#asing stocks

T#e term !ear market

means t#e market is doing

poorly and investors are notpurc#asing stocks or selling

stocks already o$ned


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2urc#asing Stock


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Brokers

" Broker is a person $#o is licensedto !uy and sell stocks8 provideinvestment advice8 and collect a

commission on eac# purc#ase or sale

2urc#ases stocks on an organi:ede5c#ange +stock market.

(ver ; of all stocks are !oug#t and soldon an organi:ed e5c#ange


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(rgani:ed E5c#anges

Minimum re


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6e$ =ork Stock E5c#ange

6e$ =ork Stock E5c#ange +6=SE.

(ldest and largest8 !egan in >?@A

>8) seats availa!le

A811 companies

"verage stock price is D))%11

Strict re


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"merican Stock E5c#ange

"merican Stock E5c#ange

Began in >@

Andlargest e5c#ange

It3s re


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Regional Stock E5c#anges

Regional Stock E5c#anges

Stocks are traded to investors living in aspecific geograp#ical area

Including Boston8 Cincinnati8 2#iladelp#ia8Spokane


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6"S"7

6ational "ssociation of Securitiesealers "utomated 7uotationsStocks are traded in an over t#e counter

electronic market8111 small companies

Company re


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Bonds

" security representing a loan ofmoney from a lender to a

!orro$er for a set time period8$#ic# pays a fi5ed rate of interest%


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Mutual Funds

"n investment t#at pools moneyfrom several investors to !uy a

particular type of investment8suc# as stocks%


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Real Estate

"n investor !uys pieces ofproperty8 suc# as land or a

!uilding8 in #opes of generating aprofit%


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Savings/Certificates ofeposits

" deposit t#at earns a fi5ed

interest rate for a specified lengt#of time%

T#e longer t#e time period t#e

greater t#e rate of return%T#ere is a su!stantial penalty for

early $it#dra$al%


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Collecti!les

9ni


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Risk vs% Return

(n average8 stocks #ave a #ig# rate ofreturn

T#e increase or decrease in t#e original

purc#ase price of an investment &ig#er rate of return greater risk

9ncertainty a!out t#e outcome of aninvestment

Stocks provide portfolio diversification

Money invested in a variety of investment tools


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S#ortGterm Investment

Strategies

Buying on marginis $#ere an

investor !orro$s part of t#emoney needed to invest in a stockfrom a !rokerage firm%

T#ere is a 41H margin re8111 to make t#e purc#ase%


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S#ortGterm Investment

Strategies Short sellingis $#ere an investor

sells s#ares of stock t#at t#ey don3to$n $it# t#e intent to !uy t#em!ack later at a lo$er price%

0et3s use roller!lades as an e5ample%


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Your friend buys new rollerblades for

$80.You borrow them and sell them for$80.

The price at the stores has beenlowered to $45.

You buy a new pair for $45 and give

them to your friend.You made $5!!!


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0ongGterm Investment

Strategies

Diversificationis spreading your

assets among different types ofinvestments to reduce risk%

on3t put all your eggs in one !asket%


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0ongGterm Investment

Strategies

Dollar Cost Averagingis !uying

an e


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ollar Cost "veraging

AmountAmountInvestedInvested

SharePrice ($)

SharesPurchased

$1,000.00 $20.00 50.00

AmountAmountInvestedInvested

SharePrice ($)

SharesPurchased

$100.00 $20.00 5.00

$100.00

$100.00$100.00

$100.00

$100.00

$100.00

$100.00

$100.00

$19.50

$19.25$19.75

$19.20

$18.90

$18.00

$18.0

$19.78

5.1!

5.195.0

5.21

5.29

5.5

5.!8

5.0

$1,000.00$1,000.00 $20.00$20.00 50.0050.00 $19.!9"$19.!9" 51.51.

$100.00 $20.90 #.78

ne%&ime Investment 'oar%ost Avera*in*

$1,000.00$1,000.00

* Average Share Price* Average Share Price


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0ongGterm InvestmentStrategies

Buy and hold techniqueis $#ere

an investor !uys stock and #oldson to it for a num!er of years%

uring t#at time you are paid

dividends and t#e price of t#e stockmay go up%


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&o$ Can overnment

Regulations 2rotectInvestorsJ

Regulatory Pyramid" net$ork of safeguards t#at

surrounds t#e securities industry G

from individual !rokerages all t#e$ay up to t#e 9%S% Congress%


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Regulatory 2yramid

www.nyse.com


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Sources of Investment

Information

Prospectus

" formal $ritten offer to sellsecurities t#at sets fort# a plan for aproposed !usiness enterprise% "prospectus s#ould contain t#e factst#at an investor needs to make aninformed decision%


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Information

Annual report

" document detailing t#e !usinessactivity of a company over t#eprevious year8 and containing anincome statement8 cas# flo$statement8 and !alance s#eet%


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Information

Financial pu!lications

'all Street *ournal

Fortune

Kiplingers 2ersonal Finance

(nline information#ttpL//finance%ya#oo%com

#ttpL//moneycentral%msn%com
http://finance.yahoo.com/http://moneycentral.msn.com/http://moneycentral.msn.com/http://moneycentral.msn.com/http://finance.yahoo.com/


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&o$ o =ou Buy and Sell

InvestmentsJ

FullGservice !roker

iscount !roker

(nline !roker

Investment advisors

types investments

Documents