Transcript Chapters 17-20

Chapters 17-20
Saving & Investing
Glencoe Business and Personal Finance
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
17
Saving and Investing
Section 1 Preparing for a Savings or Investment Program
Performing a Financial Checkup
Preparing for a Financial Crisis
Establish a larger emergency fund.
Know what you owe.
Reduce spending.
Pay off credit cards.
Apply for a line of credit at your financial institution.
Notify creditors if you are unable to make a payment.
Monitor your investments and retirement accounts.
Glencoe Business and Personal Finance
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Chapter
17
Saving and Investing
Section 1 Preparing for a Savings or Investment Program
Getting the Money Needed to Start an
Investment Program
Sources of Money to Invest
Pay Yourself First
Employer-Sponsored Retirement Plans
Elective Savings Programs
Special Savings Effort
Gifts, Inheritances, and Windfalls
Glencoe Business and Personal Finance
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Chapter
17
Saving and Investing
Section 1 Preparing for a Savings or Investment Program
Long-Term Investment Programs
Glencoe Business and Personal Finance
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Chapter
17
Saving and Investing
Section 1 Preparing for a Savings or Investment Program
Making Investment Decisions
Inflation Risk
Interest Rate Risk
Five
Components of
Risk
Business Failure Risk
Financial Market Risk
Global Investment Risk
Glencoe Business and Personal Finance
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Chapter
17
Saving and Investing
Section 1 Preparing for a Savings or Investment Program
Making Investment Decisions
Sources of Investment Income
Savings accounts
Certificates of deposit (CDs)
U.S. Savings Bonds
U.S. Treasury bills
Corporate bonds
Preferred stocks
Mutual funds
Real estate
Commodities
Precious metals
Gems
Collectibles
Glencoe Business and Personal Finance
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Chapter
17
Saving and Investing
Section 2 Savings and Investment Options
Types of Investments
Questions to Ask Before Investing in a Piece of Real Estate
Why are the present owners selling?
Is the property in good condition?
What is the condition of other properties in the area?
Is there a chance the property will decrease in value?
Will you be able to find an interested buyer?
Can an interested buyer get the financing to buy the property?
Glencoe Business and Personal Finance
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Chapter
17
Saving and Investing
Section 2 Savings and Investment Options
Developing a Personal Investment Plan
Glencoe Business and Personal Finance
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Chapter
17
Saving and Investing
Section 3 Reducing Risk and Sources of Information
Financial Planners
Types of Financial Planners
Fee-Only
Planners
Fee-Offset
Planners
Fee-and-Commission
Planners
Commission-Only
Planners
Glencoe Business and Personal Finance
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Chapter
17
Saving and Investing
Section 3 Reducing Risk and Sources of Information
Financial Planners
Basic Services of a Good Financial Planner
Assess your current financial position
Offer a clearly written plan with recommendations
Discuss the plan with you and answer questions
Help you keep track of your progress
Guide you to other financial experts as needed
Glencoe Business and Personal Finance
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
17
Saving and Investing
Section 3 Reducing Risk and Sources of Information
Financial Planners
Glencoe Business and Personal Finance
Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
17
Saving and Investing
Section 3 Reducing Risk and Sources of Information
Managing Your Investments
What Should You Do to Manage Your Investments?
Evaluate
Investments
Glencoe Business and Personal Finance
Monitor
Investments
Think
About Tax
Considerations
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Chapter
17
Saving and Investing
Section 3 Reducing Risk and Sources of Information
Managing Your Investments
Taxable Income Includes
Dividends
Glencoe Business and Personal Finance
Interest
Income
Rental
Income
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Chapter
18
Stocks
Section 1 Common and Preferred Stocks
Common Stock
Income from Dividends
Why
Investors
Purchase
Common
Stock
Appreciation of Stock Value
Increased Value from Stock Splits
Voting Rights and Control of the Company
Glencoe Business and Personal Finance
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Chapter
18
Stocks
Section 1 Common and Preferred Stocks
Preferred Stock
Why Do Investors Purchase Preferred Stock?
Considered a Safer
Investment than
Common Stock
Glencoe Business and Personal Finance
Considered a
Predictable Source of
Income
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Chapter
18
Stocks
Section 2 Evaluating Stocks
Sources of Evaluating Stocks
Finding Information for Evaluating Stocks
Newspapers
The Internet
Stock Advisory Services
– Standard & Poor’s Stock and Bond Guide
– Value Line Investment Survey
– Mergent’s Handbook of Common Stock
Corporate News Publications
– Annual Reports
Glencoe Business and Personal Finance
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Chapter
18
Stocks
Section 2 Evaluating Stocks
Factors That Influence the Price of Stock
Current Yield
Total Return
Numerical
Measures for a
Corporation
Earnings Per Share
Price-Earnings
(PE) Ratio
Projected Earning
Glencoe Business and Personal Finance
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Chapter
18
Stocks
Section 2 Evaluating Stocks
Investment Theories
The Fundamental
Theory
Assumes that a stock’s real value is
determined by looking at the company’s
future earnings
The Technical
Theory
Based on the idea that a stock’s value is
really determined by forces in the stock
market itself
The Efficient
Market Theory
Stock price movements are purely
random
Glencoe Business and Personal Finance
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Chapter
18
Stocks
Section 3 Buying and Selling Stocks
How to Buy and Sell Stock
Ways to Buy and Sell Stock
Full-Service
Brokerage
Firm
Discount
Brokerage
Firm
Trade
Stocks
Online
The biggest difference is the commission.
Glencoe Business and Personal Finance
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Chapter
18
Stocks
Section 3 Buying and Selling Stocks
How to Buy and Sell Stock
Types of Orders
Market
Orders
Limit
Orders
Stop
Orders
More and more people are using their
computers to make securities transactions.
Glencoe Business and Personal Finance
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Chapter
18
Stocks
Section 3 Buying and Selling Stocks
Investment Strategies
Long-Term Techniques
Short-Term Techniques
Buy-and-Hold
Buying on Margin
Dollar Cost Averaging
Selling Short
Direct Investment and
Dividend Reinvestment
Plans
Glencoe Business and Personal Finance
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Chapter
19
Bonds and Mutual Funds
Section 1 Corporate and Government Bonds
Corporate Bonds
Why Do Corporations Sell Bonds?
To raise money when they can’t sell stock
To finance regular business activities
To reduce tax burden
Glencoe Business and Personal Finance
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Chapter
19
Bonds and Mutual Funds
Section 1 Corporate and Government Bonds
Why Investors Buy Bonds
Why Are Bonds Considered a Safe Investment?
Interest income
Increased value over time
Face value is repaid at maturity
Glencoe Business and Personal Finance
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Chapter
19
Bonds and Mutual Funds
Section 1 Corporate and Government Bonds
Government Bonds and Securities
Treasury Bills
Treasury Notes
Government
Bonds and
Securities
Treasury Bonds
Treasury Inflation-Protected
Securities (TIPS)
Series EE Savings Bonds
Series I Savings Bonds
Glencoe Business and Personal Finance
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Chapter
19
Bonds and Mutual Funds
Section 2 Investing in Bonds
Determining Investment Value
Sources of Information on Bonds
Annual
Reports
Glencoe Business and Personal Finance
The
Internet
Business
Magazines
Government
Reports and
Research
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Chapter
19
Bonds and Mutual Funds
Section 2 Investing in Bonds
Determining Investment Value
Bond Ratings
Glencoe Business and Personal Finance
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Chapter
19
Bonds and Mutual Funds
Section 2 Investing in Bonds
Determining Investment Value
Bond Ratings
Glencoe Business and Personal Finance
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Chapter
19
Bonds and Mutual Funds
Section 3 Mutual Funds
Defining Mutual Funds
What Is a Mutual Fund?
A mutual fund is an investment
alternative in which investors pool their
money to buy stocks, bonds, and other
securities based on the selection of
professional fund managers who work for
an investment company.
Glencoe Business and Personal Finance
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Chapter
19
Bonds and Mutual Funds
Section 3 Mutual Funds
Defining Mutual Funds
Why Buy
Mutual Funds?
Professional
Management
Glencoe Business and Personal Finance
Diversification
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Chapter
19
Bonds and Mutual Funds
Section 4 Investing in Mutual Funds
Making an Informed Decision
Sources of Information on Mutual Funds
Newspapers
Quotations
Prospectuses
Annual Reports
Financial Publications
Professional Advice
Internet
Glencoe Business and Personal Finance
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Chapter
Real Estate and Other Investments
20
Glencoe Business and Personal Finance
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Chapter
20
Real Estate and Other Investments
Section 1 Real Estate Investments
Real Estate Investment: Pros and Cons
Illiquidity
Declining
Property Value
Disadvantages of
Real Estate
Investments
Lack of
Diversification
Lack of a
Tax Shelter
Management
Problems
Glencoe Business and Personal Finance
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Chapter
20
Real Estate and Other Investments
Section 2 Precious Metals, Gems, and Collectibles
Gold
The Fluctuating Price of Gold
The price of gold rises when people believe that war,
political unrest, or inflation may be coming.
Glencoe Business and Personal Finance
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Chapter
20
Real Estate and Other Investments
Section 2 Precious Metals, Gems, and Collectibles
Gold
Glencoe Business and Personal Finance
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Chapter
20
Real Estate and Other Investments
Section 2 Precious Metals, Gems, and Collectibles
Other Precious Metals
Other Precious Metals That Rise in
Value in Uncertain Times
Silver
Platinum
Palladium
Rhodium
Why Are Precious Metals Tricky?
Storage
Correctly predicting the market
Glencoe Business and Personal Finance
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Chapter
20
Real Estate and Other Investments
Section 2 Precious Metals, Gems, and Collectibles
Precious Gems
The primary risk of precious gems is the great
fluctuation in prices, which can be influenced
by global, economic, and political factors.
Glencoe Business and Personal Finance
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Chapter
20
Real Estate and Other Investments
Section 2 Precious Metals, Gems, and Collectibles
Planning Investments
Stocks and bonds have proven to be the
most stable type of investment.
Glencoe Business and Personal Finance
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Assignment
Using these power points and what we discussed
in these four Chapters, write a paragraph
describing what types of investments you plan on
investing in and WHY? you chose these. Are you a
risk taker or not?
You MUST discuss AT LEAST three different types
of investments.
Glencoe Business and Personal Finance
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