COA 4131 1st Edition Lecture 22 Outline of Current Lecture I Four Steps in Investing Current Lecture A Four Steps in Investing a Impulse items all at the check out line i Candy gum magazines soda bottles b Current Yield i Market price c Yield i Bonds as an investment d Total Return i Dividends or interest ii Can be something else that you cannot predict e Investment Risk i Theoretical risk of loss from an inflation of a possible investment f Selecting Investments and Allocating Assets i Asset allocation 1 Put them in the categories ii Diversity 1 Always want to spread the risk in the different categories 2 Don t want to buy a gorgeous huge mansion that you put all of your money in and don t have any money anywhere else and can t afford anything else iii Portfolio 1 Mix of investments 2 So much in mutual funds bonds investments ect 3 As you get older you become more conservative a Less time in time horizon to be risky 4 Look at all of investments as a group 5 Want a broad range g Speculation i Step 4 in investing ii The volatility is 1 Unsure of these 2 Have to predict iii General public start at this step and think that things they find in their attic will make them rich 1 It s possible but such a small chance 2 Really risky iv Can be jumps and metals some stock you never heard of h Growth i Step 3 in investing ii Growth is what you want 1 What is growing and are they doing it in the right way iii Apple made a lot of growth in a small amount of time iv Moe s is a huge growth story 1 Past 2 years they ve blown up 2 Restaurants come and go a People plan what they want to eat about 12 hours in advance v Chipolte is a good one too vi Starbucks and coffee shops i Safety and income i Step 2 in investing ii Stocks that give you dividends 1 Coca Cola General Electrics Johnson Johnson j Security i Step 1 in investing ii You want secure items 1 CDs U S government bonds ect iii Safe things that you won t lose k Managing Investments i How much should be invested 1 Makes more sense to have a fairly big chunk of money 2 Save a chunk and feel you are ready ii How long should investments be held 1 Way easier to buy it 2 Hardest thing is to know when to sell it 3 Philosophy is to buy and hold a Give it time to breath b Time is on your side c Buying fast and selling fast is a problem i Need to let it grow 4 Who should be involved in investment decisions and processing buy and holds a Spread investment decisions by asking other people b Spread your knowledge and their knowledge i Find out as much as you can c May have to hire professionals to buy and sell your stocks i Can t do it yourself ii Can have a direct deposit taken out from your job 5 Investment chart a Bonds are considered more conservative and safer b Large cap means the company is worth over a billion dollars i Large and secure company ii Want some of these c International stocks more of a risk depending where it is d Emerging markets i South America Asia Africa ii Some places in U S
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