COA 4131 1st Edition Lecture 34 Outline of Last Lecture I Saving Investing Planning II Manage Your Investment Accounts III Assess Your Taxes IV Create a Budget for the New Year V VI Increase Your Emergency Fund Consider Your Health Benefits and Insurance VII Update Your Beneficiaries VIII Do Not Miss Your Next Checkup IX X XI XII XIII XIV XV XVI XVII XVIII XIX Reaping Tax Savings for Large Transformations Marriage Divorce Birth Adoption Change of Employment Disasters Change of Household Medical Expenses Retirement Death Outline of Current Lecture I Test is Monday 5 30 7 30 II Review Current Lecture A Test is Monday 5 30 7 30 a 50 questions b Tests covers 6 chapters i Investing to make money not lose it ii Stocks 1 It has been doing really well this semester 2 More risky but should get more money back in the end iii Bonds 1 Loan money to government or companies 2 Considered more conservative because you know how much money you will be getting back iv Mutual Funds 1 Real estate too 2 All different types of investments and puts them together 3 Collectables gold housing 4 Groups of investments a Usually stocks but can be bonds or other types of investments v Retirement 1 Going away from full time paid employment to other sorts of activities vi Estate Planning 1 When you die what is your net worth what happens to it who is involved all of the little details B Review a Investing i Different steps in investing 1 First step is setting goals and how much do you want to make 2 Develop and investing attitude a Look at different companies 3 Assessing the risk and return of investments a Past performance and some other measurements to predict 4 Selecting your investments and allocating resources a Afford so much money into each fund each month 5 Evaluation a Once you bought watch it for a while and determine whether it was a good investment or not ii Diversification 1 Do not put it all in one bond or stock 2 Spread them out 3 Mix it up iii If you own stocks you can go to the annual meeting iv v vi vii viii ix x xi xii xiii xiv 1 Vote on annual policies 2 Send you annual report 3 Investor relations a Way to get annual report electronically The bigger the company the more important the management is Sell investments 1 Sell and make profit Capital Gain a Capital Loss if you lose money on it 2 All investments can t be winners Bottom of recession was in 2009 1 Recovered since then All different kinds of stocks 1 Speculative a Taking a lot of risk b Brand new company do not know if it ll go anywhere 2 Blue chip stock a Most dependable b Old dependable companies c Any on DOW d Pays good dividends e Not usually high gross f Colgate g Proctor and Gamble P G i Biggest consumer household band American Girl Dolls 1 Retail 2 Had HUGE growth 3 Started out with just a few thousand dollars a Sold for 700 million to Mattel Coach 1 Purse brand 2 Huge growth Strategies 1 Short term strategies a Dollar cost averaging i If you pay direct usually no fees for transaction Mutual Funds 1 No fee to get in but charge annual fee to manage Reinvest Dividends 1 Rather than get a little check in the mail you can reinvest it a Called DRIPS Bull 1 Market is going up Bear 1 Market isn t going so well 2 Going down xv Apple is a stock that hasn t been doing well this semester 1 Samsung and others are there competitors a Technology battle xvi Measures for Stocks 1 PE ratio a Most used b Low PE vs High PE i Which is better depends c Low PE means it is more stable and established i Less risk ii Older companies b Bonds i Do not have a say or a vote ii No annual meeting iii More conservative 1 Too sturdy no up and down iv People tend not to have enough of these v Bond was callable 1 There are taking it back 2 Most cases this will happen 3 Offer the bond holder so much money so they will sell it back to the corporation 4 Very popular right now a They can get loans for less than 1 5 It s a good sign now vi Corporate Bonds 1 Some considered investment grade a BBB and up i These age good ii Investment quality pretty secure 2 The word yield goes with bonds 3 High yield bond a Aka junk bonds b C graded bond i More risk ii Not necessarily a good or bad thing it just depends c Mineral Rights i Buy land or house you own what is below and what is above ii Very important in many states iii iv v vi vii Spring water Coal Oil Have to be careful Can rent it out 1 Lease it to another company viii Mineral rights can be LEASED ix Gold is very volatile 1 Sold by weight the ounce 2 Sold by purity also a The quality 3 Prices fluctuate up and down constantly 4 Platinum is worth more than gold a Platinum gold silver b All of these prices fluctuate x Real Estate 1 Secondary home you can buy or rent out 2 Zoning laws a What can be built b Cannot assume c What can go on the land 3 Commercial property a Apartment building 4 Can be an investment 5 Property taxes are paid once a year a Some people will want to sell it before property taxes are due 6 Real Estate Investment Trust REAT a Go together with other people and buy this b Principle is pulling your money for other people to buy property like an apartment building c Retirement i Social security 1 Sliding scale on the year you were born 2 Get a check 3 After January to match inflation 4 The more years worked and higher the salary the more money you will get 5 Born after 1960 the first year is 67 that you are eligible a Age 62 for partial SS
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