COA 4131 1st Edition Lecture 34 Outline of Last Lecture I. Saving, Investing, PlanningII. Manage Your Investment AccountsIII. Assess Your TaxesIV. Create a Budget for the New Year V. Increase Your Emergency FundVI. Consider Your Health Benefits and Insurance VII. Update Your Beneficiaries VIII. Do Not Miss Your Next CheckupIX. Reaping Tax Savings for Large Transformations X. Marriage XI. DivorceXII. Birth XIII. AdoptionXIV. Change of EmploymentXV. DisastersXVI. Change of HouseholdXVII. Medical ExpensesXVIII. RetirementXIX. Death Outline of Current Lecture I. Test is Monday 5:30-7:30II. ReviewCurrent LectureA. Test is Monday 5:30-7:30a. 50 questions b. Tests covers 6 chapters i. Investing to make money, not lose it ii. Stocks1. It has been doing really well this semester2. More risky but should get more money back in the endiii. Bonds1. Loan money to government or companies2. Considered more conservative because you know how much money you will be getting backiv. Mutual Funds1. Real estate too 2. All different types of investments and puts them together3. Collectables, gold, housing4. Groups of investmentsa. 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 Planning1. When you die, what is your net worth, what happens to it, who is involved, all of the little details B. Reviewa. 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 predict4. Selecting your investments and allocating resourcesa. 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 stock2. Spread them out 3. Mix it up iii. If you own stocks, you can go to the annual meeting1. Vote on annual policies 2. Send you annual report 3. Investor relations a. Way to get annual report electronically iv. The bigger the company, the more important the management is v. Sell investments1. Sell and make profit= Capital Gaina. Capital Loss if you lose money on it 2. All investments can’t be winners vi. Bottom of recession was in 2009 1. Recovered since then vii. All different kinds of stocks1. Speculativea. Taking a lot of risk b. Brand new company, do not know if it’ll go anywhere2. Blue chip stocka. Most dependable b. Old dependable companiesc. Any on DOW d. Pays good dividends e. Not usually high gross f. Colgateg. Proctor and Gamble (P&G)i. Biggest consumer household band viii. American Girl Dolls 1. Retail2. Had HUGE growth 3. Started out with just a few thousand dollarsa. Sold for $700 million to Mattel ix. Coach1. Purse brand 2. Huge growth x. Strategies1. Short term strategies a. Dollar cost averaging i. If you pay direct, usually no fees for transaction xi. Mutual Funds 1. No fee to get in but charge annual fee to manage xii. Reinvest Dividends 1. Rather than get a little check in the mail you can reinvest it a. Called- DRIPSxiii. Bull1. Market is going up xiv. Bear1. Market isn’t going so well 2. Going down xv. Apple is a stock that hasn’t been doing well this semester1. Samsung and others are there competitors a. Technology battle xvi. Measures for Stocks 1. PE ratioa. Most used b. Low PE vs High PEi. Which is better-depends c. Low PE means it is more stable and establishedi. Less riskii. Older companies b. Bondsi. Do not have a say or a voteii. No annual meetingiii. 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 back2. Most cases this will happen 3. Offer the bond holder so much money so they will sell it back to the corporation4. Very popular right now a. They can get loans for less than 1%5. It’s a good sign now vi. Corporate Bonds1. Some considered investment gradea. BBB and upi. These age goodii. Investment quality, pretty secure2. The word yield goes with bonds3. High yield bonda. Aka junk bondsb. C- graded bondi. More risk ii. Not necessarily a good or bad thing- it just dependsc. Mineral Rights i. Buy land or house, you own what is below and what is aboveii. Very important in many statesiii. Spring wateriv. Coal v. Oil vi. Have to be carefulvii. Can rent it out 1. Lease it to another companyviii. Mineral rights can be LEASED ix. Gold is very volatile 1. Sold by weight- the ounce2. Sold by purity also a. The quality3. Prices fluctuate up and down constantly 4. Platinum is worth more than golda. Platinum, gold, silverb. All of these prices fluctuate x. Real Estate1. Secondary home you can buy or rent out 2. Zoning lawsa. What can be builtb. 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 thisb. Principle is pulling your money for other people to buy property (like an apartment building)c. Retirement i. Social security1. 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 eligiblea. Age 62 for partial
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