Download - Investing Opportunities Using Investment Opportunities as a Means to Increase Individual Wealth
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Investing OpportunitiesUsing Investment Opportunities as a Means to Increase Individual Wealth
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BIG IDEA•Banks, brokerages and insurance companies provide access to investments such as certificates of deposit, stocks, bonds and mutual funds
•Used as a means to achieve personal financial goals
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Certificates of Deposit• Purchased through
banks or brokerage firms
• Fixed-income investments for a term with a fixed amount of interest paid by the financial institution
• End of the term = financial institution pays principal and interest earned
• Insured by the federal government
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Certificates of Deposit•Tips from the FDIC (Federal Deposit Insurance Corporation)
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Certificates of Deposit
Provide a guaranteed return on your investment
May not have a high rate of interest – depends on rate set by banks (FED)
A secure way to save money and increase wealth
Must wait until the term limit is up to “cash out” the CD
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Stocks•Shares of a company that can be purchased by investors through brokerage firms
•Investors are paid dividend and can make a profit if sold higher than the purchased price
•Can purchase into companies that are listed in different stock markets▫Domestic and International stock markets exist
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StocksAvailable only through brokerage firms
Firms usually require a fee for each transaction
May yield a high return on investment – opportunity for tremendous wealth gain(principal amount plus interest)
May yield no return on investment = opportunity to lose every cent invested (principal amount plus interest)
Allows an individual to “own” a piece of an industry
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Bonds • Investment instruments that are generally low-yield and low-risk
• Offered by private organizations and governmental units
• Basically – the bond “seller” borrows the money of the investor and offers a return on the investment after a prescribed term
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BondsGuaranteed return on investment
Low investment returnTypically insured by the government – especiallyif it is a government bond
May be “cashed in” at private financial institution
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Mutual Funds and Annuities•Hold diversified investments in stocks,
bonds, and money market accounts to limit investor risks
•Purchased through brokerage firms or insurance companies
•Mutual Fund – firm invests contribution along with the contributions of other people = ability to purchase more expensive or larger shares of stocks
•Annuity – fixed payment over time with an established termination date
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Mutual Funds and Annuities Annuity
– Guaranteed payment– Often used for retirements: investor deposits unlimited amounts of money into a tax-free account- Often has high fees or penalties for cashing out early
Mutual Fund – Reduces individual risk-Diversifies investments-Professionally managed- Often expensive-Not always reliable performance
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Generalized Information - All listed investments involve a fee from the financial institution
Brokerage Firms Banks and Credit Unions
• Provide the services of financial professionals who have the time and expertise to guide and monitor an individual’s investments
• Investors with time and knowledge can monitor and make investments online using online brokerage firms (E-Trade)
•provide basic financial services
•savings, investing, loans, and other fundamental forms of money management
•Readily accessible