investment slide 1.ppt

7/27/2019 Investment Slide 1.ppt

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Investment Fundamentals and

Portfolio Management


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Objectives Summarize reasons why people invest, what is

required before beginning, how returns are earned,

and some ways to obtain funds to invest.

Determine your own investment philosophy.

Recognize the variety of investments available.

Identify the major factors that affect the return on

investment.

Specify some strategies of portfolio management forlong-term investors.

List three guidelines to use when deciding the best

time to sell investments.


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Establishing Investment Goals

Financial goals should be specific andmeasurable.

Why are you accumulating these funds?

How much do you need? How will you get it?

How long will it take you to reach your goal?

How much risk are you willing to assume?Are you willing to sacrifice current consumption

to invest for the future?

Is it realistic to try and save this amount?


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Steps to Create a Personal Investing PlanStep 1

My investment goals are:

____________________

____________________

Step 2By ___________, I will

have obtained $_______.

Step 3

I have $__________

available to invest.

Date _____________

Step 4

Possible investment alternatives:

1._________________

2._________________

3._________________

4._________________

Step 5

Risk factors for each alternative

1.____________________

2.____________________

3.____________________

4.____________________

Step 6

Projected return on each alternative

1.__________

2.__________

3.__________

4.__________

Step 7

Investment decision

1._______________

2._______________

3._______________

Step 8

Final decision

1._______________

2._______________

Step 9

Continue evaluating choices.


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Preparations for Investing

Achieve financial goals

Increase current income

Gain wealth and financial security

Have funds available for retirement

WHY PEOPLE INVEST:


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Live within means

Continue savings program

Establish lines of credit

Carry adequate insurance

Establish investment goals

PREREQUISITES TO INVESTING:


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Interest

Dividends

Rent

Capital gain/loss

Rate of return or yield


INVESTMENT RETURNS:


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Performing a Financial Checkup

Learn to live within your means

pay off high interest credit card debt

Provide adequate insurance protection Start an emergency fund

three to nine months of living expenses

Have other sources of cash for emergencies line of credit

cash advance


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Value of Having a

Long-Term Investing Program

Many people dont start investing because

they only have a small amount to invest

but....

Small amounts invested regularly

become large amounts over time


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Factors That Affect

Investment Decisions

Safety - minimal risk of loss

Risk - uncertainty about the outcome

inflation risk

interest rate risk

business failure risk

market risk


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Income From Investments

Safest

CDs

savings bonds

T-bills Higher potential income

municipal bonds

corporate bonds preferred stocks

mutual funds

real estate


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Investment Growth and Liquidity

Growth

increase in value

common stock growth stocks retain earnings

bonds, mutual funds and real estate

Liquidity ease and speed to convert an asset to cash


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Business-cycle timing

Dollar-cost averaging

Portfolio diversification

Asset allocation

Management StrategiesLong-Term

Investors


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Investment Alternatives

What is a mutual fund?

investors money is pooled and invested by a

professional fund manager you buy shares in the fund

provides diversification to reduce risk

funds range from conservative

to extremely speculative

match your needs with

a funds objective

(continued)


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Sources of Investment Information

Newspapers

Business Periodicals

Government Publications

Corporate Reports

Statistical Averages

Investor Services and newsletters

Standard and Poors stock reports

Value Line

Moodys investment service


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Investment Philosophies


17/17

Best Time to Sell

Take profits

Cut losses

If wouldnt buy it now, sell it

investment slide 1.ppt

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