investment planning
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Investment Planning. #11. Learning Goals. The Objectives & Rewards Of Investing. Investing usually long-term expect future value and return to increase over time. Speculating usually short-term future value and return highly uncertain. - PowerPoint PPT PresentationTRANSCRIPT
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Investment Planning
#11
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Learning Goals
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The Objectives & Rewards Of Investing
Investing • usually long-term • expect future value
and return to increase over time
Speculating• usually short-term• future value and
return highly uncertain
Adequate insurance coverage and cash/savings are investment prerequisites
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How Do I Get Started?
PAY YOURSELF FIRST!
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What Are Your Investment Objectives?
• Current Income– appropriate for
retired persons
• Major Expenditures– college education,
down payment on a home, or starting a business
• Retirement– live comfortably
in "golden years"
• Shelter from Taxes– preserve more of
your earnings
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Coming Up With the Capital
Investment plan provides direction to help attain goal
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Different Ways to Invest
1. Common Stock2. Bonds3. Preferreds and
Convertibles4. Mutual Funds,
Exchange Traded Funds, and Exchange Traded Notes
5. Real Estate
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1. Common Stock
Different Ways to Invest
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2. Bonds
Different Ways to Invest
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Different Ways to Invest
3. Preferred securities• Equity security that
behaves like debt• Fixed dividend paid before
dividend to common stockholders
Convertible securities• Special type of fixed
income security • Allows conversion
into common stock• Provides income and
possible price appreciation
Hybrid Securities
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Different Ways to Invest
4. Mutual Funds– Professionally
managed portfolio by an investment company
– Returns and risk depend on portfolio
4. Mutual Funds– Professionally
managed portfolio by an investment company
– Returns and risk depend on portfolio
Exchange Traded Funds (ETFs)– Designed to track a
basket or index of equity securities.
Exchange Traded Notes (ETNs)
– Senior, unsecured, unsubordinated debt securities.
– ETNs face market risk and the risk of the issuing
bank defaulting.
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5. Real Estate
Different Ways to Invest
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Securities Markets
“Arenas” where financial instruments trade
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Securities Markets
Primary market new issues available
for first time
• Investment bank underwrites
• Issuing company gets proceeds
• Prospectus
Secondary market trading previously
issued securities • Securities
exchanges• NASDAQ• OTC Market
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Broker and Dealer Markets
Broker Market • buyer and seller
come together, direct trade takes place between them
• Party A sells securities directly to Party B
Dealer Market • buyer and seller
never meet• buy/sell orders are
executed separately through securities dealers acting as market makers
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Broker and Dealer Markets
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Dealer Markets
Bid Priceprice at which investor can sell a security
Ask Priceprice at which investor can buy a security
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Foreign Securities Markets
Manila
Tokyo
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Regulating the Securities Markets
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Regulating the Securities Markets
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Bull Market or Bear?
Bear Market
• Falling securities prices for extended time period– Investor pessimism– Economic downturn
Bull Market
• Rising securities prices for extended time period– Investor optimism– Favorable economy
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Making Transactions in the Securities Markets
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Historical Performance of US Stock Markets Measured by NYSE Returns
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Types of Brokers
Odd or Round Lots Round Lot
100 shares of stock or multiples thereof
Odd Lot fewer than 100 sharesOdd-lot differential
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Securities Investor Protection Corp. (SIPC)
Arbitration settles disputes between broker and client
Investor Protection
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Executing Trades
Market orders often take less than two minutes!
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Types of Orders
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Becoming an Informed Investor
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Annual Report
Here’s what to read….
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Online Investing
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Managing Your Investment Holdings
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Investor Objectives
high current capital income appreciation
Trade-off between
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Asset Allocation and Portfolio Management